As outlined in Assignment #1, operate under the assumption that your prospective customer is an established business already purchasing a similar product from one of your competitors
Weight: 15% of final grade (based on your team’s performance in the oral discussion/presentation )
Section 1 – Overcoming Objections- This is a debate between myself as your potential buyer and yourselves as the sales professionals
This will be presented as a role-playing exercise. Based on the product and industry chosen, derive a list of 4 (four) objections, that the prospective customer might have during the sales call. For example, the types of objections could be related to needs, product or service, company, or price and time. Refer to Overcoming Objections Section on Moodle.
Each member (for groups of 2) are required to respond to two (2) of the objections. For the group of three, select 6 objections (2 each).
You will be graded on the relevancy of the objection, the dialogue from all team members around the objection as well and the scope of objections addressing most possible issues.
The suggested methods in managing the process of buyer resistance is LAARC (Listen, Acknowledge, Assess, Respond, and Confirm). During the grading process, I will look for the application of this method.
The LAARC method is a customer-oriented way to keep the sales dialogue positive. It is important to keep dialogue open and build good will by adding value to your proposition. By listening to a prospective buyer’s concerns and then by engaging in open dialogue, the seller increases the likelihood for favorable results and will form the basis for a long-term relationship.
- Listening– Need to listen to what buyers are saying and resist the temptation to interrupt. It is more than just being polite and professional. The buyer could be trying to tell the salesperson something that is important to them. Listening prevents the salesperson from making assumptions and jumping to conclusions.
- Acknowledge- As buyers, finish their statements, salespeople confirm that they heard the message, appreciate and understand the concern. By acknowledging the concern and politely pausing before responding, it demonstrates to the buyer that the salesperson is a professional who appreciates other people’s opinions.
- Assess– Salespeople need to ask appropriate assessment questions in order to gain a better understanding of exactly what the buyers concern may be. By assessing properly, it allows the salesperson to avoid making assumptions regarding the concerns expressed.
- Respond– Structuring a response typically follows the method that is most appropriate for the situation. (Ex. Forestalling, direct denial, indirect denial)
- Confirm – After responding, salesperson should ask confirmatory questions-response checks to measure that the buyer’s concerns have been met. This could lead to a salesperson’s attempt at gaining a commitment.
Section 2 – Negotiation. This is a Formal Presentation
Even if the salesperson properly qualified the prospect and was able to manage their expectations precisely, the deal will most likely end up in a negotiation. The sales rep who took the role of a consultant should now take up the role of a negotiator to engineer the deal, defining a win-win agreement. In the midst of all that tension, going back and forth, negotiations can make things go array and you can lose the deal. Using the right skills and tactics, sales reps can turn negotiations into a positive leaving both parties leaving the table content.
In your presentation discuss the following 5 questions. Discuss and provide information as to what you will do and why, by justify your position.
#1. What is your absolute bottom line, the lowest price, maximum discount that you are willing to give to get this business?
- The best way to prepare for a negotiation is to define clearly your bottom line. What you are willing to settle for and beyond which is unacceptable? When you are compromising price, you are shredding the margin the company should have earned. Explain what the absolute bottom line would be in a worst-case scenario, and why you would expect that price. Anything less should be blindly refused. The use of figures to explain your position is appropriate.
#2. Even though you have confirmed in the pre-call who the decision makers are, how will you determine whom you should be negotiating with?
- Salespeople make the common mistake of negotiating with people who are not the decision makers. The biggest and basic rule of negotiation is to always negotiate with the decision maker [i.e., the signing authority]. Explain who the prospect’s negotiating body is and why? What steps will you take to confirm this information?
#3. How should you prepare for the negotiations portion of the sales call and build value to justify the asking price?
- Being prepared before entering negotiations accounts for 90% of negotiation success. The more and better prepared you are, the more likely the outcome of negotiation is going to be positive. Provide example(s) of what you will do in negotiations. List questions that you expect to be asked and formulate responses for them.
- Before entering the crossfire, build value in your prospect’s mind by focusing on the underlying interests of your prospect. If you are able to quantify the values that can be gained through your product/service, convincing the prospect will be easier. Give your price legitimacy by providing prospects with reasonable justifications. Remember, decision makers buy values and benefits, not features. List and explain 5 of the most relevant features of your product to the prospective buyer(s) and the associated values and benefits.
#4. Can you offer alternatives to cash discounts that cost less? What will you get in return for discounts?
- Prospects typically throw in the price in every negotiation, demanding discounts and rebates in the price. To counter this, offer prospects with alternatives to cash discounts that cost little or less in comparison. Provide examples of alternatives you can provide that would be of high value to the customer but will not be a direct discount to the price.
- A straight price reduction is the most expensive discount a company can offer, and the hardest to avoid in a negotiation. Therefore, even if you try justifying the price or offer alternatives to discounts, there will be a deal, where you will have no other option other than discounts. Turn it into a positive. Since you gave up on price, ask something in return. Giving away discounts will invariably hurt your company’s bottom line, so make sure you get something in return. Provide examples of what you aim to get in return.
Here are some examples of what you could ask for return:
- Shorter payment terms or prepayment.
- A larger order (up-sell) or fewer deliveries.
- Purchase additional products/services (Cross-sell)
- Opportunities for recurring revenue (business).
#5. Should you ever walk away?
- If so, by walking away you are in essence stopping the sale. Provide three examples of when you would away and detail how you would approach the conversation.
- What are your walk away points?
Marking Scheme – Oral Presentation (15%)
The format for the oral presentation is that each group will handle 8 objections through the role-play exercise. Each member (for groups of 2) is required to respond to four (4) of the objections.
Once the Objection Questions are answered there will be a Negotiation role play portion of the presentation with the Professor playing the role of the prospective customer.
- Presentation Skills: 10 marks assessing the group’s presentation Skills
- Section 1: 40 marks – 4 objections role-played using the LAARC technique – 10 marks each.
- Section 2: Negotiation Skills – 50 marks – address each of the 5 questions under Negotiations – 10 marks each
- Total 100 marks, weighted at 15
The Purpose of the Presentation:
In addition to the structural parts of the marking scheme, students must be able to:
- Being able to communicate ideas verbally in an engaging way using a debate style presentation
- Effectively using a technique in handling the objections
- Achieving call objective in addressing each objection to the satisfaction of the prospective customer.