Answering the Potential Customer’s Concerns: Negotiating Buyer Resistance

Hospitality Sales Management

HA - 400

P3, S5, T3

Negotiating the Customers' Concerns: Addressing Buyer Resistance

By Richard G. McNeill

April 6, 2000

Introduction

When potential customers ask questions that indicate they might have a concern with a statement or solution proposed by a consultative salesperson, this fact should be celebrated as an opportunity. Salespeople who encounter customers who are interested enough to seek clarification have encountered customers who are still open to hearing what the salesperson has to say. As a general statement, “resistance” (objections) indicate interest.’ If there was no interest, the customer would simply say nothing.

In sales practice, methods used in “negotiating buyer resistance” vary with whether or not you are involved with transactional selling (small sales that will be accomplished in a single sales call) or consultative selling (large, complex sales that require multiple sales calls). Similarly, negotiation/objection-handling methods vary with the type of sale in which you are involved. The following discussion primarily deals with negotiating resistance during transactional selling, but does provide insights into negotiating consultative selling.

Negotiating Concerns is the 4th Step in the Six-Step Sales Presentation

Negotiating the Customer’s Concerns

The following discussion is familiar to you as, “Handling Objections,” however; this term connotes a “win/lose” type of negotiation. It also connotes that somehow you plan to manipulate the prospect/customer to make the purchase using whatever techniques or means possible. Of course, a customer who later discovers that the purchased product does not fully satisfy their needs or that he or she has been manipulated, is not a candidate for a relationship with you. Consultative Selling relies on “win/win” negotiations. These are open, a two-way problem solving dialogue, and conducted in an atmosphere of trust. Thus, the phrases, “Answering the Potential Customers’ Concerns or “Negotiating Buyer Resistance” connotes the right for the customer to: (a) resist if the product does not satisfy their needs and/or (b) to ask questions for clarification if the customer doesn’t fully understand your presentation. It’s imperative that you assume a problem-solving consultative stance, fully listen to and understand the customer.

Overview of Negotiating the Customer’s Concerns

Common experience tells you that in most presentations you will meet resistance to your presentation (your presentation of your product’s ability to solve customer’s needs and problems will be questioned as to validity and/or clarification). Resistance can occur at any time during the presentation. It may occur at the conclusion of a Benefit/Need statement when the salesperson asks a Confirmation question, at the Close statement, and/or anywhere else. There are common types of customer resistance and you must know these and be skilled in various methods to address this resistance.

For example, price is the most common type of resistance. Other types of resistance include: (a) resistance to the source (customer has loyalty to a competitor), (b) resistance related to time (customer doesn’t want to make a decision at the time of the presentation closing statement), (c) resistance to the product itself (customer is not familiar with the product or is familiar but has preconceived misconceptions), and (d) resistance to the need for the product (customer truly doesn’t need or doesn’t know that they need).

Methods to answer customer resistance include but are not limited to: (a) Direct Denial, which clarifies facts, (b) Indirect Denial, which acknowledges partial validity of the customer’s objection but offsets with a superior benefit, (c) Trial Offer of the product to reduce the customer’s perceived risk, (d) Superior Benefit, which outweighs the competitor’s offering, (e) Third Party Endorsement, which adds credibility, (f) Question Format, which restates the benefit and suggests an obviously rational choice to be made by the customer, and (g) Demonstration, which is a tangible supporting “proof” device that usually is combined with any of the methods above.

Negotiation is Part of the Win-Win Relationship Strategy

Win-Win Negotiation Is Crucial to Relationship Maintenance

As indicated above, salespeople have been led to believe that anytime the potential customer raises a problem, issue, or objects to the salesperson’s statement, that this needs to be handled with some manipulative technique. Old selling training taught salespeople that in these circumstances that they needed to: (a) overcome the objection, (b) apply the correct manipulative technique, and (c) outtalk, outsmart, and outmaneuver the customer.

In consultative selling, Negotiating the Customer’s Concerns is a situation and philosophy where the salesperson and the customer sit together to work out the best possible solution for both parties. Both parties must gain benefits or someone loses. And, anyone who loses usually will not engage with the other party again, thus, the relationship is severed. To be avoided is a win-lose situation where either the salesperson loses or the customer loses. Hence, to maintain long-term relationships (a major objective of consultative selling) a win-win scenario is the goal of Negotiating the Customer’s Concerns.

“Win-Win negotiations result in mutual respect, stronger relationships, and greater loyalty on the part of the salesperson and the customer” (Manning & Reese, 1997, p. 270).

Win-Win Negotiation Defined

There are several possible objectives in negotiation. With a Win-Lose objective, the salesperson (negotiator) is taught to do everything possible to overcome and to dominate the other party so that he or she will emerge victorious. With a Win-Win objective in mind, as mentioned above, the idea is to have both buyer and seller happy with the outcome of the negotiation. This is more than simple compromise. Compromise does not always ensure that both parties will be happy or satisfied with the outcome.

Two definitions of win-win negotiation are:

1. “working to reach an agreement that is mutually satisfactory to both buyer and seller.”

2. “the way to reach a common understanding of the essential elements of the transaction [exchange]” (Manning & Reese, 1997, p. 270).

Negotiating the Customer’s Concerns – Common Patterns

While there are infinite types of questions or concerns that a potential customer can raise, there are five common categories of questions which a salesperson can expect to be asked:

1. Concerns related to the need for the product/service. For example “I don’t need your product/service.”

2. Concerns related to the product/service itself. For example, “I’m not familiar with your brand.”

3. Concerns related to the source of supply. For example, “ I have been buying from Marriott for years.”

4. Concerns related to time. For example, “ I want time to think it over.”

5. Concerns related to price (the most common form of concern). For example, “This is too far above my budget.”

Knowing the most common forms of customer concerns is an advantage to salespeople. With this knowledge, they can anticipate customer concerns and prepare potential responses to them. Of course, one can only guess all of a customer’s concerns, however, if the customer is well-known and researched, an approximate guess will get the salesperson into the ballpark.

What are some specific types of responses that a salesperson could pre-plan if he or she anticipated any of the above common types of concerns?

Seven Types of Saleperson Responses to Negotiating the Customer’s Concerns

After recognizing that the customer is expressing concerns (objections/resistance) the

Salesperson should first determine which of the following methods of response or combination of the following responses would be the most appropriate. When a combination approach is used, the INDIRECT DENIAL is usually the lead method which is followed by one or several of the following seven (7) methods.

1. INDIRECT DENIAL – Sometimes the customer’s concern is completely almost completely valid. Here the salesperson will acknowledge that the prospect is partially right. This is a “soft” and “conditional” denial.

Prospect: “I understand that you have hired a lot of new people at the hotel recently; to me this seem that there may be internal problems.”

Salesperson: “You’re right, we have hired many new people but this is due to our new expansion.”

2. DIRECT DENIAL - This involves directly refuting or denying what the prospect has stated. It’s considered a high-risk method, but in some cases what the prospect has stated or believes may be very wrong or mispreceived. In any case, if this misperception is left unaddressed, the prospect will probably not buy.

Prospect: “I understand that your company has filed for bankruptcy.”

Salesperson: “That’s not true.”

3. SUPERIOR BENEFIT – A superior benefit is something that will usually outweigh a prospect’s specific concern. It is most commonly used in combination with an indirect denial.

Prospect: “You don’t have enough audio-visual (A/V) equipment on the hotel property to fully accommodate our needs.”

Salesperson: “You’re right, we only stock the basic A/V on property (INDIRECT DENIAL), but one of our subsidiaries here in town is an A/V supplier and of course they carry a full assortment of equipment to which we have first rights (SUPERIOR BENEFIT).

4. DEMONSTRATION – This is used when you have the opportunity and when you know both your and your competitor’s product/service very well. The idea here is that, “seeing (and experiencing) is believing.” Demonstration is very powerful and can effectively overcome concerns. Often used in combination method approaches.

Prospect: “I really don’t know anything about the level of service that your property can provide. I don’t know anything about you.”

Salesperson: “Why don’t you and your family come and stay, as my guest, over a weekend. We would love to host a mini-vacation for you. You could relax and simply check us out.”

5. TRIAL-OFFER – This involves giving the prospect an opportunity to try the product without making a major purchase commitment. This has often been used in the case of large Association meetings where a smaller “Board of Director” meeting for the association is given a very inexpensive rate so that the association decision makers can try the property out.

Prospect: “We really can’t make a commitment for our annual association meeting at this time.”

Salesperson: “I know that you have a board meeting coming up soon, what if we could host it for a very small cost to you? You can look at this as our marketing cost to acquaint you with our property.”

6. THIRD-PARTY TESTIMONY – In consultative selling this is powerful. Third-parties are people who refer business to you or are neutral parties who agree to act as a referral source.

Prospect: “I really don’t know anything about your company. Sounds good, but I’m not sure.”

Salesperson: “Were you aware that Bob Shoemaker, the VP of Marketing in your company’s Medical Division held a successful meeting here two months ago? If you would like, I will give him a call and have him call you. How does that sound?”

7. QUESTIONS – Questions are not only an effective way to gather information and clarification, they also can be used to convert a concern into a question that may cause the prospect to rethink their position.

Prospect: “You don’t have evening room service?”

Salesperson: “How many hosted functions will you be holding?”

Prospect: “One running late every night through the entire meeting.”

Salesperson: “When and why would your attendees use room service?”

Guide: How to Respond to Customer’s Concerns

The following are practical illustrations showing you how a salesperson could respond to customer concerns. The successful salesperson will always PREPARE ahead of any sales presentation by anticipating areas where the customer may resist or have concerns. With this information, he or she will prepare some possible responses.

Here is a suggested format (Series of Steps) guiding the negotiating of customer objections/resistance/concerns:

STEP # 1: Recognize Objections as They Arise (During the Presentation)

a. Verbal and Non-Verbal signals

b. What type of Objection is it (of the 5 common types)?

STEP # 2: Validate the Objection (Use “Reflective Listening”)

a. Example, “I think I understand your concern. You feel that the meeting room (product/service ) is not large enough to accommodate your people. Is that correct?”

STEP # 3: Answer the Objection (Use one or a combination of 7 ways to respond)

a. Decide which of the 7 techniques or combinations will answer it? (Example: “Source” type of objection. “Combination Technique”: Indirect Denial/Demonstration)

b. Use “FEEL/FELT/FOUND” STATEMENT

Example: Prospect: “I’m going to check with the Marriott.”

Salesperson, (VALIDATES & INDIRECTLY DENIES) “I understand your need to compare. You FEEL that obtaining the best price/value is important. IS THIS CORRECT? My customers have always FELT the same way . When they decided to use the Park Inn, they FOUND us to be a superior value for the price.

(Uses a second “combination” technique- DEMONSTRATES: “I know our competition very well and the Marriott is a fine property. Let me show you some price/value comparisons (Show matrix of all competitive properties- from course pack as proof)

STEP # 4: Trial Close or Confirmation Question (Attempts to get customer to see your point or agree that you have answered their concerns)

a. Example, “Can we formalize our agreement?” or

b. “What do you think?”

NOTE: After the customer’s concern (objection/resistance) has been resolved, then the salesperson is free to move on to the next NEED TO BE MATCHED WITH A PRODUCT/SERVICE BENEFIT STATEMENT.

Three Examples of Negotiating A Customer’s Concern Regarding: Source, Time, and Price

1.0 Example # 1: SOURCE answered with INDIRECT DENIAL AND DEMONSTRATION

1.1 Prospect, “I’m going to check with the Marriott.”

1.2 Salesperson,

1.21 VALIDATION & INDIRECT DENIAL, “I understand your need to compare and your sense of loyalty to a familiar supplier. You FEEL that obtaining the best price/value is important and that you have been satisfied in the past. IS THIS CORRECT? My customers have often FELT the same way. When they decided to try the Hyatt, they FOUND us to be a superior value for the price and were happy that they tried us and now they had two choices of suppliers.

1.22 DEMONSTRATION, “I know our competition very well and the Marriott is a fine property. Let me show you some price/value comparisons (Show competitive matrix of area competitive prices).”

1.23 TRIAL CLOSE, “How does this sound?” “Can we formalize our agreement to host your meeting by signing this letter of agreement (contract)?

2.0 Example # 2: TIME answered with INDIRECT DENIAL, QUESTION AND

DEMONSTRATION

1.1 Prospect, “I’d like to take a day to think over your proposal.”

1.2 Salesperson,

2.21 VALIDATION & INDIRECT DENIAL, “I understand your need to give adequate consideration to important decisions. You FEEL that it is important to take additional time to weigh this decision. IS THIS CORRECT? My satisfied customers have always FELT the same way. But sometimes circumstances required that they act quickly and FOUND their action to be a good decision.

2.22 DEMONSTRATION, “We have a situation that requires decisive action. Our space availability is becoming very tight. Let me share with you the current situation (Show Rooms & Function Book - you may have your laptop computer loaded with this information).”

2.23 QUESTION, “Do you feel that the extra days of waiting to make this decision outweighs the benefits that you would receive by meeting at the Hyatt?”

2.24 TRIAL CLOSE, “How does this sound?” “Can we formalize our agreement to host your meeting by signing this understanding document (contract)?

3.0 Example # 3: PRICE answered with INDIRECT DENIAL AND SUPERIOR BENEFITS

3.1 Prospect, “That price is way over my budget.”

3.2 Salesperson,

1.24 VALIDATION & INDIRECT DENIAL, “I understand your need to meet your budget. You FEEL that obtaining the best price for value is important and you FEEL that our proposed budget is a bit higher than yours. IS THIS CORRECT? My customers have sometimes FELT the same way; however their budgets usually were a starting point and a “ballpark figure.” When they saw the excellent price/value offered and decided to use the Hyatt, they FOUND us to be a superior value for the price.

1.25 SUPERIOR BENEFITS, “Let me show you some additional benefits that will increase value receive for the proposed budget. (Use any additional benefits not mentioned earlier---always save your ACE card - unused product benefit for this).”

1.26 TRIAL CLOSE, “How does this sound?” “Can we formalize our agreement to host your meeting by signing this understanding document (contract)?

Summary

Customer concerns are welcomed by successful salespeople. When they occur it is an indication that the customer is engaged in the sales presentation. In short, they are interested.

Salespeople should be careful to fully answer all customer questions regarding their concerns. In fact, the successful salesperson will actually ask many probing questions to make sure that the customer really does understand the solution and is comfortable with it. Unsuccessful salespeople accept the first tentative “yes” or any sign of agreement from the customer. They delude themselves in believing that the customer is in agreement when they really are not. The problem? When the salesperson asks for the order, the unresolved problem usually resurfaces or the customer simply says “no.”

The above ways of handling or responding to customer’s objections are only a starting point. They offer the beginning salesperson a model to use in responding. Of course, with experience, salespeople develop their own comfort level and individual ways of responding.

Make no mistake, customers almost always raise some concerns. Prepare before the sales presentation by anticipating the possible objections you might encounter. Then during the sales presentation expect the unexpected and be ready to think on your feet. However, with preparation of potential responses and armed with a guide to structuring your answer, you will be far more skilled than most salespeople who simply “wing-it.”

References

Manning, Gerald, L. & Reece, Barry L. (1997). Selling Today (7^th Ed.). Upper Saddle River, NJ: Prentice Hall.