Service Value as a Negotiation Tool

Posted by Brian Doyle on Jan 3, 2019, 2:01:17 PM
Brian Doyle

As we enter the holiday season and life becomes more hectic, great service becomes even more important. If you’re like me and your holiday shopping tends to skew toward the end of December, getting a retailer to deliver the gift you purchased before the 25th is almost as important as the gift itself.  It reminds me that great service – throughout the year – is an important part of a business’ value prop and shouldn’t be forgotten when buyers try to negotiate.

gift wrap pic

Particularly in the B2B space, it’s rare for a buyer to look at a proposal and say, “yes” on the spot.  Usually there’s a request for a discount and the seller who doesn’t know his or her true value acquiesces to at least part of the discount request. The conversation is centered around the product, its features, what the customer says they value and ultimately, the price. The part that’s often left out is the service associated with the product.

It doesn’t matter what you’re selling, there’s an opportunity to make service a part of your negotiation. Take a software-as-a-service (SaaS) platform as an example. When asked for a discount, instead of immediately dropping the price on your core offering, discuss removing the service value you provide. For instance, you’d be happy to lower price, but you’ll need to remove the dedicated support team you’ve promised. If your customer is willing to work with your standard level of support, a lower price is a great fit.  Or, if the customer is willing to train their staff on their new purchase, you can pass savings along there too. 

In these situations, you are directly tying your service value to the negotiated price. At Holden Advisors will call these Give-GetsSM. Less value means a lower price for your customer.  If high service levels are important to them, they’ll be okay staying at your quoted price too.

When you ask a retailer to overnight the holiday gift you forgot to buy until the last minute, you’re absolutely willing to pay extra.  When you clearly articulate your service value to your customers, they may be willing to pay extra too.  Even if they aren't, when using service as a Give-GetSM, your price/value alignment stays intact...and that's important. 

Topics: Negotiating with Backbone