How To Turn A Newbie Into A Customer For Life

New customers are the lifeblood of any business, but only if they stick around long enough to become old customers. A one-time buyer is welcome, but the ones who put money in the bank are those who come back again and again.

One breed of new customer that’s tricky to develop is the neophyte, the guy or gal who is new to the world your business inhabits. Maybe they are a first-time home buyer or a young couple setting up a college fund for their newborn. The way you and your staff respond to that newbie can make or break your relationship with them. Treat them like an idiot the first time and you’ll never see them again. Treat them right, and you’ll create a customer for life.

It’s tough, though. A newbie doesn’t know what questions to ask. He doesn’t know what’s do-able and what violates the laws of physics and/or the local building code. She may have seen a TV show where some lucky stiff’s family room went from wreck to magazine-spread-worthy in thirty minutes and expect you to do the same. What’s worse, she’s going to take up way more of your valuable time than this measly little job is worth.

The next time a newbie walks through your door, put yourself in their shoes for a minute. Remember what it was like when you went onto the field for your very first Little League tryout? If you were like most of us, the experience was a little intimidating. Everyone else seemed to know exactly what they were doing, but you weren’t sure. You wanted to make the team, but the single most important goal was to avoid making a fool of yourself.

That’s what the newbie is feeling when he comes into your business for the first time. He or she may not admit it—and may try to bluff their way through—but they are nervous about sounding dumb when they talk to the experts in the field.

Your first job, then, is to make the customer comfortable. Don’t draw attention to his ignorance by telling him it’s all right to be stupid. Instead, listen to his ideas in a non-judgmental way and ask him questions about what he needs at a level he can understand. Try to avoid using terms the customer may not have heard before, or, if you have to, explain them without being condescending.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.

Highs And Lows Of Negotiation Strategy

I used to be a strong advocate of aiming high—making an outrageous offer so that I’d have plenty of room to come down when the buyer made a counter offer. Besides, I believed, low offers signal weakness.

I eventually learned that if the first offer was too high—outside the realm of what’s reasonable to the buyer—then the buyer just might not make any counter offer at all. Then where was I? If I lowered my offer to try to re-start the negotiation, I was really signaling my desperation and letting the buyer know that concessions could be won.

The first step in the Creative Selling System is gathering information about your prospect. And one of the key pieces of information is an estimate of the prospect’s spending potential. This not only gives you a goal to shoot for and an idea of how to structure your proposal, it gives you a good guideline for where to start your negotiations. As long as you begin with a proposal in the ballpark your prospect is used to playing in, you’re not likely to scare them off.

Take the time to do your homework and use one or more of the estimating methods I covered in The Dynamic Manager’s Guide To Sales Techniques. Even if you didn’t use those figures to structure your proposal in the first place, they will give you a sense of what’s possible for your negotiation.

Judge the reasonableness of your opening offer carefully. My rule now is that my opening offer is one at the high end of what the prospect could accept with no further changes if they were so inclined—and one I could defend without stretching my credibility.

It’s also good to practice a little mental discipline. Right at the beginning of the negotiation, establish in your own mind the lowest acceptable offer you’ll take. That way, you have a sense of how far you can go before you start cutting into profit margins, production capacity or whatever benchmark your company uses. As the negotiations proceed, you know where you are at all times. That sense of security gives you greater confidence during the process.

Establishing the lowest acceptable alternative in advance does something else. It keeps you in a win/win frame of mind because you don’t have to worry about losing! As long as you know the point at which you will walk away (and stick to it) you can’t lose anything.

As you may have noticed, we’ve now set an upper and a lower limit to pricing. This range makes it much easier to build a few small concessions into your proposal, or plan some value items you can add as the negotiations proceed. This helps you avoid making that big concession all at once, leaving you with no place to go if the buyer rejects it.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.

Use The Time Factor In Negotiation

One of the factors never to be overlooked in any negotiation is time. Time pressure works for and against both parties, often in interesting ways. Anyone who has been involved in union negotiations, for example, knows that the largest concessions always come just before the strike deadline. In fact, sometimes that’s the first time any concessions occur! Knowledge of the deadlines faced by the other party can be a powerful tool.

The pressure to come to an agreement is generally greatest on the party with the nearest deadline. Magazines are much more inclined to negotiate liberal terms for ad space the day before the issue closes than they are the week before. The prospect whose insurance policy is about to lapse is more eager to renew the policy than one with a 90 day grace period remaining. Know your prospect and know their deadlines.

One way to use time to your advantage is by making small concessions one at a time, drawing out the negotiating process if that is to your advantage. On the other hand, you may need to bring the deal to a close, in which case you may want to make a BFO, or best and final offer.

As a seller, though, don’t be surprised if the buyer calls your bluff. They have nothing to lose and plenty to gain by telling you your BFO isn’t good enough. If you back down and make a further concession, all you’ve done is prove to the buyer that you’re a bluffer—and that your word isn’t any good.

The time to make a BFO is when you discover you’re negotiating with yourself. You can tell that’s the situation because the other party isn’t offering any concessions—you’re the only one making any movement. It’s one of the most frustrating situations you can face. You make all the moves, getting nothing more than a “that’s not good enough” response from the prospect. The time to take a chance and make your BFO is when you have nothing to lose.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.

Adverse To Negotiation? Get Over It!

Some people are leery of negotiating a sale. They feel that the process is somehow dishonest or demeans them, their product, or even their prospect in some way. In fact, I often encounter sales managers who proudly point out that their prices are firm. They insist that every customer pays the same price and that’s the one set by the sales manager. They would rather forego a sale than violate their holy pricing policies. These sales managers need a strong dose of reality—and they often get it in the form of declining market share.

There is nothing holy about a given price, nor is there any moral law that says that every customer is entitled to the same terms. In fact, certain religions make a pretty strong moral case for customizing prices and other terms according to each customer’s individual needs. Don’t get me wrong. There’s nothing wrong with having a firm pricing policy. But let’s not hide the reasons for it in some kind of moral cloud. Firm pricing is a matter of what management feels is best for the selling company. Ideally (from their standpoint), it controls demand to produce the maximum profit from the available supply. And having firm prices makes the administration of the revenue stream easier, which makes the sales manager’s job easier. There’s nothing wrong with that.

But there is nothing wrong with negotiating every sale, either. Humans have been doing it for thousands of years in one way or another. In fact, the most successful economic system yet invented, the free market economy, is predicated on the freedom of sellers to offer different value for various prices and for buyers to accept or reject them.

Isn’t that what happens when your favorite department store puts an item on sale? Apparently, the store’s customers made the choice to not buy that item at the previous price, and the store made the choice to offer it at a lower price as a result. Isn’t that a form of negotiation?

Western retail negotiation just doesn’t happen face-to-face (usually) like the haggling that occurs in a Middle Eastern souk. It’s the same process, but the department store is haggling through the medium of its displays and signs rather than having hawkers standing in the aisles soliciting offers for the merchandise on the tables.

In business-to-business sales, nearly every sale is openly negotiated. There may be published price lists and standard terms, but very few buyers would keep their jobs if they didn’t at least try to do better. And few sellers would keep the revenue flowing if they didn’t make pricing adjustments to stay competitive.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.