Trust Triangle Selling August 2009 Newsletter

AUGUST 2009

Issue: 31

Great news to report this month. I was able to record my third hole in one last week. The best part was that I could share it with my friend and long-time mentor LaVern Luebstorf. While someone called me "lucky", LaVern was quick to acknowledge a devotion to the sport and time spent on the range. Back "in the day", LaVern coached me in high school basketball, but it was the lessons in life that he coached especially well and which carry me through many challenges. Along with my parents, LaVern helped me to understand the importance of hard work and preparation. Thinking about it, and not to draw a comparison, but Tiger Woods has 19 career aces. Kind of funny that those who work the hardest at something tend to be the luckiest? Seneca, the Roman philosopher said: "Luck is when preparation meets opportunity". I could not agree more.

Speaking of preparation, let's consider the fourth and final letter used in the closing stages of your transactions: the "Negotiation Follow Up Letter". In May we covered the "Win Letter". In June we explored "Loss Letters", and last month we addressed the "Close Plan Letter".

The "Negotiation Follow Up Letter"

The terms of the agreement and the agreed upon expiration date must be committed to writing in the negotiation follow-up letter. Have you ever heard (or used) this complaint from sales reps? "My customer let the expiration date pass but still expects the same deal!"

The fix for this problem is simple. You anticipate its occurrence and announce to the customer certain quid pro quo consequences: A price increase goes into effect as soon as the expiration date passes. Let's say that you convince the customer to provide a purchase order on or before December 31 as a condition of your concessions. The moment that you agree to these concessions you also explain that your company is depending on this business and that the concessions are dependent upon your receiving a contingency-free purchase order on or before December 31. If, for any reason, you do not receive the purchase order by that date, the price increases from X dollars to Y dollars. You may be in a position to explain, "Our manufacturing floor has been loaded based on our agreement. With any change, we would be facing high inventory-carrying costs. As a result, I need to make our commitment terms clear." Or you might say, "Our special offer has been provided because your business is critical to our corporation's meeting its financial targets for this quarter."

Below is the template for the negotiation follow-up letter that I typically use:

Lee Gannon
Senior Vice President
ABC Corporation
18 Thorndike Road
Wakefield, MA 01880
Dear Lee:

This is a follow-up to our recent discussion regarding your new ______ project.

Adams & Associates agrees to lower our price for the _____ System to $1,578,000.

As part of this price concession, ABC Corporation has agreed to the following:

Contingency-free purchase order to be received on or before August 3, 20XX.
Signed financing documents on or before August 10, 20XX.
Delivery and installation of the equipment on or before September 8, 20XX.
The special pricing and terms of this agreement are to be held in the strictest confidence.

NOTE: We also agree that the price becomes $1,750,000 if the contingency-free purchase order is not received on or before August 3, 20XX.

Thank you for working with us to construct an understanding that allows us to deliver an incredible overall agreement to ABC Corporation. We are excited about the opportunity and appreciate your business.

Sincerely,

Benjamin Edwards

Does this letter prevent the customer from calling to say he will not have the purchase order by the agreed upon date? No, but it makes it very hard for him to do so. If he does call to delay, you are in the driver's seat; you can decide exactly how you want to handle the situation. The customer might say, "It was unavoidable. We tried as hard as we could. I'm sure you aren't really to raise the price on us, right?" You can respond a number of ways:

Review with the customer the letter containing the agreed upon terms and remind him how much the delay will damage his company - for instance, "A two-week delay in signing the purchase order will cost you $50,000 in lost revenue, because the installation will also be delayed."

Would you stand hard on the price increase outlined in your negotiation follow-up letter? Maybe, but I believe the more prudent move for a superstar interested in nurturing a long-term relationship with her customer is to not increase the price. I would, however, use quid pro quo and a higher authority close to get something of value from the customer, such as a commitment for future business, the purchase of additional options, an opportunity to meet with senior customer executives, financing, the purchase of additional support and maintenance, or a customer testimonial. "I understand the difficulties you are having. I'll have to involve my manager with this situation. I wonder if you would be willing to provide A, B, C, D (concessions) to offset the difficulties the delay will cause us?"

Good luck, and Close 'Em.

Sincerely,

Dan Adams, Adams and Associates