Monday, April 4, 2016

Regulate Negotiating with Regular Customers

Health care professionals talk of the “itch-scratch-itch cycle.” A repetitive itch makes us repetitively scratch, which leads to skin irritation, which causes a repetitive itch. Remedies to regulate the cycle range from relaxation exercises to nutrition store herbs to prescription druggist corticosteroids.
     Consumer behavior researchers talk of the itch that repeat store customers have to negotiate with salespeople, those customers aiming to save themselves some scratch. A set of studies at European School of Management and Technology, Ruhr-University of Bochum, and Loughborough University identified the drivers of this cycle: Repeat customers expect special consideration from salespeople. Salespeople make negotiating concessions to regular customers for fear of losing their business otherwise. Repeat customers who receive concessions expect to receive more in subsequent negotiations.
     The researchers acknowledge that some special consideration of repeat customers is useful, but go on to caution that the concessions should be regulated to avoid unnecessary revenue losses. Here are a few ways to accomplish the regulation:
  • Fix prices. Most consumers prefer not to negotiate if they believe they’re getting a good deal. In 1846, Alexander Turney Stewart introduced price tags to American retailing. Mr. Stewart said that the hard negotiating over price—at the time, the prevailing practice—left enough bad feelings to interfere with customer loyalty. Most consumers viewed themselves as less skilled at haggling than were the retailers, who did it repeatedly each day. The customers often came away feeling they’d been exploited. The introduction of fixed pricing was largely responsible for the rapid growth of Mr. Stewart’s retail enterprises. Having Mr. Stewart’s successes in mind, negotiate with regular customers about other conditions of the purchase, aside from price. 
  • Slow down. Researchers at University of Maryland found that during the back and forth of negotiating a purchase price and conditions, the shopper will feel better about the final decision if the retailer waits a while before responding with an okay or a counteroffer during each round. The shopper interprets the hesitation to mean they’ve gotten the best possible deal. 
  • Gently joke. A used-car dealer showing his shopper a 2005 Chevrolet in excellent condition says, “The price is only $7,000.” The customer replies, “I’m willing to give you $3,500.” The salesman nods, then grins mischievously, before responding, “If at all possible, I’d prefer to sell you the whole car.” Do use humor with caution. We want to be laughing with the shopper, never at the shopper. 
For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Temper Negotiating Tension
Negotiate Through Shopper Rituals
Size Up the Customer Before Joking Around

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