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Handling Haggling

Handing MoneyHaggling on the Rise

The introduction of the new Taggle concept for in-store bidding on merchandise at participating retailers brought about a plethora of media reports on the haggling fad. Now some retailers are adopting haggling procedures and training their associates. Don’t fall for it.

Your customers are hearing, seeing, and reading in the news that they should be haggling everywhere they shop. A lot of the encouragement to haggle is directed to those who can afford it least – independently owned businesses, because large chains cannot do it consistently and can hide behind their corporate policies. Of course your customers would like to save money if they can do it just by asking, and especially if they should. Even we as consumers don’t want to pay too much, and we definitely don’t want to be taken advantage of. It’s a reasonable fear of your customers that other customers may be haggling with you and getting a better deal.

There is no fault in asking for a better price, you just need a way to handle the question.

If you begin haggling (or negotiating if that makes you feel cleaner about it) a habit will form in you and your customer. The word about your deals will spread to their friends, relatives, co-workers, and neighbors – like wildfire. There is no doubt that word of mouth advertising is best, but when it costs you this kind of money and has long-term implication to your business it may be too much of a good thing. No one is likely to be satisfied with a 5% discount when they haggle, and you can’t afford even that off your bottom line, can you? Your customers will get the idea you are giving everyone a deal and have it built into your prices. And they’re going to expect it as an entitlement.  You will be much better served to work on handling the haggling questions with better answers than you will by caving in to them.

Handling Haggle Questions

“Is that the best price? How much if I buy two? I buy a lot of stuff other places, if I buy all of it here what discount will you give me? I have $XX cash here, that take care of it won’t it?” Or maybe you get this one, “I deal with Bob. Send him out here?” We’ll deal with the Bob question a little later.

If you offer any sort of multiple, bundle, or volume discounts, loyalty rebate, bonus bucks, etc. your first response should be to as, “Are you familiar with our _____________ pricing?” It is best to state this as a better price rather than as a discount.

Another great response to haggling is a simple and straightforward statement. It has to be spoken with truth and honesty to be taken seriously so get together in your company and work on the specific wording. ” I’m sorry. (Long ago if so) we got everyone here together and decided that we were going to offer the best products and service we could at the best prices we could stay in business with. We know we don’t have cheap stuff with cheap prices, but we have a lot of happy customers who keep coming back to us because they found they get better results and it is worth it. One of the best things about it is that you’ll never have to worry that someone else paid less, or that you paid too much here. Does that sound fair to you?” After you say that shut up until the customer talks.

Bob nearly buries his business.

In some cultures haggling is the norm. In the United States it fortunately is not the norm, however there are certainly exceptions in individual company cultures. One client, (I’ll call him Bob) was sought out by customers because they know he’d make a deal. Word spread among customers friends, relatives, co-workers, and neighbors that a deal could be had if you asked Bob. Otherwise they would be paying too much, wouldn’t they? Why should one customer get a deal and the next one pay the marked price? That wouldn’t be fair would it?

The rest of the staff resented Bob’s deals because their credibility to help customers was undermined, and they knew the bottom line of their company couldn’t handle it. But Bob practically grew up in another store he worked at where the owner haggled. Naturally, when he started his own garden center it was something he fell right into. It felt good when people wanted to see the owner, and the haggling ensured they did. All the haggling kept Bob busy and on the sales floor, which was good, but it also kept him from managing his business as well as he should.

What Bob lacked was a mindset that encouraged his customers to value his products instead of valuing him for his deals. He felt inside that the haggling was costing him money, but didn’t know quite what to do about it. And more specifically, he didn’t know how to break the haggle habit he created among his own customers.

Breaking the Haggle Habit

The answer was not clear. If Bob wasn’t in the store he wasn’t aware of what was going on in there and would lose touch with customers. If customers couldn’t talk to Bob many of them would tell the staff they’d “come back later when Bob is in.” Breaking the cycle was not going to be easy. There were going to be dues to pay.

If you’ve been doing what Bob did consider doing what Bob is doing now.  Bob now tells customers who try to haggle with him, “I’m sorry but I’ve been fired”. After observing the shock on their faces, he would continue, “we have not been making money and I have to stop giving discounts because we can’t afford it. Besides, some customers thought it was unfair that I might be giving someone else a better deal than they were getting. So, what we decided to do was to put our best, and a fair price on our products, and trust that our customers would find the value and continue to want to shop here.” Then Bob would ask, “does that seem fair to you?” Almost all customers reply, “yes”.

The Dues Bob Paid

There are “dues to pay” when you make any big change that effects customers. Generally speaking, if you pay the dues in about a year most of them will have been paid and you can move on. After a year or so nearly all of Bob’s customers had been given his ” no-haggling speech” and bought anyway. He was able to put his time into getting to know his customers better, and helping buy more of what they needed for the projects they were working on.

There are Always Exceptions

Purchases by public agencies and non-profit groups may be considered for special pricing on items you would like to get rid of and are willing to sacrifice your margin because the long-term impact on your store image and brand are controlled. There may even be occasions where you feel like you should give a customer a break. Get over them. Clearance and close-out merchandise are good items to haggle on and provide a way to offer your stingiest bottom feeding customers the real deal they thrive upon.

Leave a Reply to tell how you feel about haggling? And before you leave, VOTE on this post. (Click on “Comment” if you don’t see those features below.)

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8 Responses

  1. Whatever you do, don’t go down this road. It is so hard to get away from, and will eat profits so quick. when people ask me for a lower price, i explain that we try to keep a fair price while still being able to have good people to help you out. Use the opportunity to sell the product. Explain some of the highlights of what they are looking at. yesterday a guy was loking at one of our Alfresco fountains for $300. By far our most popular fountain. He asked if we would go $275? i responded with “How about $314?” Then started telling him how if he and his wife love birds they will ejoy this fountain as it it one we see birds land on to drink from all the time. Water flows off 4 sides intoa deep dish, so it seldom needs refilled, and has great sound. Most times they buy anyway.
    Eric Hill
    Autumn Hill Nursery

  2. Excellent advice and a great way to reinforce the value you provide through service. I love the way you focused them on the benefits of the fountain.

  3. When people want to haggle, we smile and explain that this is how we pay our people to keep jobs in the community, how we pay our taxes so that we can have good schools and roads, how we pay our phone and electric bills so that they can continue to shop there. In short, it’s how we and our staff makes their living. That usually silences them. But what is it anyway that makes people think that plants have no real value and should be negotiated? We’ve faced this for years.

  4. Very good points. We don’t want to make customers feel guilty about not buying from a local company but if we view their haggle question as a VALUE question it is an opportunity to support their wise decision to be in your store in the first place. Thanks for commenting Gail.

  5. It is increasingly frustrating when we get into summer season, the “summer” (non resident) customers, and end of a season. They expect sales, they demand sales. The mind set has been engraved into them. I would just love to once ask, “Do you ask Macy’s if they can go lower on their price? Do you ask Lowes if you buy “X” many do you get a discount?” It is so frustrating for us because they will tell you straight out “What, you don’t NEED my money?” urgh!!! Fall here on Cape Cod is worse- they expect your whole nursery to be onsale. And this is the season we should be getting in brand new trees & shrubs for planting. But we can’t because customers expect everything to be onsale. They even expect more than 50%!!! (discussion for another time)

  6. Thanks for commenting Donna. I understand you feel you are in that eternal trap. But take heart because others have broken free, and you can too. Generally speaking part of the problem USUALLY stems from bringing in too much inventory in the spring. Bringing in fresh new inventory on a regular basis such as every 7-10 days throughout the season customers become accustomed to seeing fresh and different plants, not the same stuff they’ve seen all year. This reduces their ideas of you giving them a discount because you need to get rid of that stuff. It also makes the staff more excited about the selection and more likely to add value with what they say. One of the keys to this is the “Merchant’s Mantra” that we cover in our Merchant Advantage program. “Never buy what you cannot sell all of before you have to pay for it.” I know that is impossible to do 100% of the time, but it is what we should strive to do.

    It can be successful also, and is not immoral to give the customers a sale especially when they have become accustomed to it either from your own past habits, or from the actions of competitors. Finding great buys on a small selection of good quality merchandise for the fall, then pricing it in at what they would normally cost you gives you some room to provide a discount, but still get your margin. I mention this with caution because it can be overdone and done incorrectly. It’s the old trick of the furniture industry and customers do come to expect it, but it can be effective done well. Care needs to be given to the structure of the pricing so you don’t devalue the product in the process of using it to create a price perception favorable to these types of customers. Be sure to get good advice and think it through thoroughly, then measure the results and adjust as needed.

  7. Sid –
    Your reply to Donna is excellent. As a smaller, independent grower and supplier to many retail nurseries and garden centers, we use this notion to our advantage explaining that our smaller size means we can be more responsive by offering smaller, more regular deliveries. We’ve even been known to offer quick restock during sales or busy weekends! This allows them a chance to turn merchandise before paying for it and it also allows them to continually bring in fresh inventory just as you recommend without overstocking.

    An example of your recommendation is Nordstrom. Yes, they are a big chain, however, they do just what you say. They continually bring in fresh merchandise and keep it at full price. Two to three times a year they have a big sale and promote it heavily. The rest of the year you may find one or two sale racks in the back of each department where they mark down a very small percentage of items. It’s important to note that they nearly always place these sale racks at the BACK of the department. It forces customers to walk past all the new, full-price merchandise first.

    My point with Nordstroms and other like retailers is simply that they do not devalue their merchandise nor their own brand with endless sales and markdowns. Their focus is on the latest clothing with new, top quality merchandise and changing displays at full price. They built their brand on this.

    There is nothing better than walking into your favorite garden center (independent of course!) and seeing it freshly stocked with a good selection of new, quality, healthy nursery stock and inspired merchandising. Consistently offering this elevates the store’s whole brand image. It adds value.

    I have a marketing background Sid but I’m also in the nursery business. I really enjoy your blog and think your advice is right on. Retail nurseries and truthfully, many wholesale nurseries, could benefit from your insight. Thanks!

  8. Thank you for commenting Amy, and for your compliment. Nordstroms is an excellent example of doing the right thing to manage inventory well, protecting a great consumer brand (their customers really do take ownership of it), and focusing on what their customers really do want them to keep doing – bringing them exciting new merchandise at a good value (though not the cheapest), and they also have an everyday inventory of basics and consumables (socks, underwear, and the like). Nordstroms perpetual but small clearance racks help provide an ongoing “thrill of the deal”, satisfy the bottom feeders who might just see something to buy at full price, or to take a chance on getting off the clearance rack later, and keeps the store clean of “remnants” and old merchandise. These are all things independent garden centers can do.

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