Some Common Questions & Answers when Negotiating with Customers
Is it wise to make concessions when negotiating with customers? What are your concessions saying to your customers? Consider a business customer with a positive long term relationship with the bank who at some stage in his business may experience some difficulties. The bank may well decide to accommodate a lower interest rate for loans and overdrafts in an
effort to help the business hopefully recovering from this transitional situation. Helping the business will potentially build a stronger relation and enhance customer loyalty. However a large concession on your part tells the customer that he can get a lot more, so he may press you for more. Rapid concessions undermine your organisation’s creditability. Only make concessions if you have considered all of the alternatives and you feel it will maintain the customer’s loyalty, and when it balances the interests of both your customer and your organisation. Thus making concessions if used appropriately may be fruitful.
How do you respond in a negotiation with a customer when the customer’s demand is unreasonable? Imagine a scenario where a customer is asking for a substantial loan and where repayments are beyond his means. It is imperative to explain the situation and make the client reconsider his demand focusing on interests for mutual gain. Make it clear that the demands are high, sit back and wait for a response. Most likely, the customer will either make a more reasonable request, or will try to justify the request i.e. explore possibilities before giving up.
What do you do when you find yourself in a deadlock with the customer in a negotiation situation? That is, what do you do when the customer isn’t accepting your offer and you are not willing to concede? Today customers are more demanding and those with healthy accounts can easily threat to close these accounts if their demands are not fulfilled. Meeting their demand today does not guarantee that this event will not repeat itself in the future. So try to reach a compromise when the problem arises, finding a solution for both best interest. Don’t allow the customer to push you into a corner and always turn to your BATNA for an alternative.
Is it appropriate to negotiate with a difficult customer who is actually responsible for the problem they are complaining about? It often occurs that customers complain when fees are charged for cheques returned unpaid due to insufficient funds, even though it is the customer’s responsibility to ensure that he has enough available funds in his account before issuing the cheques. In general, it is important not to compensate customers when the problem is clearly their fault, since today’s exception will become tomorrow’s expectation. However there are rare exceptions where the bank is willing to accommodate such customers. This happens when the bank wishes to please a really good customer, and when it is genuinely clear that the customer will make authentic efforts such that this incident will not repeat itself.
Should frontline customer service employees be involved in negotiations with customers or should this always be the responsibility of supervisory or management employees? During the selling of financial services all employees are continually negotiating with customers. Today, Financial Institutions have enough controls in place to ensure that the correct procedures are being adhered to at all times such as seeking a 2nd authorisation for certain financial instruments thus reducing the risk of a front-liner exposing the bank to any unnecessary risks. As long as employees are trained, empowered, confident, and known to make good judgment, they can negotiate with customers. Having said that, it’s often a good move for frontline customer service representatives to admit early that they don’t have the final say in a negotiation. Admitting this gives the representative a graceful exit, should negotiations become deadlocked.
(Top 7 Questions About Negotiating with Customers, 2007)
General Considerations
"Negotiation is the process of arriving at mutual satisfaction through discussion and bargaining." The future of Financial Institutions depends on effective negotiation with customers in order to reach a “wise agreement”. Any method of negotiation may be fairly judged by three criteria: A wise agreement can be defined as one that meets the interests of both parties, resolving conflicting interests fairly and taking community interests into account. Remember that "To negotiate well, you do not need to be tricky. But it helps to be alert and prudent. The best negotiators play it straight, ask a lot of questions, listen carefully, and concentrate on what they and the other party are trying to accomplish at the bargaining table." (Bargaining for Advantage: Negotiation Strategies for Reasonable People, by G. Richard Shell, 2006) |
