Every company, family and individual is trying to run an efficient budget, make bigger profits for themselves and their shareholders, or generate more disposable income. Everyone is looking for a good deal. In other words, everyone is looking for massive value at a low price.
We all get that. Profit is generated when one buys low and sells high. Any profits that are made, however, run the risk of being significantly smaller as we realize that low price and high value hardly ever co-exist.
The Cost of Cutting Costs
Low-priced machinery often needs to be replaced more often. Inexpensive technology often needs more fixes, and downtime is costly. Low-cost labor is often less skilled and we end up redoing tasks that weren't done right first time. I suggest there is nothing more costly than having to repair or redo a project that was done incorrectly or at a budget standard the first time around.
As the pressure to make larger profits grows, we should not be surprised that price is one of the most common objections that comes up in any sales presentation, pitch or sales cycle. In fact, there are some sales specialists who would suggest it is the number one objection salespeople must learn to deal with.
The concept of market value is probably something that an economist would do a better job of expounding than I can, and while theories abound, one fact cannot be disputed. No matter what product, no matter which industry people are selling into, there are always top salespeople and underachievers. May I suggest, then, that top salespeople are better at dealing with objections around price than underachievers?
I absolutely believe that if we can more professionally reduce the impact of the price objection and discussion, it will result in bigger sales and better commissions — if we sell differently.
My contention is that when salespeople have neglected to communicate or articulate the value of their product, price is all they leave themselves to work with. This statement is often met with some pushback.
"Our salespeople are the best trained in the field."
"Our salespeople’s product knowledge is exceptional."
"Our product sells itself.”
My recommendation to salespeople and sales teams is based on a twist on an old proverb.
Value is in the Eye of the Beholder
How many salespeople labor under this misapprehension that the value of their product is obvious to everyone, including the client? It's not. What is valuable to one person might mean nothing to another. What is valuable to a salesperson might not be valuable to a customer. Let's consider, for example, some reasons for buying a car.
- Top speed
- Fuel consumption
- Maintenance costs
- Availability of spares and service centers
- Resale value
- Passenger carrier vs. coupe
- Luggage space
- Environmentally friendly
- Safety features
There are probably many more reasons. The point is this: People buy for different reasons.
A customer's reasons for buying are more important than your reasons for selling.
Luggage space might be critical to the parents of five kids who love traveling, but might mean nothing to a single executive who needs to zip around the city. Simply spewing all the facts and figures you as a salesperson think might be important and relevant could mean speaking to something of no value at all to the prospective buyer.
We can reduce the solution to just one word, one of the shortest and simplest words in the English dictionary.
Find out what is important to the customer — before you even do a presentation or pitch.
"What is important to you in a supplier?"
"Why do you say that?"
"Why would this model/size suite you as a business/team/family?"
"Is the square footage your business is looking to rent based on current size, or are you looking to grow in the near future?"
"May I understand your requirements before I make a proposal?"
"What are your reasons for wanting to buy/upgrade/downgrade this item?"
"How much longer can your business absorb the cost of not fixing this problem?"
"What is the dollar value of not moving ahead?"
I am persuaded that the more useful information you have, the clearer you'll be able to articulate what is of value to the prospect. In fact, I’d recommend you adapt your proposal or presentation to use the language the client gave you as they answered your questions at the beginning of the process.
Always use the price objection to immediately revisit and rediscover what is important to the client by asking further questions.
"Are you saying that price is the only deciding factor in this process?"
"Apart from price, what are your top two critical decision-making issues? Tell me more about them.”
"You mentioned earlier that you were losing $__ per week by not fixing this problem, is that correct? How do you feel about that?"
"You mentioned earlier that ________ was important to you. Can you tell me more about that?"
The Downside of Discounts
In conclusion, some final remarks.
Discount? Don’t do it. Discounts represent one thing: the price of your self-worth. It highlights the value you see in your own product or self. The bigger the discount you give, the bigger a pain in the neck your client is likely to become because they will pick up your value perspective. The moment they see you are open to discount, they’ll push for more. That's been my experience!
As a professional salesperson, you have a huge number of prospects in your files anyway and are not desperate for any deal, so if a customer continues to hook on price, walk away and go spend time pursuing other prospects.
"Mr./Mrs. Prospect, it appears we don't have a deal right now and that's okay. Would you be open to me calling you again in a month to see how things are progressing with your decision-making process?"
Many times this gets the client back to making a decision and away from trying to haggle you out of your commission, or worst-case-scenario it gets you more time to spend with customers who are not going to try haggling with you at all.
Find out what’s valuable to the client. I believe you’ll sell more business at better prices.
What's holding your business back?
About the Author
OneAccord Principal Brad Thomson is a sales leader and pastor with a passion for seeing people live up to their fullest potential. As an experienced salesman, Brad has sold goods ranging from the unseen (e.g., insurance) to the misunderstood (i.e., IT). His passion to see people develop their potential led him to study human resources, then open and run his own recruitment consultancy. As a consultant, he helped people and businesses thrive by finding the right fit for their unique situation. Click here to learn more about Brad.
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