Are you really losing on price?


Are you really losing on price?The truth is, price is ALWAYS a major part of the buying decision. Some buyers understand market price; they do their homework or have purchased your service/product in the past. This group also knows what to expect at certain price points. Other buyers have no clear idea about price and expect salespeople to educate them (frightening, but true). So why do you or your salespeople always seem to be selling on price?

The answers, listed in no particular order:

  • Poor selling skills
  • “Me too” selling by all competitors

Most price issues are generated by the people selling the services. If no one is good at selling or differentiating how she is the best provider, the only thing left to talk about is price. This reality is hard for most salespeople to accept because what it really means is:

  1. You suck at sales
  2. Your company sucks
  3. Your industry is full of hacks

You can correct or take advantage of two of these. If your company sucks, leave!

A simple action to add so that you don’t totally suck at sales is to become skilled at identifying how much a buyer expects to pay. Looking at their current expense is NO indication of the buyer’s real price expectation.

Have you ever tried to get out of a bad relationship? Think of it in these somewhat strange terms:

Say this current bad relationship costs you $85.00 in happiness dollars. In return, you get:

  • A dinner companion
  • Someone to hang out with
  • His annoying habit #1
  • His annoying habit #2
  • His annoying habit #3
  • Etc.

Now someone else comes along and is willing to get in a relationship with you at a cost to you of $125.00 happiness dollars. In return, you get:

  • A dinner companion
  • Someone to hang out with
  • A friend you enjoy
  • Going to movies you want to see
  • Freedom to be yourself

Would you rather pay about the same just to be in any relationship so long as it’s not your current one or invest an additional $40.00 to be in your ideal relationship?

Sales is about gaining an understanding of buyers’ needs and helping them achieve their goals with YOU! A first step in not totally sucking is to ask a simple question or two early so that everyone can focus on the buying process.

Identify an initial budget or price point:

“What are you expecting to invest on this project?”

The buyer will either tell you a monetary range or twist in her seat before saying “I can’t or would rather not give you that information.”

If he twists, be simple and help him out. Take your rough idea of price and give him a range to consider.

If your widget costs $100.00 month, you might say:

“Most clients expect to pay between $100.00-$150.00 a month. Does that fit within your budget?”

Notice that you should place your expected number on the low end. At this point, you want to see if you can even participate in the buying process. The buyer will either agree to the budget or explain that your numbers are low, high, or come clean and tell you he has no idea what to pay. Regardless, you now have a number to work with and can place pricing aside and help the buyer identify his ideal relationship. If you are high, don’t worry; find out what type of relationship they are looking for. When all is said and done, if you can deliver the relationship he really wants, he’ll find a way to invest in you.

If your sales team is selling price first, immediate and dramatic action should be taken to help them all earn more money. The following information should be considered.

How to bring your sales team around to sell first and align price later

  • Ask this question first: Is your company actually priced within market? I define this as being 20% either side of the market leader’s price.
  • Don’t let your team adjust price on any new business for one quarter. This may be kind of hard for some managers. Don’t worry about the short term. You need to be thinking of future team health. If a manager can hold firm on price concessions, the sales team will spend more time helping buyers BUY from them and less time giving price. Once they get it, they get it!
  • Create a great SPIF program focused on holding price.

What to do if your main competitor is 20-40% less on every deal and they’re actually winning the deals

  • Verify that the competitor is actually winning. Call lost accounts to make sure a change or deal occurred.
    • Survey these accounts
    • What did they like most about the winner?
    • Is the purchase working out as expected?
    • If price wasn’t an issue, would they have chosen you?
  • As a sales team, do a Differentiation Worksheet
    • “Ben Franklin” each company
      • Where are you the same?
      • Where does your team say the same thing?
      • Where do you do the same things?
      • What can you change to stand above this competitor?
      • How can you demonstrate value to these clients against this competitor?

Work as a team to develop a simple sales approach to use when competing against this competitor. By being prepared, your team will instantly bring a better buying experience and more likability to the sale.

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