The whole economic world has changed in the last few years. It will never be ‘business as usual’ again. Most companies that haven’t adapted to the changes will either no longer exist or will have suffered dramatically.
One thing that many salespeople tell us has risen high on the client’s agenda more than ever before is the concept of value and pricing. Costs have been squeezed until the pips don’t only squeak; they cry out in agony.
It would be strange these days if prospects and clients didn’t ask about the price of your products and services. Gone are the days when the costs incurred were absorbed into the overheads of the buyer’s company. Now, every penny or cent is vetted before being spent.
So, how do you deal with prospects who seem to put the price of your products at the top of the list of priorities when they are making decisions?
There is a very good question you can ask when the customer enquires about your price. It helps you and them to assess the relative importance of the price in their decision-making process. And it identifies what direction you take the rest of the conversation. The question is simple in its execution but profound in the results it obtains.
When the question of price comes up in the conversation, try asking, “Is price your only consideration, or are there more important things that you would consider?”
Now think about what the client’s answer will tell you. If they say “Yes, it’s my only consideration”, then you can weigh up the consequences of going down the ‘cheapest option’ route. You can assess whether you want to beat the competition and lower your price to the cheapest available. You may get the deal there and then. Or they may go back to the competition and ask whether they could match your lowest price.
The price shopper will always want to go cheaper if they can, and you are in danger of being taken to the cleaners by someone who simply wants a transaction and not a service. They may know the price of everything, but the value of nothing.
On the other hand, if they say, “Well, price is very important, but we also have to have speedy delivery and good quality. So, yes, I want good quality and your best delivery terms, but at your cheapest price”.
Now you’ve ‘smoked out’ the real criteria they will be judging your price against. In this example, the customer has confirmed that quality and delivery are foremost in his mind, but he still wants a good price.
You can start by emphasising that quality and delivery are your main concerns, too, and you want to make sure the value you offer is as good as it could be. You can emphasis that your company always wants to maintain their quality standards and that includes offering good delivery terms as well. The prices you offer allow you keep those high standards and cover the quick delivery too.
Here you justify your price, rather than apologising for it. If the client still feels the need to haggle, you can restore their confidence in you by returning to their words, which highlighted things other than price as being more important.
This type of question allows you to see exactly what you’re up against when the issue of price is raised and it shows you how serious they are about getting value from you rather than just seeing how low you will go.
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Invariably, as a professional sales person, you will run across that prospective customer who is only concerned with the price. I am talking about that buyer who can only see how much the product or service costs and nothing else, including quality, service, longevity, reputation, or even the value of YOU.
This prospect usually leaves you with only two options:
1. Lower yourself, your company and what you offer, to the level the prospect demands
2. Walk away
In my opinion, in most cases, you should walk away from the price only prospect (P.O.P.) and here are just a few reasons why.
#1. No Loyalty
You may close the deal by giving away your shirt, your commissions and company profits, but you will not gain a legitimate client. The minute someone else comes along with a seemingly lower price, this customer will leave. In the interim, they will play you off your competitors and essentially use you like a discount coupon.
#2. Too Much Work
In doing the above, this customer will usually demand more of your time and resources for even less. This prospect will want additional products, services and add-ons and not want to pay anything for them. This customer literally wants something for nothing.
#3. Negative Word-of-Mouth
While positive word-of-mouth can be a great asset, negative talk about you and your company can prove devastating. The problem with that POP is that no matter what value you deliver, no matter how well your product performs or how well you service the customer, if the price is not right, they will see no satisfaction. This customer then spreads the word that you and your firm are not a good company to deal with.
#4. Set the Standard
You dropped your proverbial pants to close the sale with the POP. However, now that POP, talks about how much they paid for your illustrious services. Now, you run the risk of running into other prospects in the same industry or target market that know just how LOW you can go. You can become known as the “cheap one.”
Depending on exactly what you sell, such issues may not be very important. However, if quality, service, value and personal commitment are important factors in your business, then you may want to walk away from that POP.
Try something like this as you deliver the news…
“Steve, I appreciate that you want to save money and pay the lowest possible price. However, our company made some important decisions long ago.
First, we decided that we would deliver the very best product/service available so that our customers get the best in return.
Second, we decided only to work with the highest-level clientele…those customers that understand and recognize value.
And finally, Steve, we decided that it made a lot more sense to explain a higher price ONCE, than to have to make excuses for poor quality and inadequate service over and over.
Honestly, Steve, do you think we made the right decisions?”
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There’s a great saying that I’m sure you know well; “The bitterness of poor quality remains long after the sweetness of low price is forgotten”. Most clients know the association between low price and poor quality. Here are 10 things that the prospect wants more than the lowest price available.
1) Reliability and Dependability. Remember those old, sad stories about certain makes of car that had less than reliable reputations? They were also the cheapest on the market. Why didn’t they sell well? You don’t need me to tell you!
2) Predictability. If they have to wonder what is going to happen next with the level and quality of service, there is something wrong.
3) Breadth and Depth of Quality. This applies throughout your range and through time. If you don’t offer that, they won’t trust you in the future, especially if your product quality is as brittle as your relationship.
4) Reaction to their overall needs. Most clients will beleive their business is unique, and you’d better go along with that, or you’ll be shot out of the water. Agree how the prospect’s needs are different to other clients.
5) An easy relationship. Yes, people do buy from people, and for most, the long-term partnership will mean more than getting the cheapest service.
6) Better and shorter delivery times. Their business will suffer if they can’t service their customers’ needs. If you can get the deliveries there quick, they’ll be willing to pay for it.
7) Great follow up. People will pay for the reliance and confidence that you will be there when they want you.
8 ) Knowledge and Assistance. Again, this will add tremendous value to the relationship, when you can be used as a font of knowledge and skills to your client.
9) Clarity of terms and conditions. If they have to wade through a forest of paperwork to find out what your warranties are, they won’t be staying very long. Clarity and simplicity is worth a lot to clients.
10) The ability to get on with their business, without worrying about what you should be taking care of. They pay you for solutions. If what you offer is cheap, it doesn’t give you the opportunity to back up your product with the service it needs. Plus, you won’t have the money to do so.
These ideas should help you to determine how you can offer something to your client that is worth more value than the money they would be saving by going with someone cheaper.
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