Are You Really That Different From Your Competition?

One of our clients had a particular dilemma, described here by one of the sales team:

“Our clients think our products are just a commodity, and so mainly focus on the price against our competition. We know that our products are different, have differential qualities and will be better for our prospects than our competition’s will. What can we do about this?”

Interesting question. Remember, the perception of your products and services are in the eyes of the customer. If they think you’re cheap, then you’re cheap. If they think you’re lousy, then you’re lousy. No amount of marketing or brochure blurb will influence that if it’s ingrained.

What should you do? Here’s a checklist to ensure your customers see your products as different in many ways.

1) Be absolutely honest and truthful about your products’ appeal to the marketplace. Are they really different, to everyone you meet? Or do they just offer value to specific customers with specific needs? You could have a niche product. But who does it appeal to?

If you really think your products are special, then…

2) Do you have a great story about your offerings that make the value and benefits come alive? If so, how do you prove it to the customer? Have you got testimonials and references of the results others have got? Specify what your product will do for this actual customer, based on what other similar companies have experienced.

3) Have you created enough opportunities with the decision-makers to prove how valuable your offer would be to their business? Remember, the decision-makers may not be the end-users, and they might not be able to perceive the real differences between yours and the competitive offerings.

4) Have you become so focused on price differentials that the real value of your products has been clouded over? You must be capable of really detailing the story of what your products will do, for THIS specific customer.

5) Think seriously about the results you’re promising from your products. Are they of real benefit to the customer? For instance, one photocopying supplier we worked with tried to sell the value of their machines by saying it saved three seconds of time in printing 100 copies over the prospect’s current machine. The prospect couldn’t see the real value in that. It simply didn’t justify the changes they would have had to go through in order to get our client on their supplier list. So, identify what is of real value to the prospect and help them see what it would do for them in terms that are valuable to them.

By being aware that customers will focus on price if there’s nothing else to differentiate you, you are able to determine what could be important enough to this specific customer to warrant you referring to them.

Happy Selling!

Sean McPheat
Managing Director
MTD Sales Training
http://www.mtdsalestraining.com

(Image by cooldesign)

The Reason You Shouldn’t Pay The Lowest Price

I love this quote, often attributed to John Ruskin….

“There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey. It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money – that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”

When people make decisions, they weigh up lots of options. These are called ‘evaluations’ where they ‘e-value-ate’ what is most valuable or important to them.

If they want to save money, find out the background reason for that. Ruskin stated that you can’t pay a little and get a lot. What you have to take into consideration is the risk that is inherent in anything that can be considered ‘cheaper’.

The reason why someone might want the cheaper price is not always because of increased value. They might want to pass on savings to their own customers, or invest in greater service or more stock. As a salesperson, you need to find out the reason why price is so crucial to the decision-making process.

If the prospect sees price as the main or only criteria then it would be good to invest some more money in covering the risk they take in buying so cheaply. Then they can determine how much that risk is worth to them or their business. It also de-commoditises the product or service you’re offering when you assume the cost of the risk the prospect is taking by choosing a cheaper option.

John Ruskin’s quote is extremely relevant today. Any idea when he wrote it?

You may be surprised that it’s over 150 years old. Yes, what was true back then is even more so today.

Happy Selling!

Sean McPheat

Managing Director

MTD Sales Training

www.mtdsalestraining.com

(Image by Vlado at FreeDigitalPhotos.net)

At What Point In The Sale Should You Disclose The Price?

We all know the old rule-of-thumb in selling which is to try not to reveal or discuss the price of what you are selling, until after you have completed your sales presentation.

However, dealing with today’s modern, more educated consumer, many of which are demanding price before presentation; should you still try to avoid  talking about the price early in the sales interaction?

Not As Easy, Yet Just As Important
Of course, there are some products and services where price is common knowledge and not integral to the sales process, as in many retail selling scenarios. In addition, with today’s sophisticated internet connected buyer, it’s not as easy to hold out on discussing rates and fees.

However, in most sales situations, it is still essential not to expose pricing until you have accomplished several mission-critical objectives. Below are a couple of reasons why you should still try to delay pricing discussions until after the presentation. Also note that this is not just for your benefit, but more so for the benefit of the buyer.

Revealing Price Too Soon Is Unfair To The Buyer
Uncovering the price too soon in a sales interaction is actually a disservice to the prospect. If you believe in what you do, then you know that it is imperative for the buyer have all of the necessary information and facts so he or she can make a PROPER INFORMED BUYING DECISION.

Revealing price too early, inadvertently forces the prospect to make a buying decision before receiving all of the information. Even if the prospect decides to buy, it is an ill-informed decision. Such buying decisions create cancelled orders and unsatisfied customers.

If on the other-hand the prospect decides NOT to buy after hearing the price, you have robbed the prospect of the opportunity to solve their problems and benefit from the sale. After hearing the price, the prospect will make a buying decision and like all buying decisions, is based mostly on emotion. Any amount of logic you add on after the fact to try to justify the price is irrelevant.

The Price Is Irrelevant Until You Have Established The Value
For your product or service to have ANY value or meaning to the prospect, the prospect must have a NEED for that product or service. Before you can establish a need, there must be a solution. Before there can be a solution, you must unearth a problem. The significance of the problem for which the product is a solution, determines its value. Until there is such a value, the price is meaningless. The following analogy, though absurdly fictitious, will help demonstrate the point.

If I came to sell you a gigantic inflatable toy and I told you that the price for this huge, bright yellow blow-up toy is £500, would you be interested in buying it? What if I discounted the price to only £250? You would have to think that such a child’s toy is not worth more than £5 or £10.

However, what if only moments before I walked in with the blow-up toy, you heard in the news that the local reservoir dam had just collapsed, and the equivalent of a small tsunami was on the way. In a matter of a few minutes, the entire town is going to be 20 feet under water. Now if I asked £10,000 for that same child’s toy, you would consider it a bargain.

The price is irrelevant until you have established the value. Revealing price after you have established the value, benefits both buyer and the seller.

Happy Selling

Sean

Sean McPheat
Managing Director
MTD Sales Training
http://www.mtdsalestraining.com

(Image by FreeDigitalPhotos.net)

A SMALL Price Decrease Is A BIG Deal

While it should be only on rare occasions, there are times when you will need to offer a discount and lower your price to close the sale. A well-orchestrated and properly timed price drop can indeed help close a sale.

However, a price reduction – no matter how small – done incorrectly can cost you the loss of more than just the sale at hand as well as additional sales; but also your credibility and reputation.

As you may know, I often write about this subject and how to properly reduce the price, including a methodology to accomplish this successfully. However, I have had requests to explain the method using more generic wording. So, without further ado…

The Formula
Take these steps for a proper price drop

1. Stand firm
2. Raise the value up to three times.
3. Find a justifiable reason
4. Slightly reduce the price
5. Repeat, only if necessary

#1: Stand Firm
This is where most sales people blow it. You cannot arbitrarily jump to lower the price as soon as the customer offers the slightest resistance. Hold your price.

#2: Raise the Value Up to Three Times
Always keep in mind that a price objection is not about price; it is about value. Don’t start debating and negotiating price. Instead, raise the value. Also, keep in mind that you will usually not have to do this three times. Two is normally enough for the buyer to feel that he or she did not “roll over.”

#3: Find a Justifiable Reason
If the price you first offered was indeed real, then how can you simply change it with the stroke of a pen? You have to have a legitimate REASON to change the price, and it should involve the customer doing something to EARN the reduction.

#4: Slightly Reduce the Price
Don’t instantly go to the bottom line! A small, incremental decrease could be all that you need. Often it is not the actual amount of money, but the small victory that the buyer needs to help him or her logically justify the decision.

#5: Repeat, Only if Necessary

Example
What follows is a clear example of the process. As always, it is not a script, but will demonstrate the concept.

Sales Person
“So, Steve, we are looking at £200 per territory for three territories or £600 per month. Does that make sense?’

Prospect
“Well, yeah, but that’s a lot of money per month. I don’t know if I can handle that.”

Sales Person
“I appreciate that Steve. However, if you sincerely have a problem with £600 per month to get your web site on the front page of Google, and dramatically increase your customer base, then you need this service immediately! Let’s get this paperwork done so I can take it up to our technical staff and get started today.”

Prospect
“Well, on hold. I mean can you do a little better on the price?”

Sales Person
“The price is exactly what we are trying to reduce, Steve. There were 9,765 searches for YOUR services in YOUR area last month and the majority of that business went to your competitors! THAT is a heavy PRICE to pay for coming up on page three or four. Do you want to use 20 keywords, Steve or do you have more in mind?”

Prospect
“I know, it can help. But what kind of special can you give me?”

Sales Person
“Please consider this, Steve: You told me that your average customer grosses you about £520. You also agree that with 9 to 10,000 hits on that front page, that you would HAVE to get a few new jobs every week, right? I’m not talking about hundreds, just one or two every other day or so. Steve, we’re sitting here debating £600 as you continue to lose £60,000 every month. I think it makes sense to put that money back into YOUR pocket, don’t you agree?”

Prospect
“Yeah…I know it could work. But…I just don’t know.”

Sales Person
“You know, I have an idea Steve. I could really use a reference in this area. I mean, a respectable business and website that I can show to potential customers. I am certain that will help me gain at least two or three new clients in the area. If you will be that reference for me, and maybe even accept an occasional telephone call, I will pay you a referral fee in advance and take it right off the top.

I’ll give you 25% for three territory sales that I know I will make. So, that brings your areas to only £175 each or just £525 per month. Is that fair enough?”

1. Stand firm
2. Build value up to three times.
3. Find a justifiable reason
4. Slightly reduce the price
5. Repeat, only if necessary

Happy Selling

Sean

Sean McPheat
Managing Director
MTD Sales Training
http://www.mtdsalestraining.com

(Image by FreeDigitalPhotos.net)

Is It A Price Objection Or Sticker Shock?

A price objection is one thing. However, if you reveal your pricing and ask for the order, then after a comprehensive sales interaction, the prospect responds with a state of disbelief; you have a much bigger problem.

The Molehill Really IS a Mountain
In a price objection, of course, you failed to build enough value. However, if the prospect is truly surprised or even shocked by your price, you failed in many foundational sales areas:

You did not…

1. Properly unearth the prospect’s problems and pain
2. Properly expose the need
3. Help the prospect to understand the validity, costs and importance of the problems
4. Properly build the value of the solution
5. Convey creditability in you and your company
6. Gain the prospect’s trust

No Objection
What most sales people do at this point is turn to their “rebuttal book,” and begin to try to overcome the price objection. Please understand that at this point, there is no objection. There is no objection because there is no valid offer. There is no valid offer because the prospect does not see a realistic solution to a legitimate problem. There is no objection because the prospect does not even have a real consideration on making such a purchase.

The Missing Link
The main thing for you to do if you are so unfortunate to be in this self-imposed predicament, is to go back and try to find out what you missed. Ask questions. Dig deeper into the problems and properly expose the need.

Then assign a real monetary value to the problem: What does it cost the prospect NOT to have your product or service? What do they suffer or lose?

Don’t Keep Changing the Tires on the Car…Fix the Hole in the Street!
Also, please note that if this sticker shock or surprise happens more than extremely rarely, you have a fundamental problem in your sales interaction. There are essential ingredients missing in the foundation of your sales structure. (This of course, is assuming that your pricing is reasonable.)

Instead of continuously trying to combat so-called price objections and eventually drastically lowering your price all the time; go back to the proverbial drawing board and redesign your sales interaction.

Price Objection = Build value
Price Shock = Start over

Happy Selling

Sean

Sean McPheat
Managing Director
MTD Sales Training
http://www.mtdsalestraining.com

(Image by FreeDigitalPhotos.net)