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

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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

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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

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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)

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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)

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How To Build Value In A Sales Presentation

Increase the value, or the perceived value of what you sell, and you will make more sales! You have to have ways to raise the value of your product or service. By that, I mean, when the buyer feels that the return, is greater than the investment, you will close more sales.

The sale often takes place when the prospect feels that the value of the product is significantly greater than the value of the money. Once the benefits outweigh the costs, you are in position to do business.

Of course, the process of building perceived value differs depending on what you sell, in particularly, if you sell a tangible product or an intangible service. Below, find three powerful tips for both sides of the sales spectrum.

How to Raise the Value of a Tangible Product

#1. Handle the item as if it is made of glass: The way you handle the product you sell can greatly increase or decrease its value. Handle the item as if it were made of glass and worth £1,000,000. Even if you are selling strong, durable machinery or tools, handle them as if they were Faberge Eggs, and watch the perceived value soar.

#2. Do not touch it—caress it: Automobiles, furniture, appliances, clothing or even machinery, when in contact with your product, be gentle and soothing. Contrary to popular belief, do not ever kick the tires! Gently caress the item, sooth it.

#3. Savor with your eyes: When you first saw this great product you sell, your eyes lit up like a fire. However, after selling it for months or years, you don’t see it the same way today. The prospect sees and feels how you react when you gaze upon your product, and they react likewise. Selling essentially is a transference of FEELING, and if you do not feel genuinely excited when you see your product, neither will the prospective buyer. Savor the item with your eyes and the prospect will do the same.

How to Raise the Value of an Intangible Service

#1. Promote the value of YOU: The more of an important person you are, the more valuable your service is. Promote yourself; articles you wrote, awards for service, etc. Also, dress to impress. Look like you have millions in the bank and you do not have to work.

#2. Explain the value of people behind the scenes: Let the prospect know that your firm invests in only the best. For instance, assume there are two software companies whom both sell a comparable accounting application. One company employs entry-level, unproven, programmers still in college, while the other hires only high-level, seasoned and certified professionals. The higher worth and investment for the professional programmers, will increase the intrinsic value of the software.

#3. Uncover the behind the scenes processes: Explain how your company has enhanced processes and procedures. Does your company spend more money on research and development, legal areas or security? Perhaps the filtering process and assessment tests you use to hire accountants are more sophisticated than the industry norm. Such information will increase the value of your service.

Raise the value and raise your closing averages!

Happy Selling!

Sean

Sean McPheat
MTD Sales Training

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Price Objection? Is It The Price Or The Cost?

Of course, price objections run rampant and are certainly here to stay. However, I believe sales people need to understand, and more importantly; help their prospective customers understand the difference between price and cost.

Is it the Price or the Cost?
The next time you get that objection on the price; before you go off arguing about pounds and trying to justify and defend your price, and before you start to lower the price; find out exactly what the prospect means. As an example…

Prospect
“Like I said, it all looks great. But that’s too much right now. That’s a lot of money. I mean can you do something about the price?”

Sales Person
“Steve, you’ll have to help me. I’m not sure what you are referring to. When you say it is too much, are you referring to the PRICE or the COST?”

Prospect
“Uh…What do you mean? What’s the difference?”

Sales Person
“Well Steve, the difference is that if you are referring to the price, that is the actual amount of money that I am going to charge you, our fees, and such, that is one thing…and frankly, our price is quite fair. Yes, we are a bit higher than our competitors are, but we decided long ago that is was better to explain a slightly higher price once, rather than make excuses for poor service and merchandise over and over.

However Steve, if you are referring to the COST…then I agree with you 100%! You are right. The cost is high. That is the cost of you losing money every day in the factory due to the inefficiency of the inventory system. Yes, the cost is high when you are losing £320 every day because of outdated technology. Steve, as I thought I demonstrated, you are throwing away over £7,650 a month! Yes, that is too much!”

It’s About Value
The price is merely what is on the invoice. The cost is what the prospect looses by NOT having what you sell. Help the buyer understand that the COST is always much higher than the price.

Happy Selling!

Sean

Sean McPheat
MTD Sales Training

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4 Powerful Reasons To Walk Away From The Price ONLY Prospect

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?”

Happy Selling!

Sean

Sean McPheat
MTD Sales Training

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3 Critical Reasons Why You Should NEVER Reveal The Price Until You’ve Built Up The Value

You know the age-old Golden Rule—“Do not reveal the price until the end.” Even if you are new to sales, management has told you that you have to wait until the closing stages before you tell the prospect the price.

However, does such a rule or concept still have merit, especially in dealing with today’s modern and educated buyer? Since today’s prospect has instant access to a ton of information about what you sell before you even show up, and they are so short on time; does it still make sense to hold out on the price, even if the prospect is demanding to know?

In a word…YES!! Below are three critical reasons why you should still never reveal the price until you have built significant value.

#1. Price is Irrelevant Until You Have Established the Value
For your product or service to have any value 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 chair and I told you that the price for this huge, pink blow-up chair is £600, would you buy it? Would you consider it for a discounted price of only £350? You would have to think that such a child’s toy is not worth more than £10.

However, what if I informed you that the local reservoir dam just collapsed, the equivalent of a small tsunami is on the way, and in a few minutes, the entire town is going to be 20 feet under water. Now if I asked £10,000 for that same chair, you would consider it a bargain.

The price is irrelevant until you have established value.

#2. The Prospect’s Ability to Listen Disappears After They Hear the Price
The moment you reveal the price, the prospect makes a buying decision. On hearing the price, the prospect feels they have all of the information they need, and makes a mental decision (usually negative), and that’s it. The prospect now has a closed-mind, and deems any additional information unnecessary. It becomes near impossible to build value after you have revealed the price.

#3. Price Before Value Creates a False “Price vs. Value” Perception
The sale takes place when, to the prospect, the value exceeds the price. This is not about money. It is about perception and expectations in the prospect’s mind that determine how they feel about the offer. It is about emotion. When you quote a price before establishing value, it creates the perception of a price that far outweighs the value. No matter how you try to build value after revealing the price, you cannot change that feeling, because you cannot, (significantly or justifiably), change the price.

Conversely, if you build the value before price, in the prospect’s mind that price will be greater than the value. If you have done a reasonable job building value, then when you finally reveal the price, it should be but a fraction of the established value. Therefore, the prospect perceives the price to be far less than excepted and thus a proper price vs. value perception results.

And how exactly should you respond to the prospect who asks you for the price upfront?

Here’s how:

“James, there are a lot of options and variables that we need to take into consideration before I can give you an accurate figure. Is it ok if I ask you a couple of questions to get some further information so I know which one of our products/service would be the right one for you?”

A lot has changed when it comes to dealing with today’s modern buyer. However, holding on to that price until after you have built the value, is one concept that must stay the same.

Happy Selling!

Sean

Sean McPheat
Bestselling Author, Sales Authority & Speaker On Modern Day Selling Methods

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3 Ways NOT To Handle The Prospect Who Is Shocked By Your Price

You went through the entire sales interaction without much problem.  However, as soon as you mention the price, the prospect, noticeably stunned, slips into a comatose gaze, and a look that says, “Are you kidding?!”

As mentioned in, “3 Ways To Handle The Prospect Who Is Shocked By Your Price,” when the sales interaction fails to uncover problems and pain or build value, there are but a few steps you can take to possibly save the sale.  However, here are three things you should not do, in this situation.

The Three DON’Ts

#1.  Don’t Try to Justify the Price
The only way to justify the price is to rationalize and defend the price, which only further diminishes the value.

“Well, our pricing is in line with the industry…”

 “Our price is lower than most of our competitors…”

“Due to the economy and oil prices, our costs go up…”

“Sticker Shock” at the end of the sales interaction is not a reaction to price; it is a matter of value and likely a failure of several steps in the sales process.

#2. Don’t Begin Discounting the Price
Do not lower the price!  Changing the price or the offer at this point only proves the prospect was correct in that your price was outrageous.  Sadly, some sales people justify the price and discount it at the same time; driving the value of their product and company into the ground.

#3.  Don’t Agree
Many sales people like to agree or empathise with the prospect in this situation.  This is a mistake.  There is a time to agree that your price is high, even to brag about your high rates.  However, that is only when you have built the value to where the prospect feels it is significantly higher than the price.   If the perceived value is so low that the prospect is shocked by the price, then do not agree.  Don’t use statements like:

“Yes, it is high, Mr Prospect, but everything costs more these days.”

If you routinely get prospects that feel your pricing is extraordinarily high, understand that you have more than a pricing problem.  In fact, you may not have a price problem at all.  Conversely,  you probably have very serious problems within your sales process, your sales interaction, and in building value.

Before I sign off, here are some more tips on becoming a great sales person:

Happy Selling

Sean

Sean McPheat
The UK’s #1 Authority On Modern Day Selling
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