Written by Sean McPheat |
The most frequently asked question we get asked on our sales courses is the one related to price. ‘How can we resist the temptation to give away the shop? We’re not a charity, but our customers often think we are’.
It’s a common complaint. Even though there’s no doubt in your mind that your product or service is worth every penny you’re asking, you also know that there are many competitors ready to cut their price and do whatever it takes to make the sale.
How frustrating is it to have to give away your product at a cut-throat price because the prospect has beaten you down to the ground, promising to buy if you would just go that teeny-weeny bit further (or 10%, whichever is the smaller)? If you play the price game, you will ultimately see your profit melt away.
So you need to have a well-thought-through process for dealing with price pressure. How can you ensure that you won’t give in on price and compromise margins and profitability? What can you do to prevent your margin being eroded to nothing?
Here are three ways to deal with the price pressure clients can force on you:
1. Make sure you know the value of your products and services and how it links to the customer’s business situation. This is the key to creating value and is at the heart of selling with integrity and credibility. A salesperson must understand the departments that are most affected by the solution, and the financial impact of his solution on various sections of the buyer’s company.
Understanding the customer’s critical issues, dissatisfactions, and frustrations, plus recognising the business opportunities that arise from them, takes research, time, commitment, and dedicated work.
2. Make sure you can help the customer calculate the cost of not going with your solution. Imagine being the doctor and your customer the patient. Identifying the cause of the pain is a pre-requisite of any remedy the doctor might prescribe. Equally, before you can offer a remedy, you must be able to firmly establish the pain of not doing business with you.
Increasing the pain and suggesting a remedy for it is the true sign of a consultant, and will take the client’s mind away from commoditising your product by focusing on the price only
3. Make sure the customer realises the benefits of your solution over that of your competitors. Be specific, and highlight areas that the client will identify with immediately. Get the customer to realise how the financial impact of your solution is worth more than taking the risk of a cheaper solution.
These ideas concentrate the client on making solid business decisions and may help you to convince them that price is only one facet of the decision-making process. It also raises the profile and image of your products and services, keeping them out of the mire of pile-‘em-high, sell-‘em-cheap offers that create poor reputations and damage brand image.
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Originally published: 4 March, 2011