Sidestep the Price Wars
Edition: December 2003 - Vol 11 Number 12
You don’t have to give away the store.
If you’re like most salespeople, you probably complain that your customers are interested in only one thing – price. But have you ever considered that you might be training them to be like that?
Researchers have found that as many as 90 percent of sales reps offer a price break to their customers unprompted, said Tom Reilly of Tom Reilly Training in Chesterfield, Mo., who spoke at the recent HIDA trade show and conference in Baltimore. Reilly’s own research shows that fewer than 20 percent of sales reps close a sale without discounting.
You don’t have to go there, said Reilly. In fact, there’s a good chance your customer is interested in value, not price. According to Reilly, only one out of six buyers are true price buyers. Most of the time, they rate price lower in importance than their salespeople do. What’s more, your customer will probably respect you more if you hold the price line rather than cave in.
“There are always ways to compete aggressively and profitably,” said Reilly. “And you don’t have to give away the store.” How? By selling value, not price.
Value is a personal thing, said Reilly. It means whatever the customer thinks it means. Price objections arise when the customer perceives a lack of equity – or value – in the transaction. In other words, he or she thinks the salesperson is getting the better of him.
“Value includes price, cost and impact,” said Reilly. “Price is just what’s on the invoice.” But cost involves much more, such as operating cost, maintenance cost and disposal cost. The sales rep can gauge the impact – or value – of a product or service on a customer by asking himself or herself some questions, such as:
• What problems can the customer solve with the product or service that they couldn’t solve before?
• What opportunities can they pursue that they couldn’t before?
• What can they do differently with the product or service?
Of course, the rep can gauge impact only if he or she knows how the seller would answer such questions, said Reilly. That means asking questions and listening to the customer’s answers.
Citing industry research, Reilly pointed out that the best salespeople spend 70 percent of the typical call listening to the customer and just 30 percent talking. And they offer product or service recommendations only after 40 percent or more of the sales call has elapsed.
The bottom line is this: If you can sell value, you can escape price objections. But if you don’t know how the customer defines value, you can’t sell value. And if you don’t listen to the customer, you won’t know how he or she defines value. So be quiet and listen!
Avoid Price Objections
Tom Reilly says a few questions can help you avoid price objections. Here are some examples.
Ask questions that stretch your buyer’s time horizon.
• How long do you plan to own or use this product?
• What are your long-term goals for this project?
• Where would you like to go in the future with this?
• What post-sale, long-term requirements do you have?
• Where do you see your company headed in the future?
• Walk me through your project start to finish.
Ask questions that call attention to broad-based, non-price issues.
• What are the three most important trends in your industry?
• What do your buyers look for from you?
• What are some drains on your profitability?
• What special delivery requirements do you have?
• Do you have any special packaging issues?
• How much technical support do you require?
• How do you define “value?”
• What do you want to gain with this solution?
Ask questions that call attention to your value-added extras.
• How much flexibility do you need from a supplier?
• What can we do to make it easier for you to purchase from us?
• Is it important to have your suppliers offer this type of service?
• What quality issues concern you the most?
• What special ordering needs do you have?
• Is electronic commerce important to you?
• Do you need help training your employees?
Ask questions that call attention to a competitor’s weakness.
• How’s the quality of what you’re using now?
• What do you like or dislike about what you’re currently using?
• Will the product you’re currently using get you where you want to be in the future?
• What kind of feedback do you get from your folks on what you’re currently using?
• How’s the delivery?
• What experiences have you had with this particular product?
Ask questions that create a positive sense of urgency in the buyer.
• How quickly do you want to move on this?
• What does a delay cost your company?
• What are your short-term goals?
• What benefit is there in waiting?
• In what ways are you not getting full utilization from your current solution, and how does that affect your company?
Encourage the buyer to dream the impossible dream.
• What would you like us to do for you that no one else can do?
• If you were to create the ideal solution, what would it look like?
• If you had unlimited funding for this project, what would you do? Why?
• If you were a supplier, what would you offer buyers like yourself that no one else offers?
• If you could change just one thing, what would it be? How would that help your business?
Ask questions that draw out your buyer’s concerns or fears about making a buying decision.
• What concerns you most about making this buying decision?
• What is your greatest fear with this purchase?
• What do you want to avoid moving forward?
• What would inhibit your moving forward?
• Do you see any reason why you wouldn’t go forward and purchase this solution?
• What do you dislike doing that we can do for you?
Get to price indirectly.
• Tell me about your decision process.
• What factors go into your buying decision?
• What are you looking for in a product?
• What are the three most important things you want in a solution?
• What budget range are you working with?
The Value-Added Salesperson
Following are five attributes of the value-added salesperson, according to Tom Reilly of Tom Reilly Training in Chesterfield, Mo. Does this describe you?
1. Integrity. People want to do business with people they trust.
2. Empathy. Do you have the ability to view things from the customer’s side of the table?
3. Initiative. This is all the stuff you do without someone telling you to do it.
4. Optimism. It’s a bone-deep belief that your actions matter and that you can create positive outcomes.
5. Courage. Courage doesn’t mean being without fear. It means managing fear. Courage is when your customer says, “Your price is too high,” and you stand by it.
Attitudes Drive Behavior
We move in the direction of our thoughts, according to Tom Reilly. Have you had many of these thoughts lately? If so, you’re on the way to becoming a value-added salesperson.
• I pursue excellence in everything I do.
• I define value in the customer’s terms.
• I seek to add value, not cost, to my relationships with my customer.
• I compete for the customer, not against the competition.
(Chances are, your company’s mission statement says a lot about serving the customer, but nothing about crushing the competition. So pay attention.)