Crush Price Objections: Learn to sell value, not price
Crush Price Objections: Learn to sell value, not price
According to a recent survey of 8,000 industrial buyers, one out of six buyers is a true price shopper who shops only price. One out of six is a value added shopper who is more focused on the total solution, not just price. This leaves two-thirds in any industry that is up for grabs. We calculate that one out of three shoppers are probables for value added, and one out of three are questionables. Two-thirds of the market is up for grabs at any given time.
We asked buyers, “on a ten-point scale, how important is price?” (One being not important, ten being very important.) Buyers rated price 6.9 on the ten-point scale. When price surfaced, it appeared as “help us control our costs and maximize our profitability.” Incidentally, we found that salespeople rated it 8.3 on the ten-point scale, which tells us salespeople make a bigger deal out of price than buyers do. We also found that 13.9% of respondents would be willing to pay for a better quality product, and 9.4% said they would pay more for better service. Our survey also revealed that the top twelve things buyers look for in a solution are: knowledgeable salespeople; quality products; product availability; technical support; ease of doing business; product performance; follow-through; ability to get things done; acquisition price; inventory levels; accessibility; post-sales service.
What’s the problem?
I ask the following question at my seminars: “If your best buyer called you and said they needed relief on an order, what percent discount would you give?” I instruct people to write down a percentage anywhere from 0 to 50%. Many of the responses fit into the 10 to 20% range. That’s a significant amount of money left on the table. Why do salespeople cut their price? There are internal and external reasons.
The internal reasons are:
Lack of knowledge about a product or service and why it’s worth the higher price.
Lack of skills in selling at higher prices.
Lack of confidence in a product.
Philosophical problems with selling at higher prices.
The external reasons are:
Poor service by your company.
Inferior product quality.
Being outsold by the competition.
Market conditions.
The buyer is out-negotiating you.
Value in Purchasing (VIP)
One way I encourage salespeople to short-circuit and defuse price objections is to make a list of twenty value added extras, print it on a sheet of letterhead and make it a visible item with customers. Here’s a sample of things to put on a VIP List: electronic data exchange; 24-hour service, seven days a week; custom service; ease of doing business; partnering; customer training; toll-free customer ordering and assistance.
Purchasing Check-off
Another way to de-emphasize price is to make a list of key areas where you enjoy a competitive advantage. Turn the list into a check-off sheet you provide your customers, showing key things to consider when purchasing. An example list might include:
Does the supplier have a track record of success with like customers?
Is the supplier conveniently located?
How easy is it to do business with the supplier?
Will the supplier’s quality meet our needs?
Does the supplier offer 24-hour service?
Does the supplier offer post-sales support?
Understand Customer Needs
Two-thirds of the objections salespeople hear come from a failure to qualify and fully understand the buyer’s needs. Superficial probing by the salesperson or a narrow field of vision by the buyer may cause this. And where there is no value to the customer, price rears its ugly head. These are some reasons for objections. There are others that I teach at Value-Added Selling seminars. When you get a price objection, your immediate reaction should be to slow down the process. Buyers know if they push you to make a quick decision on price, emotion will drive the decision. When you make an emotional decision, the buyer wins. Following are five types of objections and strategies to deal with them:
Information-based Objections:
The buyer lacks the information needed to make a buying decision. Your strategy should be to:
Help the buyer develop a better understanding of needs.
Educate the buyer about the total value of your solution—the unique way in which your company solves problems.
Lack-of-resources Objections:
The buyer lacks money, time or authority to buy your product or service. Your strategy should be to:
Determine if there is a way to create money. Can you offer variable payment schedules? Is there discretionary budget money for you to pursue? Is it a credit problem?
Is there a way to help your buyer get the time he needs to make the decision? When is the timing better?
If you’re not selling to the real decision maker, can you get to him? Who can say “Yes” to your ideas?
Attitude-based Objections:
This could be a fear the buyer has for being gouged. It could even be that the buyer feels it’s risky to pay too much for something. The buyer has some arbitrary upper limit and has committed to not exceeding it. Your strategy is to:
Demonstrate that there may be even greater risk in paying too little for something.
Remember that the buyer wants to feel good about what he’s paid.
There are times when a buyer needs permission to indulge himself.
Wrong-solution Objections:
There are times when your solution is too much or too little for the buyer. Are you selling a sledgehammer to kill a fly? Are you selling a peashooter to stop a tank? You may need to add or subtract value from your package to suit the buyer’s needs.
Competition-generated Objections:
Your competitor has offered the buyer a cheaper deal or they’ve started a price war. Your strategy should be to:
Make sure it’s an apples-to-apples comparison.
Determine if it is a bona fide competitive offer?
Determine if you want to play the game? Remember, your price may be just fine. It’s their price that’s too low.
Presenting Price — Do’s and Don’ts
When discussing price with your customer don’t: look down or stare into space when presenting your price; apologize for your price; cover your mouth or your face; duck when you’re presenting your price; say, “here’s our asking price”, or “here’s your price.”
On the other hand, do: use these three words only: “the price is”; maintain steady eye contact and project confidence; present price matter-of-factly. It’s the natural next step in the process. Explain it without apology. Defend without defensiveness. Inform without embarrassment. Frame the price within the context of what they get versus what they give. In other words, sell the value.
Clarifying the Price Objection
The first step in dealing with any price objection is to clarify what the buyer is really saying. Uncovering the motive will suggest ways to deal with the price objection.
These are just several principles for crushing price objections. Of course, there’s more to it. As Cicero wrote, “The skill to do comes from doing.” You gain mastery in application. I believe this is especially true in mastering the art of selling.
Crush Price Objections Learn to sell value not price - To learn more about this author, visit Tom Reilly's Website.
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At my seminars, I tell salespeople they should never lower their price unless it is a strategic decision where they call the shots. When you compete on price only, you send the wrong message to the buyer. Indirectly you’re saying, “since price is all that matters, whenever somebody else comes along with a cheaper price, you should jump on the opportunity to buy cheaper.” You’re sending buyers to the competition. The ugly reality of price selling is that you discount the importance of your company’s value. The aggravation of dealing with price shoppers is high. They worry you to death. In negotiation, it’s called nibbling. It’s like being bitten to death by ducks. They swamp you with nickel-and-dime requests and pick you clean.
According to a recent survey of 8,000 industrial buyers, one out of six buyers is a true price shopper who shops only price. One out of six is a value added shopper who is more focused on the total solution, not just price. This leaves two-thirds in any industry that is up for grabs. We calculate that one out of three shoppers are probables for value added, and one out of three are questionables. Two-thirds of the market is up for grabs at any given time.
We asked buyers, “on a ten-point scale, how important is price?” (One being not important, ten being very important.) Buyers rated price 6.9 on the ten-point scale. When price surfaced, it appeared as “help us control our costs and maximize our profitability.” Incidentally, we found that salespeople rated it 8.3 on the ten-point scale, which tells us salespeople make a bigger deal out of price than buyers do. We also found that 13.9% of respondents would be willing to pay for a better quality product, and 9.4% said they would pay more for better service. Our survey also revealed that the top twelve things buyers look for in a solution are: knowledgeable salespeople; quality products; product availability; technical support; ease of doing business; product performance; follow-through; ability to get things done; acquisition price; inventory levels; accessibility; post-sales service.
What’s the problem?
I ask the following question at my seminars: “If your best buyer called you and said they needed relief on an order, what percent discount would you give?” I instruct people to write down a percentage anywhere from 0 to 50%. Many of the responses fit into the 10 to 20% range. That’s a significant amount of money left on the table. Why do salespeople cut their price? There are internal and external reasons.
The internal reasons are:
Lack of knowledge about a product or service and why it’s worth the higher price.
Lack of skills in selling at higher prices.
Lack of confidence in a product.
Philosophical problems with selling at higher prices.
The external reasons are:
Poor service by your company.
Inferior product quality.
Being outsold by the competition.
Market conditions.
The buyer is out-negotiating you.
Value in Purchasing (VIP)
One way I encourage salespeople to short-circuit and defuse price objections is to make a list of twenty value added extras, print it on a sheet of letterhead and make it a visible item with customers. Here’s a sample of things to put on a VIP List: electronic data exchange; 24-hour service, seven days a week; custom service; ease of doing business; partnering; customer training; toll-free customer ordering and assistance.
Purchasing Check-off
Another way to de-emphasize price is to make a list of key areas where you enjoy a competitive advantage. Turn the list into a check-off sheet you provide your customers, showing key things to consider when purchasing. An example list might include:
Does the supplier have a track record of success with like customers?
Is the supplier conveniently located?
How easy is it to do business with the supplier?
Will the supplier’s quality meet our needs?
Does the supplier offer 24-hour service?
Does the supplier offer post-sales support?
Understand Customer Needs
Two-thirds of the objections salespeople hear come from a failure to qualify and fully understand the buyer’s needs. Superficial probing by the salesperson or a narrow field of vision by the buyer may cause this. And where there is no value to the customer, price rears its ugly head. These are some reasons for objections. There are others that I teach at Value-Added Selling seminars. When you get a price objection, your immediate reaction should be to slow down the process. Buyers know if they push you to make a quick decision on price, emotion will drive the decision. When you make an emotional decision, the buyer wins. Following are five types of objections and strategies to deal with them:
Information-based Objections:
The buyer lacks the information needed to make a buying decision. Your strategy should be to:
Help the buyer develop a better understanding of needs.
Educate the buyer about the total value of your solution—the unique way in which your company solves problems.
Lack-of-resources Objections:
The buyer lacks money, time or authority to buy your product or service. Your strategy should be to:
Determine if there is a way to create money. Can you offer variable payment schedules? Is there discretionary budget money for you to pursue? Is it a credit problem?
Is there a way to help your buyer get the time he needs to make the decision? When is the timing better?
If you’re not selling to the real decision maker, can you get to him? Who can say “Yes” to your ideas?
Attitude-based Objections:
This could be a fear the buyer has for being gouged. It could even be that the buyer feels it’s risky to pay too much for something. The buyer has some arbitrary upper limit and has committed to not exceeding it. Your strategy is to:
Demonstrate that there may be even greater risk in paying too little for something.
Remember that the buyer wants to feel good about what he’s paid.
There are times when a buyer needs permission to indulge himself.
Wrong-solution Objections:
There are times when your solution is too much or too little for the buyer. Are you selling a sledgehammer to kill a fly? Are you selling a peashooter to stop a tank? You may need to add or subtract value from your package to suit the buyer’s needs.
Competition-generated Objections:
Your competitor has offered the buyer a cheaper deal or they’ve started a price war. Your strategy should be to:
Make sure it’s an apples-to-apples comparison.
Determine if it is a bona fide competitive offer?
Determine if you want to play the game? Remember, your price may be just fine. It’s their price that’s too low.
Presenting Price — Do’s and Don’ts
When discussing price with your customer don’t: look down or stare into space when presenting your price; apologize for your price; cover your mouth or your face; duck when you’re presenting your price; say, “here’s our asking price”, or “here’s your price.”
On the other hand, do: use these three words only: “the price is”; maintain steady eye contact and project confidence; present price matter-of-factly. It’s the natural next step in the process. Explain it without apology. Defend without defensiveness. Inform without embarrassment. Frame the price within the context of what they get versus what they give. In other words, sell the value.
Clarifying the Price Objection
The first step in dealing with any price objection is to clarify what the buyer is really saying. Uncovering the motive will suggest ways to deal with the price objection.
These are just several principles for crushing price objections. Of course, there’s more to it. As Cicero wrote, “The skill to do comes from doing.” You gain mastery in application. I believe this is especially true in mastering the art of selling.
Crush Price Objections Learn to sell value not price - To learn more about this author, visit Tom Reilly's Website.
Like this article? Share it with your friends
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I really like the article on price objections, many times I run into this issue especially now that the economy is tight and many customers are closely looking at prices. I want to be a salesman not just an order taker who competes on price.
Commented on Crush Price Objections Learn to sell value not price. |
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Joe DagerJoe Dager is President of Business901, a progressive coaching company providing no-nonsense direction in areas such as Lean Six Sigma Marketing and organized referral marketing. What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joe’s ability to combine his expertise with “out of the box” thinking is unsurpassed. He has always delivered quickly, cost effectively and with ingenuity. A brilliant mind that is always a pleasure to work with.” - James R. If you want to learn more about Business901, start a conversation with us. We can be found @ Web/Blog: Business901.com Web/Blog: FundingYourNonprofit.com LinkedIn Profile Follow me on Twitter - Visit Joe Dager's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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