|Why do some salespeople believe that price is the most important ingredient in making the sale? They begin their sales campaign by emphasizing the lower cost of their product. Or even worse, by telling prospects that if they can make a decision before the end of the month, they will enjoy a 20 percent reduction in price.
Maybe the reason is we are conditioned to purchase only when we see the “sale” sign. No one wants to pay retail price, so maybe we feel that this mindset should be transferred directly to our business process. But even if you examine your personal shopping habits, why would you purchase an item simply because it was significantly discounted? If you were a right-handed golfer, would you buy a set of high-priced but significantly discounted left-handed golf clubs? Would you purchase an awesome Hugo Boss suit that didn’t fit? Or would you purchase a $150,000 Bentley discounted to $100K simply because it was a good deal? The point is, a good deal is only a good deal if it meets your buying criteria.
This is equally true in corporate sales, yet we sometimes forget this truth. An executive needs to make sure the product or service being evaluated meets the business criteria before price comes into play. But many times, salespeople offer significant price concessions before prospects determine if the product meets their business requirements. In other words, they are attempting to close the sale based on price when the prospect is not prepared to make a buying decision. This shows a lack of professionalism at best and, at worst, can tick off the prospect and jeopardize the opportunity. Additionally, if the prospect is not ready to purchase and you have already given an aggressive price, he may be looking for an even lower price when he is finally prepared to make the decision.
My suggestion is to cover all aspects of the buying decision in advance of providing price information. You can certainly offer general price guidelines to make the prospect comfortable that you are in the ballpark. In fact, if the prospect asks for very aggressive pricing early on in the sales process, I would tell your prospect in a professional way that price is meaningless unless the product first meets the business requirement. Suggest that your company will be competitive on price, but at the end of the sales process it will become clear that it is not the most important component of the decision. In fact, I would suggest that if you do your job effectively, your prospect might not haggle too much on the price. Hopefully, he will be more excited about how your product or service will provide significant value to his organization.
Think of all the resources available to you as a professional sales exec that you can offer to your prospect that are unrelated to the actual price of your product.
For example, in the data storage industry, where I spent most of my career, we could offset our clients’ direct costs by offering services such as technical assistance, data migration services, capacity on demand, product evaluations, and outstanding customer service.
Most companies have services and benefits unrelated to the price of the product that can provide direct savings and add value to your clients.
A great example of a company that took a commodity and completely transformed its value in the marketplace is Starbucks. Who would have thought people would stand in line to pay $4 for a cup of coffee? Sure, the coffee is excellent, but the taste is only one component of the experience. The company completely changed the way people view having a cup of coffee. Starbucks made having coffee an “experience.”
So in our world of professional sales, I would suggest you don’t introduce price too early on in the sales process. Several results are likely to occur:
- Once you quote a “special” price, it will be difficult or impossible to change it
- You may be viewed as a pushy or less-than-professional sales executive
- You devalue all of the other benefits of doing business with your company
- You run the risk of giving away a lot of margin
Typically, there is a lot of work to be done before the final price is negotiated. And after doing the necessary qualifying, you might determine that you don’t have a prospect at all, so why would you offer low pricing?
UNIVERSAL SALES TRUTH #3
Do more listening than talking
Answering before listening
is both stupid and rude.