Fri, 21 June 2019
TSE 1121: Your Price Is Right: How to Stand Your Ground Against the Lowest Bidders and Protect Your Margins
We’ve all encountered price wars against the lowest bidder, but today we’re going to talk about how you can stand your ground, protect your margins, and earn the price that you’re worth and how that will help you grow your business.
Chris Perry works with Market Sense, a Sandler Training franchise, that helps business attrackt, assess, hire, and on-board world class sales people.
There are lots of great ideas in the world. Many businesses have built things that they are excited about and proud of, and eventually others notice that they are making a lot of money doing it. So they jump into the game.
Suddenly options exist where they didn’t before, and consumers, whether they are B2B or B2C, don’t know how to differentiate between them. Many of them fall back to the cheapest option.
If we fall into that trap, the buying process becomes all about price, and we’re forced to trade dollars for deals. We must cut our prices, and that’s a slippery slope. It’s also a great way to go out of business.
Consumers will treat you like a commodity if you allow them to.
Attitude makes a big difference in this scenario, because the salesperson’s mindset plays a huge part in price. Human beings are trained to seek deals and discounts. Chris’ company runs a lot of assessments on salespeople and they’ve discovered a lot of what they call money tolerance issues.
We all grow up with different relationships to money, with some of us believing it’s rude to talk about it. Others are taught to pinch every penny, while still others believe there is always more money available. Whether it’s conscious or not, we have a bunch of recordings playing in our heads. Those recordings impact our money conversations.
If, for example, a seller grows up believing it’s rude to discuss money, he’ll be less comfortable talking about it. He’ll likely wait until the last possible moment to address cost, because he assumes the prospects are uncomfortable talking about it, too. Waiting until the presentation to discuss price can be a recipe for disaster for sellers.
Sellers who believe that $500 is a huge purchasing decision, but who are selling $50,000 solutions, will be nervous about the price discussion. They’ll sweat a little extra, and the prospects will see that anxiety and they’ll assume the seller doesn’t believe in the product. They might also perceive that there’s room to negotiate price.
The key is to change the way you perceive your value so you don’t undersell yourself or your product. If you do, you’ve already lost before you even get started. You must believe in yourself and your product.
The truth is that it’s hard to change someone’s mindset. People won’t generally understand their worth simply by listening to a podcast, no matter how good it is. Chris recommends that you begin by acknowledging your mindset. Figure out which relationship you have with money and then leave it in the car.
When you go on a sales call, your relationship with money shouldn’t matter. Focus instead on the prospect and figure out her relationship with money. That’s the conversation that matters.
There are many aspects to behavior: having a goal, developing a plan to accomplish the goal, and establishing activities that get you to those goals. But with regard to budget discussions, we must be more consistent in knowing when and where to discuss pricing.
We’re typically mentioning it too early, before we’ve helped the prospects understand the value, or too late, when they’ve already got some idea of what they should be paying. Many sellers are winging this aspect of their sales process.
Have a plan. Develop milestones for your sales process. Have an idea of things you have to check off before you move to the next step. If you could establish just a bit of organization, if you could figure out the key steps in your sales process, you could map it out and figure out where the budget discussion should fall.
Then stick to your guns. Don’t allow the prospect to pull you into a discussion you aren’t ready to have yet. Many people routinely argue that the prospect is always right, so we must follow where they lead. Your role is to help your prospect, so you have to explain that it’s irresponsible to sell something or provide a quote without understanding what he needs.
In a world where prospects see all alternatives as basically the same, with price as the only differentiator, the one thing that remains within our control is how we sell. Our sales conversations make a huge difference. If we’re doing like many reps and choosing the “showing up and throwing up,” option, dumping features and benefits and then giving a price, we’re missing an opportunity.
Differentiate by slowing down and asking good questions. When the prospect asks for price, push back a bit in a compassionate, professional way. Ensure that you want to make sure you’re both a fit before moving forward to price. The prospect will appreciate your effort to understand his world.
In a scenario where you aren’t the cheapest option, what should you do? This is likely where most sellers could use a little help. We know our product or service but we don’t know the prospect’s world. But the prospect is evaluating us on how we fit into their world.
In that sense, the prospect is best equipped to resolve those objections. We have to ask the right questions to get to that discussion.
So once we’ve run our sales conversation, asked the right questions, sought to understand the prospect’s world, and talked a little bit about budget, it’s important to acknowledge the issue of price.
“Hey, Donald, you know, I've really appreciated the opportunity to talk with you about your world and how our services might help, but we've got a problem. My guess is you're probably going to be talking to other folks to see how they might help as well. I get it. I'd probably do the same thing. The problem is if you compare us on price, I can almost guarantee we're going to be the highest bidder. So my question is for you, if you were me, would you still put together a quote?”
If they agree to a quote, ask this: “What do you need to see from someone to compel you to pay a premium?” Now we’re figuring out what the prospect needs to see to make it worth paying more. Chances are the prospect hasn’t thought about this before, so now he’s selling himself on value.
If the prospect says no to a quote, then you can acknowledge that perhaps you aren’t a fit, but you can still ask what the prospect would need to see in order to make a decision based upon something other than price.
Continuing the conversation
Now, whatever the prospect says, you’re continuing the conversation. If they need on-time deliveries or fantastic customer service, you can continue the discussion. You’ll move from being an order-taker to a problem solver. You’ll also sound confident in your discussion because you aren’t desperate.
These things won’t work if you don’t believe in your product or if your pipeline is anemic. Having a full pipeline cures most ailments. If you don’t absolutely need this deal, your technique can be a lot stronger.
Don’t try to do this on the fly. Sit with your manager or someone on your team and practice this stuff. Practice fielding tough questions. Practice handling pricing objections. Practice handling conversations where the prospect immediately asks about price. If you do, when you find yourself in thoe scenarios, it’s second-nature rather than something you fumble through.
“Protect Your Margins” episode resources
Sandler Trainers are worldwide, so you can always look for a local office to help you. If you’re in Austin, connect with Chris at their website, ms.sandler.com. You can also connect with him on LinkedIn to see the videos and articles he shares there.
If you haven't connected with me on LinkedIn already, do that at Donald C. Kelly and watch the things I'm sharing there.
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