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Sales is all about closing the deal, and in order to achieve
that goal, a purchase price must be agreed upon. All
salespeople, at one time or another, have had their price
challenged. What do you do when that situation arises? As much
as everyone in sales would like to consider themselves “great
closers”, in reality, many are sissies when it comes to this
important skill. They often boast about never discounting their
product, but when they’re suddenly confronted on price, they
fold faster than a cheap umbrella on a windy day.
Consider the following scenario you may have found yourself
in. . . .You’re on the verge of closing the biggest deal of your
career. Doing so will put a nice, fat commission check in your
hands and you’ll soon be receiving kudos from everyone in the
company. Now comes the curve ball. You discover that the
customer is looking to you for a price discount and, to top it
off, you find out about an equally qualified competitor that is
willing to undercut your price. While you are under the
pressure of being in the middle of the hunt, you are left with
only two options. You can hold the line and not cut the price
to keep your profit potential in tact. Or, you can cut the
price and be willing to take a lower margin for the sake of
landing the big order. Which do you choose? Although the
tendency for many is to give in to the price discount, by being
prepared ahead of time as to why your product/service can fill
their need, you can avoid caving in under the pressure of the
moment.
In a situation like this, your self-assurance is critical.
Be confident in what you say and, more importantly, ensure that
the customer is certain of the benefits they will receive by
working with you. The cheapest price might be what everybody is
looking for, but what good is a low price if it doesn’t deliver
on what it is supposed to? When the customer requests a price
discount, respond by asking them about how they intend to use
your product/service, and what they expect to gain from using
it. Your goal should be to get them to express both the pain
they will experience if what they’re about to buy doesn’t help
them accomplish what they want it to and the need they have for
your type of product/service. Then you can explain how your
product/service can alleviate that pain and best fill that need.
How can you establish a high level of confidence in your
price? One of the best ways is by having a full sales
pipeline. This means that you have prospects and customers at
each phase of your sales process so you don’t have to worry
about closing every sale. Your assurance comes in knowing that
you’re making the right decision by not discounting because you
“have” to.
The worst thing any salesperson can do when a customer is
looking for a price break is to give in. Unfortunately, because
many cannot confidently communicate their price, they often cave
in. To overcome this problem, salespeople need to understand,
in real terms, the buyer’s perspective of how they can benefit
from the product/service. For example, if I’m going to take a
trip and my destination is 1,000 miles away, I have several
options as to how I can get there. I could hitchhike, which
would cost me virtually nothing, but wouldn’t guarantee when I’d
arrive. I could drive my car, keeping my immediate costs to
only the gasoline (assuming the car does not break down), but my
travel time could take several days. Or, I could fly, which
would probably have the highest immediate cost, but would,
undoubtedly, be the fastest.
Because your goal in selling should be to help ensure the
success of your customers, you can see from this example that
the cheapest approach is not reliable, nor would it save time.
In addition, most people wouldn’t want to take several days to
drive to and from the destination. Therefore, because of the
time it will save, the best option is to fly, even though it’s
probably the most expensive. Since time is of the essence in
many industries, its value is worth the extra money. Keeping
that in mind, cutting the price is clearly not the most
beneficial or efficient.
Besides being unable to confidently communicate their price,
another common reason salespeople give in when challenged is
because they believe the misconception that by offering a
discount on the initial order, they can make it up on the next
one. However, the truth is that there is no way to ever regain
the lost revenue. Once the customer has accepted a lower price,
that amount becomes their new level of expectation. Any other
price is seen as an increase.
Think of it from the following perspective: Would you
believe a promise from your boss that if he/she were to hold
back your next raise for a year, it would be made up to you
later? We often kid ourselves into believing that we can get
the higher price out of the customer on the next order.
Finally, when a customer requests a discounted price, it is
important to remember that giving one is an immediate reduction
to your total profit. Depending on how drastic you are willing
to go, you are ultimately the one taking the pay cut. Is that
what you really want to do? Consider that decreasing your
price may help you land the initial sale but, over time, it
still does not make up for the revenue you lost on the initial
sale.
Maintaining pricing integrity is a challenge. It starts by
being self-assured and it extends not only to the service you
deliver, but also to the expectations of the customer. Don’t
entertain their requests for a discount. Be confident in both
your price and the product/service you offer. Ensure that your
sales pipeline is full by spending adequate time developing it
at all phases of your sales process. Consider how your
product/service can help ensure the future success of your
customers.
Don’t believe the lie that you can make up your initial price
cut on the next order. Without confidence in your price, you
can say good-bye to your profits. Price cutting is for sissies!
Mark Hunter,
“The Sales Hunter”, is a sales expert who speaks to thousands
each year on how to increase their sales profitability. For
more information or to receive a free weekly sales tip via
email, contact “The Sales Hunter” at
www.TheSalesHunter.com.
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