Overcoming Price Objections
Doyle Slayton | Mar 10, 2010 | Comments 12
I recently heard a business owner complain about how his sales team is trapped in the price driven sale. He says his sales people are submitting copies of competitor invoices and requesting approval on discounted proposals.
It’s unrealistic to think that price doesn’t play a factor. Everything hinges on the prospect’s pain, need, and/or their perception of your company’s brand/reputation.
First, let’s look at the three key indicators that determine how much of a factor price will play in any given sale. Then I’ll share a bonus tip that will help your sales people handle requests for discounts.
Pain – If the prospect is happy with their current product, you can expect the buyer to have a “money talks” attitude. Getting beyond price means finding a significant area of frustration.
Need – Sales people, especially those who are generating their own leads through cold calling efforts, will push and push and push just to get an appointment. As a result, they often meet with prospects that don’t necessarily have an immediate need.
Is your service going to make-or-break the prospect’s ability to improve their business, make more money, or be more efficient? Your ability to create a need will determine whether the purchase is “worth it.”
Brand/Reputation – This is where the underdog struggles most with pricing. Prospects know this and often use the little guy to negotiate a better deal with their current provider.
If you are the underdog, focus on building your brand and your reputation for being different and better in areas where your big name competitors are weak!
As a business owner or sales manager, don’t be so quick dismiss price as an issue… and don’t be so quick to point fingers and blame your players. Take each sales scenario where price is a question and apply it to the three indicators. Focus on improving your people’s ability to uncover pain and develop needs. Then drive an organizational effort to build brand, reputation, and GLARING differentiators.
BONUS TIP: Build options that allow the sales person to make adjustments to the product/service offering. If the prospect asks for a discount, the sales person can say, “I don’t have a discount to offer on these services, but what I can do is remove some of the items from the package. If we remove this item, and this item, we can get it down to the price you are requesting.”
Think of it like being at a grocery store checkout counter. If the customer claims they only have $100 and the bill is $125, are you going to let them walk out with $25 worth of free merchandise? Nope. They will either come up with the $25 bucks or they’ll take items out of the cart. In either case, they are going to find a way to make the deal happen!
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Filed Under: Blog • Leadership • Sales
Price is always a factor in the sale, unless you are giving away your product.
However, it only becomes an ISSUE in the sale for two reasons and the first really doesn’t count.
First, price will become an issue in the sale if the prospect has no funds, or not enough funds to purchase what they want/need.
The reason I say this doesn’t count is that if you qualify properly this is a presentation that you would never make and thus you won’t hear the objection at the end.
Second, price only really becomes a factor when the seller makes it so or has failed to show value.
If I come to you and tell you that my product is unconditionally guaranteed by God to provide $1 for every 25 cents you invest — and you know the guarantee to be good, you will never argue about or be concerned about the price.
Zig Ziglar is quite right when he says the only reason a prospect doesn’t buy is that his/her stack of money appears to be far larger than your stack of benefits. (Obviously, if your product doesn’t benefit the prospect you won’t sell it.)
If price is an issue, the salesperson either made it one, or has not solved a problem more costly than his/her solution provides.
If you use the “consultative selling” method put forth by Mac Hanan in his book of the same name your focus in the sale is not the product at all but the ROI that will be gained by buying it.
This not only takes you outside the competition, but leaves no option for a price excuse/objection.
Quite a good book if you haven’t read it. But be warned, reading it is closer to reading a chemistry book than a typical book on selling.
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Price will always be a factor regardless of the product or the need of the customer. Many times, sales people are in a hurry and just looking to make the sale and move on to the next one. This form of selling is created many times by the owner or supervisor’s desire for fast sales regardless of how you are to get it. You must listen to the customer, determine whether they really need your service or product, and then resist throwing a price on the table until you have uncovered all objections or road blocks the customer may be exibiting. Once on the table, it is virtually impossible to change your position.
Qualify, qualify, and then qualify again…
in my opinion, price will only be a factor when you are selling commodity. If you are not selling commodity, price is no longer a factor as selling based on price, you will be outbidded by your competitors, you will reduce your profit margin.
For a complex sales, learn how to align your solution to your customer business performance, know why they want to buy and articulate a business impact based value proposition is key and not price.
Great article Doyle! Buyers instinctively ask for discounts – they think its their job. They need to feel they got a good deal or the best deal they could. They need to tell their boss how they extracted better pricing from you.
In most businesses you can prepare a list of “concessions” you can offer in lieu of pricing discounts – rush delivery, an add-on option, better financing or payment terms.
Its usually more pofitable to offer these types of concessions that to discount the price.
Good answers to the post already… being able to create the need is always a challenging job for sales reps.
Ten years ago I did a study to see what were the 3 major objections our customers were having with the sales teams involved in selling our products/services.
Close to two thousand objections were sliced and diced and fell into the following 3 buckets: Performance, Value, and Credibility (PVC).
When all the numbers were crunched over 73% of customer objections accounted for Performance (52%), Value (14%) and Credibility (7%) issues. Price only accounted for 27% of our customer’s objections. However, if you talked to our sales teams they would have said that price accounted for over 50% of the objections. We were surprised by what the data was telling us.
As has been said, price will always be a factor in selling. But, how big a factor will depend on where you stack up in the areas of performance, value, and credibility. These issues are not just sales issues.
In our case, we went back and focused on our performance and value issues immediately. We worked with product and service realization teams and made changes; retooled our selling message to the customer and made sure that there were “credible” reframes to the top 4 PVC+Price objections.
Over the next 8 quarters the sales team’s complaints about pricing (and discounting) grew less and less especially as they became more confident in their ability to deal with the major PVC issues.
Great info and I’d like to add another tip: make sure your prospect believes that you understand what they need.
Through using rapport-building tools properly (such as verbal and non-verbal communication in-line with how your prospect thinks and feels), you are better able to get to the core of what they really want and need. Then, you are closer to the prospect feeling comfortable enough to buy.
Hey Doyle,
Another excellent and timely piece.
I just had this issue come up this week. A PA informing me that we will be “haggling” over the price I’ve consistently been quoting for over six months.
I understand it’s his job to get the best price for anything the company buys…but here is my take on it. Rate Integrity.
I’ve just completed a handful of sales for the exact product in the same regional territory and each one was given the same allowable price break off list. Were I to cut a deal to this guy below everyone else, what does that say about me and my company? Would they want me to then go down the street and offer something even better to the next guy? Also, too much of a chance that two buyers could travel in similar or same circles ie business groups, trade shows, networking circles etc and find out that one got a better deal than the other. Then where am I? I give the best possible price on the outset to avoid any appearance of inconsistency and low integrity. I’ll even offer names of previous sales to call if they question my truthfulness.
Overall I find that price slowly ticks down the priority list the more value the client sees in going with the Cadillac vs. the Yugo. I just try to point out all the pitfalls and pains of owning the Yugo.
Russ
Good article Doyle, I especially like the Bonus Tip. Never agree to sell your offer for less, agree to offer less to meet their price requirements.
“Price” is the crack cocaine of the average and below average sales person says my good buddy Tim Wackel! And I agree and wish I had said it first.
Nonetheless, sales people revert to price when their sales skills run out of bandwidth. For some that is immediately and is their default for others it may take a little more pressure.
Our point of view says;
Value + relationship = no negotiating!
When we know, understand and own our value proposition (issue, action impact) and we have Level 5 & 6 Relationships (trusted advisor) with the decision maker then we don’t have to negotiate or sell on price.
The problem is that most sales people won’t work hard enough and learn how to make that equation a reality in their business so they default to price!
Great article Doyle. Show the customer how they will pay for it and you have a sale.
Price is obviously a factor; however when you speak with buyers….not salespeople… the real reason they do not buy is salespeople fail to listen.
Since they do not listen, they fail to understand the buyer’s problem, and what they propose does not perfectly solve it. In my interviews with buyers, price was not even on the list of why they did not buy, but it is always #1 when you ask sales….Hmmm not listening again?
Mark Allen Roberts