Why Selling on Price Isn’t Really Selling at all?
In selling, you want to help your customer base their buying decision on value, (that’s what they perceive to be good value), and not on price.
Does that mean it’s wrong to offer the lowest price occasionally? No. Not really. But it does mean that it will be much tougher to create any long-term customer loyalty when the purchase decision is based on the lowest price alone. And that (unfortunately) is what so many retailers today believe is the best way to handle price issues.
It’s also true, that from a competitive standpoint, price can be the toughest position to defend. And that’s because someone else can simply lower their prices to compete with your price or to beat your price.
It takes no great marketing mind; no innovative product design or application; no in-depth marketing research to know that you’re likely to get more looks by offering the lowest price for anything you sell. But beware, because these are short-term outlooks only. And virtually anyone in the market can offer a lower price for the short-term market only – any time they believe they have an advantage doing so.
Recently I wanted to buy a printer, so I decided to visit a few electrical discounters that had been advertising ‘sales’ in the suburbs of Sydney, Australia. My first port of call was the Harvey Norman Computer outlet, and I began with my previously mentally rehearsed phrases. In no time at all, I had the salesman look me in the eye and reply to my offer with words something like this. “You’ve got to dreaming. We open these doors seven days a week to write a profit. Not to loose money.” I immediately stopped drawing on those previously mentally rehearsed phrases and returned to the real world, bought the printer, and abandoned visiting any other store.
Another exception to this rule is a company such as the Bunning’s hardware stores, an Australian company where ‘low price’ is their dominant marketing message. At Bunning’s, all systems are designed to support the chain’s ability to buy from its suppliers and sell to its customers at lower prices than the competition. But even Bunning’s offers more than just low pricing – by attracting shoppers who like its overall shop-floor service and hassle-free return policy.
But there was another thing I learned from dealing with Bunning’s, and that is, that they also offer a 10% better price if you can find the same product elsewhere at a lower price. So one day I proudly walked into the store to buy up 20 solar spot lights from Bunning’s at $4.00 less 10% which worked out to be $3.60 per item. Bunning’s were selling exactly the same ones at $6.00 each which I figured would be a saving of $2.40 per item a saving of $48.00 on the purchase. Armed with the evidence (a brochure from Sam’s Warehouse with the price clearly marked on it) I was under the impression there was no way they could get out of this. But to my surprise, I was told that although the product looked very similar it was not the brand Bunning’s sold. I also found that Bunning’s imported the item, braded it and sold it in their store. So how often did they surrender the 10% better price. It appears never. I left and marvelled at how good their marketing was.
So do I believe that Bunning’s are a ‘real discount store?’ I suppose that unless I am shown otherwise I believe Bunning’s to be better marketers than discounters.
You should save price for last
In any sales conversation, price is the last thing the salesperson wants to be discussing, because in sales, you build value (in the mind of your prospect) before you mention what they’ll have to do to enjoy the product or service they acquire from you. This may be considered to appear very basic to the consumer, but there are the salespeople at opposition stores who’ll immediately dive right into a price discussion (or an argument on price) before they ask any questions to understand what the prospect wants – or in other words, what represents value in the prospects eyes.
When it comes to pricing, how high is too high? To get a better handle on that question, just ask a man gasping for air how much he’d pay for just a single breath of oxygen. The reality is, he’d pay heaps, because, in his eye’s, the value of what he needs to pay for the oxygen is already there.
Now let’s deal with the price issue and best way to handle it
So what’s the best way for you handle any price objections from your prospect? Well the easiest way to answer that is simply when the prospect says it costs too much – and when they do that, they will be doing one of two things.
The first is, they will be simply ‘trying-on’ those five magic words they learned at the latest buyer’s seminar, “Your price is too high,” because it often gets the intended result – a drop in pricing from many of salespeople selling to them
The second thing this prospect could be doing is asking themselves, “How can I justify paying that price?” When that happens, what should be your response to that old worn phrase, “Your price is too high,” be – because that’s what your prospect will more than likely say?
Now here’s where ‘the rubber really hits the road.’ If you respond the way most salespeople would in a situation such as this. And the reality here is, that with most sellers, their first response would be to drop the price. Why? Why would you even contemplate doing that? Because when a situation such as this happens, what the prospect was really asking was for the salesperson to justify the initial price they have just heard – not reduce it. But unfortunately most sellers react this way Alternately if they react in any other similar way, they will also loose – really lose.
But wait, there’s more, because the salesperson will also lose if they answer with something as silly as, “I know it’s expensive, so let’s see if I can get a better price for you.” The fact is, whenever you do this, you’ve allowed yourself to be dragged down to where you will be responsible for the price to fall as far as you allow it to. In fact, in just one sentence, you’ve simply surrendered control to the prospect.
This move is dumb, and this dumb move becomes a wonderful bonus for the prospect who really didn’t expect anything as good as this to happen to them. Then with each price drop, you prove to the prospect that their time invested in the discussion with you is getting a good, if not a really great, return.
The immediate and long-term problem that this creates is . . .
Say if you offer a low price as a part of a strategy to create a long-term loyal customer, you will also need to send a clear message to them that this low price also includes service and satisfaction after the sale has been made, plus any additional warranty, guarantee and whatever else you feel you need to offer to get the sale. Unfortunately, most will offer the lower (or lowest price possible) without even suggesting any of the consumer benefits (or even similar) to the ones just mentioned.
But those who understand the selling process, and also understand the various ways of building client relationship (either before or after the sale has been made) understand the concept of sales process known as “Build Relationship.” And the concept of Build Relationship simply means you must understand to ‘Build the Value,’ of whatever you are selling, so that the price on offer appears small in comparison to the sale price of the goods, or services, on offer.
So learn to sell on value, not on price
Therefore, how do you get away from the price when you’re selling whatever product or service you have on offer? Simply focus on the value your prospect should expect from buying what you sell. That is, the benefits they would get from the product or service on offer, after they take delivery of the product or service on offer at the time. And that could be a higher than anticipated return on investment, far greater enjoyment than anticipated, or higher productivity, better than expected convenience or any of a number of other calculable measures.
Here are four steps, taken from the work of Alan Weiss, in his book, Million Dollar Consulting (McGraw-Hill, 1998) to focus on value in selling to your prospect:
Focus on objectives
You need to establish value by determining exactly what someone wants to get from your product or service. Ask, “If ever you were to buy this product or service, why would you buy it?” The answer to that question should lead you to the prospect’s specific want for your product. Once exposed, immediately sell off that point – then wait for a decision without further prompting.
Confirm the desired outcome/s
Restate what you’ve heard them say to you by declaring, “So if this copier does what you want it to do, you’ll experience greater productivity in your office. Is that what you want?” But the most important things is that it’s critical that you get agreement for full understanding of desired results before you ask this client for an order.
Check for temperature testers
You’ll also ask open ended or closed questions such as, “How will you know you’ve reached higher productivity with this machine?” Then once they answer, ask for the order based on their response to you. “So if you could get the level of productivity you’ve just told me about, you’d want to install the copier?” If they answer with a yes, simply shake their hand and congratulate them on their decision. This makes them feel good about making the decision. Confirming the prospect’s expectations on the level of productivity they expect simply takes the guess-work out of perceived value of return expected by the prospect on investment.
Now determine the value
Ask, “What would be the value to you of the higher productivity within your office be as a result of you installing the new photocopier?” Their answers could include factors such as increased revenues, more satisfied customers, cost savings, faster turnaround time or a host of other responses. But you should get as many answers as you can, because this is where the true value of the product or service on offer is really established.
From this point onward, and through the rest of the sales discussion, all you’ll need to do is to simply refer back to the prospect’s objectives, measures and value. The once they tell you about because of your constant probing – or the ones they openly volunteer.
That type of questioning keeps the focus right where it belongs. On the value the prospect expects to receive, rather than the price the prospect is told they must pay.
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This Article is by Peter Collins – In a sales career spanning more than 53 years, Peter Collins has focused on helping and bringing out the best in others – whether it involves training or mentoring salespeople, managers, business consulting to SME’s. Since the 1970’s Peter has built a reputation as a Nationally and Internationally Published author, and has 68 business books to his credit, but he is mainly known for one book based on the Audio Tape series of the same name, Over 50 Ways of Closing the Sale. Peter had his first book published in 1969 and now has over 133 books in all, including Business, Marketing, Sales, Free Publicity, Body Language, Music and over 30 Christian books to date. Peters books have sold over 2.5 Million copies of his books over 49 years. In his personal life, Peter has been sought after as an encourager and motivator that has given of his time and talents freely despite his busy schedule. Subsequently, he has assisted churches, pastors, community and charity groups, as well as individuals through his teaching, training, development and on-going mentoring.
© Copyright Peter Collins, Profit Maker Sales, Sydney, Australia, 1994, 2002, 2007, 2011, 2015, 2017, all rights reserved. Peter can be contacted through his website – profitmakersales.com
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