Many sales leaders think price is paramount to buyers because their sales reps regularly tell them that deals were lost because the price was too high. But this is usually just an excuse the buyer gives. Price is rarely the primary factor in the buying decision.
According to Howard Stevens, author of Achieve Sales Excellence, price is actually the least important factor in a buyer’s decision. The most important factor is the competence of the sales rep. When a buyer thinks your sales rep lacks sufficient competence, he’s not likely to say so. It’s much easier to use price as a disqualifier.
A recipe for losing money
If you hear this excuse often, it’s easy to think price is the bottom line and design your sales process with price as your focus. This is a recipe for losing money.
By selling on price, you are telling your customers that all the other benefits of your offering are unimportant. You are basically saying you are no different from your competition; price is the only reason they should choose you.
One way or another, you will lose money with this approach. You will either lose by not winning the sale or by gaining a customer who does not truly value you or your offering. This kind of client is high-maintenance because you have taught them that they must work to extract value from your relationship. You can spend more servicing these folks after the sale than you made by closing it. You may actually lose money if you sold at bottom price.
Two keys to avoiding focus on price
Companies that sell strictly on price generally lose to the company who focuses on what the customer thinks is more important. Yet many sales reps are still conditioning their own customers to buy on price. There are two things you must do to steer customers away from this.
1) Don’t YOU focus on price, and don’t allow your sales reps to.
Sales reps sell on price for a few reasons, most of which have to do with fear. They may bring it up because they are afraid the customer is losing interest, but will sit up and pay attention again if the price is good. They may fear they will lose the deal if they don’t have the lowest price. But fear can cause sales reps to think illogically and drive them to do what they shouldn’t.
When a sales rep focuses on price, he makes it the most important issue. He demonstrates that he has no other differentiating value to offer. The intent may be to “sweeten the deal” with price, but the customer will see a red flag. A rep who sells on price sends a message that there’s more risk than value to his offering, and price is a tool he is using to manipulate the prospect into buying.
A prospect who feels manipulated doesn’t trust the sales rep and doesn’t buy. If you are telling your sales reps to do whatever is necessary – meaning lower the price – to close sales, stop it. This strategy is counterproductive and is costing you sales. Instead, move on to item #2.
2) Teach your reps to sell the way customers want to buy.
Price is where customers go when they can’t find much value anywhere else. A prospect who jumps quickly to discussing price sees no difference between your solution and someone else’s. This happens when a sales rep has not engaged the buyer in a discussion geared toward discovering what his needs are, the problem he needs to solve, or the goal he needs to achieve.
A rep who has not identified how the customer will determine the best solution has no chance of presenting the customer with a winning offer.
Customers buy from the sales rep who understands their buying criteria and can tie his solution to the them. The rep knows what the customer hopes to gain from the purchase and can explain how his product or service will impact business, increase or protect revenue, reduce/control expenses, or reduce/control risk – whatever outcomes are important to the customer.
Price at the end of the sales process
When a sales rep sells the way a customer wants to buy, price is the last thing the customer will mention. If your reps get to this stage and are asked to reduce the price, the customer may have genuine budget limitations, but they may also be trying to reduce risk.
World-class sales organizations train their reps to be competent in understanding how the customer wants to buy because they know that competence always trumps price. If you use the same strategies, you will enjoy higher margins, long-lasting business, and customers who are a pleasure to work with.
Need help shifting away from price-based sales?
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