Greenville Business Magazine 2010 June issue : Page 10
››columns Price: A Bigger Issue Among Salespeople than Customers BY BILL LEE Most of us buy products that are actually of higher quality than is really necessary. Take golfers as an example.How many golfers do you know who play with the cheapest golf clubs on the market? If you see the latest and greatest Callaway or Taylor Made driver in their bag, odds are you’re looking at around a $400 price tag. How many of your customers drive the cheapest car or live in the least expensive home they can find? When customers tell salespeople that price is their number one criterion, they are simply not telling the truth. Most buyers make buying decisions based on quality and service. It’s only when salespeo- ple fail to convince a buyer that their quality and service are superior to the competition that price becomes an issue. When it comes to price, quality and service, you can pick any two you wish. It is almost never the case that a company can offer the highest quality and the best service at the lowest price. Companies that adopt this marketing strategy usually go broke. What’s the purpose of a salesperson anyway? It’s to impart upon buyers the value that either the salesperson or their company represents. If salespeople fail to accomplish this goal, they almost always fall for their customer’s negotiating tactics. If price were the real issue, then only one company in town would get all of the business. The only survivor would be the competitor that has the most capital and, therefore, the most “staying power.” Companies that employ salespeople who must have the M ost salespeople are scared to death that the prices they quote are going to be too high. But more times than not, the price is a much larger issue among salespeople than it is among customers. Of course, customers tell salespeople that price is of primary importance because they are trying to get the salesperson to cut his or her price, but when it comes down to decision-making, price is rarely the customer’s overriding concern. What service advantages do you offer your customers that set your company apart from its competitors? If you were to go to a purchasing agents’ convention and ask 100 buyers their number one criterion when making buying decisions, how many of them do you believe would say their number one criterion is price? My guess is very few. When buyers get chewed out by a superior, it’s usually for not receiving the right materials on a timely basis or for buying materials that don’t perform to acceptable standards. When buyers say price makes the difference, it’s usually because their experience has taught them that most salespeople are extremely vulnerable to pricing objections. Naturally, buyers are willing to accept a lower price if the salesperson falls for their negotiating tactics. 10 GREENVILLEBUSINESSMAG.COM | JUNE 2010 lowest price continually struggle to produce a satisfactory bottom line. To achieve an optimal gross margin, salespeople today must add more value than their competitors add. When you analyze your sales force, what kind of sales- people do you have? Do you have a sales team that believes they must have the lowest price to meet their sales goals? If so, your gross margin will forever be under attack. Invest the training dollars necessary to educate your sales force to deal with pricing objections and negotiating tactics. Your return on investment will be outstanding. Here’s an example: There’s one negotiating tactic in particular that I hear buyers use a lot: it’s called the “flinch.” If you’ve been selling for any length time you’ve most likely heard it used. The sales- person quotes a price and the buyer practically goes into orbit: “…you’ve got to be kidding! Is that stuff made out of gold?” The “flinch” is a deceptive tactic buyers use to make salespeople feel insecure about their prices. Athletes face a similar deceptive tactic called a “head fake.” The head fake is used to make your opponent think you’re going one direction when you’re really going another, so if the opponent falls for the head fake, you have a split second advantage. To reduce the odds that I would fall for a head fake, I remember my coach teaching me to focus on my opponent’s midsection, not on his head. While this doesn’t guarantee
>>columns - Price: A Bigger Issue Among Salespeople than Customers
Bill Lee
Most salespeople are scared to death that the prices they quote are going to be too high. But more times than not, the price is a much larger issue among salespeople than it is among customers.
Of course, customers tell salespeople that price is of primary importance because they are trying to get the salesperson to cut his or her price, but when it comes down to decision-making, price is rarely the customer’s overriding concern.
What service advantages do you offer your customers that set your company apart from its competitors?
If you were to go to a purchasing agents’ convention and ask 100 buyers their number one criterion when making buying decisions, how many of them do you believe would say their number one criterion is price? My guess is very few.
When buyers get chewed out by a superior, it’s usually for not receiving the right materials on a timely basis or for buying materials that don’t perform to acceptable standards.
When buyers say price makes the difference, it’s usually because their experience has taught them that most salespeople are extremely vulnerable to pricing objections. Naturally, buyers are willing to accept a lower price if the salesperson falls for their negotiating tactics.
Most of us buy products that are actually of higher quality than is really necessary. Take golfers as an example. How many golfers do you know who play with the cheapest golf clubs on the market? If you see the latest and greatest Callaway or Taylor Made driver in their bag, odds are you’re looking at around a $400 price tag.
How many of your customers drive the cheapest car or live in the least expensive home they can find? When customers tell salespeople that price is their number one criterion, they are simply not telling the truth. Most buyers make buying decisions based on quality and service. It’s only when salespeople fail to convince a buyer that their quality and service are superior to the competition that price becomes an issue. When it comes to price, quality and service, you can pick any two you wish. It is almost never the case that a company can offer the highest quality and the best service at the lowest price. Companies that adopt this marketing strategy usually go broke.
What’s the purpose of a salesperson anyway? It’s to impart upon buyers the value that either the salesperson or their company represents. If salespeople fail to accomplish this goal, they almost always fall for their customer’s negotiating tactics.
If price were the real issue, then only one company in town would get all of the business. The only survivor would be the competitor that has the most capital and, therefore, the most “staying power.”
Companies that employ salespeople who must have the lowest price continually struggle to produce a satisfactory bottom line. To achieve an optimal gross margin, salespeople today must add more value than their competitors add.
When you analyze your sales force, what kind of salespeople do you have? Do you have a sales team that believes they must have the lowest price to meet their sales goals? If so, your gross margin will forever be under attack. Invest the training dollars necessary to educate your sales force to deal with pricing objections and negotiating tactics. Your return on investment will be outstanding. Here’s an example:
There’s one negotiating tactic in particular that I hear buyers use a lot: it’s called the “flinch.” If you’ve been selling for any length time you’ve most likely heard it used. The salesperson quotes a price and the buyer practically goes into orbit: “…you’ve got to be kidding! Is that stuff made out of gold?”
The “flinch” is a deceptive tactic buyers use to make salespeople feel insecure about their prices. Athletes face a similar deceptive tactic called a “head fake.” The head fake is used to make your opponent think you’re going one direction when you’re really going another, so if the opponent falls for the head fake, you have a split second advantage.
To reduce the odds that I would fall for a head fake, I remember my coach teaching me to focus on my opponent’s midsection, not on his head. While this doesn’t guarantee that you won’t be “head faked,” it does greatly reduce the odds.
So when you hear a good “flinch” from a buyer, remember that it doesn’t necessarily mean that your price is high, it’s probably just a deceptive tactic. It’s part of the negotiating game buyers play.
Over the years, I have found it to be effective to tell customers who question the competitiveness of my prices that while I can’t guarantee you that every item I sell will be priced lower than the competition, I can guarantee that if they do business with me, they’ll end up with the lowest cost. Why? Because there’s a big difference between cost and price.
I can’t tell you how many times I’ve paid the lowest price, but because of either quality or service, I ended up paying more in the long run. Now that’s a story worth repeating.
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