Why Selling on Price is a Race to the Bottom and How to Turn it Around
Picture yourself in the sweetshop. A 6-year old child with your pocket money, you scan the array of sweets on offer and calculate how much you can possibly squeeze out of the bit of money that you have. You count your coins and ask the sales assistant “How much are they?” and “How much is that?” and “What about this?” Now this a great question from a child exploring the world of commerce in penny sweets. This question turns into a whole different animal when it starts showing up in the business world. And it does! Often! As a sales professional, how often do you get stumped by this question from prospects and customers? How is it that you do seem to end up there every time? Here are some tips if you want to move up the value chain and get out of bargain-basement selling.
1. Get clear on the Value You Bring to the Market
Nobody ever buys because of the price. They may believe they do. So I am going to shatter than illusion right now and show you that people will take you to the bargain basement, if you fail to clearly demonstrate real value to them around what you are selling. When I hear somebody asking how much is a product or service is or I hear clients telling me that everybody is selling on price and they cannot do much about it in a “recession”. What I am really hearing is the impact of their poorly executed sales techniques. People only sell on price when they don’t know how to sell on value. The real problem is, they haven’t taken the customer deeply enough into their own motives for making a decision to buy. When the value is hazy or buried in features and benefits, a buyer will haggle.
2. Identify the buyers you want to do business with
In a market, there are buyers hanging out at every level on the price spectrum, which allows for an array of service providers to co-exist. Some are offering their products at bargain basement prices and others at a premium that only a fraction of people are prepared to pay. The only difference between buyers is their appreciation of quality value versus price value. Some take very little time to explore the quality value. They only look at the budget they have to spend and try to fit a solution into the price.
Other buyers care about value and they look at ways they can find the money to invest because they immediately see how much value they will get from paying a little bit extra. It’s the difference between buying a standard car and wanting a high-end luxury-car experience as against paying for the BMW because you know you will get the luxury experience! They are worlds apart! As a sales professional, it’s important that you know very clearly where you are selling in your market and where you want to be. Are you a premium business selling in the bargain basement?
3. Get out of the Bargain Basement
Bargain-basement selling brings you into the numbers game, closing the sale, getting the customer over the line. It encourages buyers to shop on price, and drive a hard bargain and exit too quickly from the sales conversation if they don’t hear what they want. These buyers seem to want to extract every cent from the deal, while expecting a premium service. They hold the upper hand. The relationship becomes secondary to the best deal and price. I don’t know many sales people who enjoy this experience, not to mention the effort needed to service and maintain a customer like this. This is not good for either party. So what’s the missing link? The missing link is to be found in slowing down the conversation completely and getting to the root of buyer motives. I would encourage anyone selling to defer all conversations about price until you have a clear map of exactly what your buyer wants from you in terms of experience, value and level of service. There is truth to the idea that you do get what you pay for and in the long run cheap is expensive. Make sure you have a strong well-formed value versus price proposition. If this doesn’t work, be prepared to say no to this type of customer.
4. Position yourself as a Premium Service Business
When we talk about a premium business operating from value-based selling, price can never be the key driver to closing the sale. A premium sales person in action must be focused on a strategic level of thinking, demonstrating business acumen around the buyer’s business and the best possible outcome for both parties. It often boils down to three things, in one form or another; growth, efficiency and profitability. If you are offering a premium service or business, you must position yourself as a facilitator in the buyer’s decision-making process. This is where you help your prospect explore how they want their business or personal circumstances to improve by doing business with you. Only then can you look at the price they are prepared to pay. If you are within their price scale, the conversation will expand into exploring what is a good deal for the buyer. It’s about balancing their expectations with what you plan to deliver.
5. Create Quality Sales Conversations
Find a quality sales person and you will find somebody who can create real quality for the buyer in how they have a conversation. They can stimulate a way of thinking the average sales person simply cannot. If you want to have quality conversations with your clients, there are a number of things to consider:
6. Develop Your Coaching Skills
Coaching as a skill, has been undervalued, and no more obviously than in the sales field. I speak about this often, because coaching has got a bad rap. It has been poorly used and that has helped build a false impression of its impact in business performance and selling. Quality coaching can transform a business relationship and the sales person that uses it.
Sales people need to start developing and understand the importance of good coaching skills. At the heart of every quality sales conversation is the skill of uncovering the unasked question and the un-met needs around what value means to the buyer. This is about asking enough quality questions, without grilling, to motivate the buyer. This allows them to explore more deeply the areas and blind-spots associated with making a rash buying decision. Without good coaching skills, I am not sure how sales people can continue to compete with the sophisticated buyer, particularly when working within the complex sale and longer sales cycles, particularly inside the larger organisations where multiple influencers drive the buying decision.
Return on Investment and the Multiplier-Effect
Nobody can argue with a clearly thought out value return-on-investment. Show this to your prospect through case studies or an ROI calculator, where you demonstrate cost of doing nothing or buying cheaper. You then contrast this with impact of buying a premium service (hopefully yours) and how quickly and how often the investment will continue to pay for itself. This I call the Multiplier-Effect. In other words, they will repeatedly get the return on their investment over time by doing business with you.
The Over Delivery of the Under-Promise
I have always carried with me this motto “Under-promise and over-deliver” and it has helped me through my sales career. Whatever you are selling, it is important to sell within the realms of your company capabilities and be able to deliver on your promise. The last thing you need is a nightmare scenario, when you made enemies with your customers and an internal production team or supplier. The simple way to make this happen is to ensure the buyer articulates what they expect from you. Then you follow through with the team that is going to deliver it for you. You are the person that must balance the expectations with the promise you have given.
As a final comment, the view from the top floor is far more appealing than the bargain basement. Make the decision on where you want to be. Take command of your sales conversation by slowing down the process. The question you want answered in every sales conversation is “If this customer were delighted with our service, how much would the price matter?” That’s the difference between the premium floor and the penny sweetshop.
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