It Really Isn't all about Price!

Here is a little drama I come across, seemingly weekly.

The Boss: “My sales people don't know how to sell anything without a discount. Every day, they come to me and want lower prices in order to match the competition. They aught to be selling on our great features, not price.”

The Salesman: “ The Boss won't give us anything we can sell with. The competition is eating our lunch with better pricing, and we are losing a lot of deals.”

Enter the Consultant, who is supposed to save the day. After a little research, I find that both sides are correct to some extent. However, they'll never come to an agreement, because the issue is improperly framed. Here is the reality:

If you get to the end of the negotiating process and are losing deals on price, you actually lost the deal much earlier.

In a previous post, I wrote about how shoppers are looking for an answer to The Big Question (Click Here). In short, when shoppers are early in the buying cycle, they are looking for a reason to buy from you. Specifically, they want to know, “Why should I buy from you, rather than 6 other companies that do the same thing?” And they will continue shopping until they:

• Run out of vendors
• Get tired of shopping
• Find a good answer to The Big Question
• Run up against their buying deadline.

When your prospect gets to the end of the buying process, and only wants to talk about price, it means you didn't give him any other reason to buy from you. In that environment, it is hard to close deals, to build customer loyalty, and to maintain reasonable profit margins.

You can avoid this situation by giving your prospects some good reasons to buy (beyond low price) that set you apart from the competition. Is this easy? NO! But it is much better in the long run than cutting your margins to shreds.

Simply put, here's what needs to happen to get out of the never-ending cycle of price cutting:

If you are The Boss: It's your job to create significant value points (that are meaningful to your customer base) that set you apart from your competitors. It's also your job to see that this extra value is actually delivered to your customers, and not just talked about.

If you are The Salesman: It's your job to mention, re-enforce, and demonstrate the benefits the customer will get from those extra value points, and remind the customer that they make your product worth that little extra in price.

Now, Here is some Good News!

If, in the current scenario, you are always having to compete exclusively on price, it means that you haven't succeeded in giving the prospect a good non-price reason to buy from you. So, where's the good news?

It also means your competition hasn't done a very good job of convincing the prospect of their extra-value proposition either.

That's where your opportunity exists. This window may not last long however. Your competitors are probably working on this project right now.

Practical Tip of the Day:

1.) Talk to you salespeople. Get them to develop a list of what you offer, or could offer, that would set you apart from your competitors. HOWEVER, think of this list as just a starting point. Salespeople (even the best of them) tend to think in the short-term, and are influenced by the last customers they spoke with.

2.) Talk to your best customers. Put together a list of you best 15 accounts last year. Cross off the top 5 (who may represent special circumstances, and not be typical of your overall target market.) Go out and meet with the rest. Take them out to lunch. Ask them what they like about your company / products / services as compared to the competition. They'll have some useful opinions to share. Getting those opinions directly from the customer is far superior to just hearing them (in filtered form) from your sales staff.

3.) Talk to your suppliers. Especially the ones that sell to your competition. What do they see going on in the industry? What innovation have they been impressed with? It is amazing what people will share when you ask their opinion.

4.) Finally, use you instincts about where the market is going. Put all of this together and create some distance between you and the competition. This will improve both sales and margins, and make things fun again.