The most common grumble I hear from sales people is that their market is driven by price and it’s getting harder to make any margin because price cutting has become so aggressive.
My advice to them is, if you can’t win the price cutting game, don’t play it!
Let me explain with an example. A sweet potato farmer based in West Virginia who exported to the UK was paying $1,000 per container to ship his harvest. His shipping overheads were low but his customers were disgruntled because many of the sweet potatoes transported in the low-cost standard containers were no longer in saleable condition when they arrived at their destination – they had perished.
The sales person was going to offer ventilated containers at a cost of $2,000 each but this is twice the price and would sound expensive at this stage. So, the first priority for the salesperson was to ask the right questions.
He ascertained that the farmer was now using refrigerated containers at a cost of $3500 dollars each shipping 20 containers per week for 25 weeks of the year whilst the sweet potatoes were in season, at a total cost of $1,175.000.
Armed with this information, the sales person was able to base his approach on helping the farmer improve his business by addressing his customer's needs, while offering him a price that was lower than his expectations, even though it was twice his existing costs of a basic container it saved the farmer $75,000 over the 25 week period. In this way, he not only sealed the deal but exceeded the customer’s expectations by helping him solve his issue with perished stock much more cost-effectively than the customer had anticipated.
So what’s the moral of the story? Firstly, it’s a reminder that price is never the sole criteria for any purchase. A successful salesperson will always keep this as their mantra and find out more about the buyer’s other purchase motivations as an integral part of the selling process.
By asking the right questions, listening to the answers and developing a solution that addresses the customer’s specific needs, a salesperson can add value and push price down the agenda.
Instead of focusing on price, this approach establishes the desire to buy. As a sales professional, if you understand the desire to buy, you’re in a position to develop it, and the higher the desire to buy, the lower the customer’s price resistance will be.
For many salespeople, the default setting seems to be to find out what the customer is currently paying and begin negotiations on price. While finding out what the customer is already paying is an important part of the process, it should go hand in hand with finding out what value they are receiving at that price so that you can offer them a higher value solution.
It is the value that you can provide that will secure the sale and only once the customer is sold on buying from you should you begin negotiations on price.