CRUSH PRICE OBJECTIONS

SALES TACTICS FOR HOLDING YOUR GROUND AND PROTECTING YOUR PROFITBy TOM REILLY

The McGraw-Hill Companies, Inc.

Copyright © 2010 Tom Reilly
All right reserved.
ISBN: 978-0-07-166466-0

Contents

Chapter One

Facing Reality

Reality isn't the way you wish things to be, nor the way they appear to be, but the way they actually are.

—ROBERT RINGER, LOOKING OUT FOR #1

Perception is subjective reality. It is the meaning that you attach to incoming stimuli; what you see is reality for you. With price objections, your perceptions coupled with the buyer's perceptions may offer a discordant view of reality. Resolving differences in your subjective realities is one of the fundamental challenges of dealing successfully with price objections. You may perceive your price as fair while the buyer perceives it as unfair. The greater the divide between your perceptions, the greater the challenge to resolve the price issue. You need to earn a profit, and the buyer needs an equitable and viable solution.

This chapter is about bridging that great divide by introducing you to the realities of price resistance. By studying these realities and integrating them into your daily selling, you are invoking an objectivity that may prove to be your greatest weapon when battling the beast of price resistance. Specifically, this chapter will cover the following:

* Ten realities that shape the landscape of selling in a price-sensitive environment

* How your attitudes influence the outcome of your efforts

A key characteristic of resilient people is their willingness to face reality as it is, not as they wish it were. We begin with ten realities that affect your life as a salesperson. Accepting and integrating them into the context of your sales presentation provides the energy behind the death blow to the beast.

REALITY #1: YOU WILL HEAR PRICE OBJECTIONS

They go with the territory. In spite of your best efforts, someone will object to your price. As a consumer, do you accept the first price a salesperson presents to you? No, of course not. Think about your last major purchase—house, appliance, or vehicle. Did you attempt to negotiate a better price? When you were a child, did you attempt to negotiate a bigger allowance? Have you ever negotiated your salary or compensation package? We wonder why buyers ask for a cheaper price, but facing price resistance is a sign that you are engaged in your territory.

REALITY #2: YOU WILL LOSE BUSINESS BECAUSE OF PRICE

There is some business you want to lose because of price. If you want competitors to have low-profit, high-aggravation, and slow-pay business, then take Napoleon's advice, "Never interrupt an enemy when he is making a mistake." From our research, we have concluded that if you are not losing one in six deals on price, your price is too low. If you target all customers as viable opportunities, you will mix price shoppers with value-added shoppers. With price-shopping customers, your in-pocket profitability is lower because they demand the same high level of treatment at a lower price. These two questions help you clarify your focus and face the reality of where to invest your sales time:

* Do you want every order or every opportunity?

* Have you ever met a customer whose business you did not want?

REALITY #3: YOU WILL SELL IN SPITE OF YOUR PRICE

In every seminar I have ever conducted, salespeople have told me, "I was able to sell for some reason other than a cheap price." Think about your own selling. Consider the last good or service you sold for which your price was higher than a competitor's and you still got the business. Why were you successful? Was it your service, product availability, or your relationship with the buyer? The customer recognized the value in your proposition and was willing to pay for it. Customers have taught you how to sell your total solution—in our terms, your value-added. Are you listening?

REALITY #4: EVERYONE WANTS EQUITY

When the buyer says your price is too high, he is more focused on what he is giving than what he is getting. When the buyer obsesses on price, he is locked in on his sacrifices more than your solution's advantages—his pain versus gain. The one thing the buyer wants more than a cheap price is equity. He wants to feel that he is getting at least as good as he is giving. The sale is always about the customer, and his perception of value is sacrosanct.

Drawing from management psychology, equity theory explains employee-motivated behavior. People want equity from their work; they want a fair return on their personal investment. If they perceive equity—getting as good as they are giving—they are motivated to perform. The same concept applies to buying behavior. People buy when they feel they get as good as they give. Your task is to present your solution as an equitable exchange for the buyer's money. Here is a paradox: equity exists in the buyer's mind, not in your mind. It is not reality unless the customer views it as reality.

REALITY #5: SOME PRICE OBJECTIONS ARE FAKE

Some price objections are real; some are not. Fake means that price is not the real reason the buyer is hesitating. Whether the resistance is real or a red herring, there is an incentive for the buyer to bargain on price. If the buyer gets a better price, she wins. If not, she has lost nothing. From the buyer's perspective, why not ask for a lower price? Regardless of the motivation, you are dealing with a price issue at that moment.

REALITY #6: PREPARATION BUILDS CONFIDENCE

Whoever is better prepared for a price negotiation tends to emerge from that negotiation with a more desirable outcome. Being prepared does not guarantee your success, but being unprepared portends failure. Just as you never want to be out-prepared by the competition for a presentation, you never want to be out- prepared by the customer for a price negotiation. It is the one thing you control, and it affects your confidence and competence. Do you remember the one school test you studied for weeks in advance? This type of preparation fuels your passion and excitement, and this type of energy makes you persuasive and your argument compelling.

REALITY #7: YOU ARE SUPPOSED TO MAKE MONEY

Your company is in business to make a profit. Unless your company is a nonprofit organization, you must earn a profit on a sale. You lose money when you discount. I have met salespeople who sold as if they worked for a nonprofit. For them, making a sale was more important than making a profit. The purpose of a business is to make money—hopefully, lots of it. There is no reason to feel guilty about making a profit. That is why your company is in business.

Profit is not a dirty word; it is the lifeblood of your company's ability to reinvest in its future. Profit funds your R&D, recruitment of top talent, and service programs. How can you deliver maximum value if you have nothing to give? The profit you garner in the form of a higher price is an investment your buyer makes in receiving greater value from your company in the future.

REALITY #8: SALESPEOPLE CREATE THEIR OWN MISERY

Most price resistance is a self-inflicted wound. Salespeople have taught buyers to object to price. A fifteen-year study of sales behavior conducted by the Vass Company appearing in a 1996 issue of The Competitive Advantage magazine reported that 90 percent of salespeople impulsively—and...