The Best Hand in the Business
I found this today and thought you may be able to pull a couple of good points out.
By Geoffrey James | August 25, 2010
Novice sales pros often believe that the easiest way to make a sale is to have the lowest price. But that’s not always true. Or even frequently. Research reveals that even with identical competing products, low price is the dominant factor in the buying decision only 15 percent of the time.
What actually IS important to customers? It depends on the situation, but in general a variety of different factors can be more important than price including convenience, location, brand familiarity, and (most importantly in B2B) the authority and reliability of the sales rep.
However, customers often focus on price, even when it’s not all that important to them. The reason is that, of all the factors influencing them, price is the most easily understandable. It’s often difficult for customers to get their minds around the value of convenience or their sense of confidence.
For example, a “thrifty” shopper might spend a dollar in gasoline to save 50 cents on a product. Similarly, a B2B purchaser might spend a day researching the best price for a product, saving $250, without realizing he spent just cost the company $500 in salary and $500 in lost opportunity cost, simply by spending a day doing research.
Regardless of how your product is priced versus the competition, the most important job of a sales professional is to extract the customer from focusing on the price. While there are many ways to do this, they all follow this basic pattern:
Let’s see how this works in actual practice.
Suppose that you âre in the web services business, and your customers currently view you as overpriced versus your competition. The differences between your offering and that of your competitor are that 1) your websites are marginally more stable, and 2) you (as opposed to somebody else) are selling them.
To create the perception of value using the first differentiator (i.e. greater stability), you show the customer that the value of greater stability is far higher to them than the additional cost. Buying from you could prevent a crippling downtime that might easily cost them $100,000, for instance.
To create the perception of value using the second differentiator (i.e. you), you turn yourself into a valuable resource. You present yourself with professionalism, find opportunities to be of service, and act in a consistent manner, so they know you’ll be there when they need you.
Combine the two, and the customer will be no longer focusing on price, but instead focusing on writing you a Purchase Order.
Incidentally, the above method applies even when the only differentiator is a high price. As is amply evidenced by the luxury goods market, being overpriced can actually make it easier to sell to customers who automatically associate â high priced with â better product.
I realize that this is pretty basic sales theory, but I know for a fact that many sales pros still struggle with customers who are obsessed with price. Extracting them from that weird obsession is the primary reason that sales pros get paid.
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Posted on: Thursday, August 26th, 2010 at 6:09 pm
Posted in: Best Practices for Business, Motorcycles & Scooters
Tags: Pricing, Sales tips