Price Objection - What Price Objection?
By Dr. Rick Johnson
Wednesday, 9th June 2010
A major reality during tough economic times is the simple fact that customers ask for lower prices.

Sales people often encourage this mindset themselves simply by listening to the doom and gloom that the media frenzy promotes on a daily basis. Sales people that don't understand their value propositions resort to old school training and  begin focusing on features and benefits which has a tendency to commoditize their product line.

Effective sales managers understand this phenomenon and help the sales force recognize that it is especially critical in tough economic times to help customers visualize the difference between price and cost. They direct the sales force to focus on value.

Price must not become the major issue and it should be the last issue on the table and not the first. If sales people understand their value propositions and can communicate that value while providing real solutions then price does not become the deciding factor.

  • Price isn't part of your value proposition
  • The art of selling has nothing to do with price
  • Value trumps price
  • Value is determined by the customer --- not you
Most companies have created the mythical term added value. It's a term that many have never really understood. It usually is a bunch of gibberish containing very little value. If I asked you individually to describe what added value is, some of you probably would have a hard time with it.

Value is defined as the dominant benefit you provide that helps your customer produce more, benefit from, and/or profit from or satisfy a need.  This is a selling approach that focuses on helping the customer solve their problems without regard to making a sale. That means everyone must be part of the sale!
  • Most Important – often ignored by Sales People
  • Creates the greatest engagement
  • What the customer is really interested in.
The Value Proposition if used properly can;
  • ELIMINATE or reduce competition.
  • Set forth things that make you the only choice.
  • Create competitive advantage
Attitude is Everything

If you're frustrated with poor sales numbers from your team, understand attitude impacts a sales person's level of expectation for results. If you anticipate negative results from a particular activity how enthusiastic are you about engaging in that activity? Poor attitudes begin the downward spiral leading to sales decline, unhappy sales people and unnecessary turnover.

Sales Managers often respond to economic turbulence by trying to drive certain behaviors in sales people—pushing them to do more to make up for current attrition. . If the current behavior (business development activity and sales routine) of the overall team isn't producing the desired results, asking them to do more of what isn't working accelerates the downward spiral.

The quickest way accelerate decline is to remain excessively concerned with how much can be sold to the customer. The issue is not about any of that nor is it about what products the customer uses; rather, it is about what the customer is buying, then and only then does "share of spend" become the objective. The focus must be on your Value Propositions that solve a customer's problem.

The Emerging Specialized Role for Professional Sales People  today IS NOT TO INCREASE SALES, BUT to systematically and consistently increase the number of customers who choose you to be their #1 supplier........

Effective sales people minimize price significance by:
  • Separating selling from problem solving
  • Taking all of their industry experience and knowledge to understand the customers needs
  • Presenting alternative solutions—defining the value propositions and letting the customer decide
  • Applying their knowledge and experience to the customers pain as if it was their company to solve the problem.
People come to conclusions by making comparisons. If you don't let customers and prospects know why it is in their best interests to do business with you or buy your product, they won't. Market driven companies spend time and effort consciously influencing the way they are perceived by customers, prospects, and other stakeholders.

Some Realities of Competitive Analysis:
  • Your customers always say you are not competitive, your prices are too high
  • You know your customers guard the truth, but you're not sure to what extent
  • You must get competitive information to compare prices – ask for a copy of the invoice
  • You know your competitor's price list is discounted, but you're not sure how much
  • Your manufacturers swear that your prices are the lowest in town
  • You know your manufacturers guard the truth, but you're not sure how much
  • You sometimes worry that when your products sell quicker because your prices are too low and when your products do not sell, it is because your price is too high
  • You're wrong!
  • You know you operate in a maze of confusion
  • You know you're losing profits
  • You're right!
"Truth is such a precious commodity; we often surround it with a bodyguard of lies."
Winston Churchill

Remember this; price is not a benefit. Selling is not determined by the cost of your product. If you truly "sell" your customers and prospects, they will purchase your products/services no matter what price you determine. By the time your customer wants to discuss price they should be determined to purchase no matter what the cost.

So, find "real" benefits (value) to sell to your customers and prospects. Help them to see how great their life is with your product, and you've got a customer. Point out their current pain, and offer solutions to take the pain away. Discipline yourself to become a total solution provider.

Rick Johnson, expert speaker, wholesale distribution's "Leadership Strategist", founder of CEO Strategist, LLC a firm that helps clients create and maintain competitive advantage. Need a speaker for your next event, E-mail rick@ceostrategist.com.  Don't forget to check out the Lead Wolf Series that can help you put more profit into your business.

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