Loading ...Selling in Tough Times (August 2008)
Here’s how to communicate your value to potential customers in a tough economic climate.
By Linda Bishop
“I’m sorry Joe, but I awarded the project to a different vendor,” Nancy said.
Surprise painted a picture on Joe’s face. Nancy had been his customer for more than a year and he had expected to win this bid. “Why?”
“You told me our price looked good.” Joe knew he sounded upset, but he couldn’t disguise his emotions. This was a big order and it hurt to lose it.
Nancy sighed. “I know. To tell you the truth, I expected you to get this job, but one of your competitors came in cheaper. Right now, I couldn’t afford to ignore that.”
Sound familiar? A good customer gives you the opportunity to quote. You gave her a fair price. Everything looks good until the competitor’s bid comes in. It’s lower. You lose the order because of price, and the loss stings.
Price matters when times are good. When times are bad, it frequently casts the deciding vote.
It pays to look for new ways to deepen your understanding of price’s role in business because knowledge helps craft smarter selling strategies. You close more orders and leave less money on the table. You stop wasting time on accounts that claim to like your offering, but will never be willing to pay for it.
Price matters because resources are limited. Spending less money in one area allows businesses to spend more in others. Companies have multiple goals, so tradeoffs are required. Companies make tradeoffs by balancing benefits against costs.
Benefits browsing
Picture the customer walking into a store. The shelves are stocked with benefits. The customer grabs a shopping cart and goes to the aisle where your product is located. They select desired benefits, the ones they care about, and toss them into the cart.
They don’t pick everything you offer. Some benefits remain on the shelf.
The buyer goes to the register to check out. The clerk punches keys and gives the buyer a price. The buyer is told that some benefits are bundled together. Whether or not the buyer wants them, they’re included in the price. The buyer inspects the pile. Is there enough value there to make it worth the cost?
There is always more than one way to get a job done. Substitutes lead to market competition. Companies create advantages by understanding customer needs and developing offerings that differentiate them from competitors. They construct their own unique package of functional benefits relating to product performance in areas like:
• Order speed
• Ease of use
• Quality
• Technology
• Safety
• Physical product characteristics
• Service
• Location and logistics.
Customers evaluate and rank these logical reasons to buy when making purchase decisions. They determine what is critical, important, nice to have, or doesn’t matter.
On minor purchases where risks and tradeoffs are small, buyers decide quickly. They want to check the task off their list and move on. Often, the salesperson in the right place at the right time with a reasonable price gets the order.
Major purchases require more thought because they necessitate bigger tradeoffs. Involved parties apply higher standards of logic to benefits ranking. They engage in deep discussion and generate reports listing pros and cons. Buyers are required to justify preferences and defend them.
Changing buyer preferences
In good times and bad, personal selling has the power to change buyer preferences. One way we think is by answering questions. Good salespeople know the right questions to ask. They use conversation as a tool to educate buyers about their offering and motivate them to consider it.
During tough times, budget reductions force new tradeoffs and buyers sacrifice functional benefits for lower prices.
• The buyer accepts longer lead times in return for better pricing.
• Buyers look for ways to unbundle total costs and pay for only what they need.
• They eliminate add-on services that are nice to have, but not necessary.
• They select lower quality options even though higher quality options are preferred.
Corporate buyers are expected by their boss to purchase for logical reasons, and lower prices make a strong appeal to logic. But, buyers are human. Their emotions play a role in decision-making.
“The last time I bought this product, it delivered late and the end user was angry. I’m uncomfortable when people are angry. Even though the price was lower, I won’t buy from that company again.”
“The last time I bought this, everyone loved it. I saved the company money and looked like a hero, so I’m ordering it again.”
“The last time I bought this, there were several miscommunications, but in the end it worked out. I’m stressed and have a lot to do. I guess I’ll take the easy route and buy the product again. Hopefully, this time it will all go better.”
Using positive emotion
Positive emotions connected to salespeople play significant roles in minor purchases and reorder items. On big ticket items, they get you an audience and the opportunity to present your offering. Smart salespeople know the importance of “feel-good” aspects of selling.
• Listen without interruption.
• Demonstrate to the buyer that you like and respect them.
• Keep promises.
• Understand the current situation, and have empathy.
• Make buyers look good to their boss.
• Provide information that makes decision-makers look intelligent for choosing you.
• Protect customers from making mistakes.
In tough times, sales success comes from taking a cold, hard, objective look at the product you sell. In terms of functional features, how distinguishable is it from the competition?
If the product is highly standardized or a commodity item, it’s easy to find substitutions. Often you, Mr. or Ms. Salesperson, serve as the product differentiator based on the emotional benefits you provide for buyers. All things being equal, customers buy from the salesperson they like the most.
Even when all things are not exactly equal, customers often buy from favorites. Why? Emotional benefits can tip the scale in your favor when they outweigh pricing differences.
Ear to the ground
When your price is higher than the competition’s, the amount of the difference has significance. A buyer may decide to pay 10 percent more to deal with you on a $500 order. If you’re talking about 10 percent on a $50,000 order, the stakes change. Yes, the buyer likes you, but not that much!
Remember, in tough times your customer feels increased pressure because the boss subjects all decisions to higher levels of scrutiny. A loyal buyer may never have expressed a single concern about your price in the past, but you should give thought to how you fit in the current business environment. Don’t wait until you lose business to react.
Talk to prospects and customers about pricing issues.
• What new corporate initiatives pertain to costs?
• What is the buyer’s boss saying about pricing?
• What is their big picture view of pricing in the product category where you fit?
• Do they have concerns about the price of your specific product?
• Are they considering new offerings from competitors as substitutes for your product?
• What tradeoffs are they willing to make to get a lower price?
Great salespeople aren’t scared by price. They welcome discussions because they provide insight into how prospects and customers think. Their expertise allows them to communicate the value of their offering and explain why they believe it’s worth every penny.
There will always be bargain hunters interested in cutting costs, but great salespeople know there are plenty of people who want their offering and will pay for it.
Look for buyers who fit. Talk price with confidence. Recognize you make a difference by how you treat people. Whether times are good or bad, take skills to the next level and sell more.
Linda Bishop has spent over 20 years in sales and marketing. She was previously vice president of marketing for IPD printing, presently owned by RR Donnelly. In 2005, she started Thought Transformation, a national firm dedicated to helping clients add sales dollars by developing an educated and professional sales force.
Sidebar: Give me a second chance
Some customers allow you to revise your bid when your price is high. Others won’t for reasons relating to ethics, personal preferences, or company buying rules. If you know you won’t get a second chance, talk to the buyer about pricing before giving them your bid. Look for clues that help you craft a proposal.
Sidebar: What are you worth?
You lose an order for a small and insignificant amount of money – let’s say $72 on a $2,800
tri-fold brochure job.
• Does the customer operate in a world with strict bidding rules that require them to select the low priced vendor?
• Or, did they decide you and your company aren’t worth $72 more?
If the answer to the second question is yes, what can you do to change their perception of your value?
Sidebar: Sales Incumbents, be warned!
When cheaper substitutes perform adequately, it is usually impossible to convince buyers to return to high-priced options. For example, a buyer decides to order their trade show sell sheets off the Internet to save money. The quality is lower, but they serve the purpose. In tough times, don’t waste any time mourning lost business that will never return. Accept the situation and look for a new opportunity.
