Some salespeople use price as an excuse for a poor job selling. But price objections may raise a red flag indicating something else is wrong — and that it’s a deeper problem.
Here are nine guidelines for analyzing the price problem:
1. Is price more of a problem in the salesperson’s mind than in the prospect’s?
Top salespeople know that selling is about offering the best value, not the lowest price. They uncover the prospect’s needs, analyze the costs associated with those needs and translate features of the product into what it will do for the prospect. The prospect’s buying decision is based on perceived value in relation to price. Value or benefits are not in the product but in the prospect’s mind.
2. Is there insufficient differentiation?
The “we can get it cheaper elsewhere” comment generally indicates that salespeople have failed to separate themselves from the competition in ways that impact their prospects. Prospects are not being shown the value of doing business with the salesperson. If salespeople selling the same products or services are all viewed alike, then price is the only factor separating one from the other. Unless a product is clearly differentiated from its competitors, the price issue will be a constant problem. Even if the products are nearly the same, there are always ways to differentiate, such as service, delivery, product durability and company reputation. Prospects don’t buy products or services based on price — they buy them based on value.
3. Are salespeople out of step with prospects?
What salespeople want to sell isn’t as important as what prospects want to buy. Customers are more sophisticated than in the past. Some salespeople continue to try to sell products that no longer meet prospect needs. Price objections occur when the product or service doesn’t meet prospect needs.
4. Did salespeople fail to educate prospects on the value of doing business with them?
Many price objections are raised because salespeople failed to take the time and effort to make prospects understand they’re buying a company as well as a product or service. The price can be higher than the competition as long as the prospect feels it’s justified in terms of the values and benefits offered.
5. Did the salesperson anticipate the prospect’s arguments about price?
Some prospects open with unreasonable demands just to see if a salesperson will cave. Successful salespeople view pricing as a problem-solving process — exchanging ideas and information and generating creative trade-offs and alternatives.
6. Did the salesperson discover the leverage points?
Salespeople have more leverage than they think. Customers usually won’t tell them about scheduling problems or quality issues with competitive products. Salespeople need to be patient and probe for problems and solutions that have nothing to do with price concessions.
7. Does the salesperson understand that customers are paid to press for concessions?
Customers don’t necessarily expect to get everything they ask for. Sometimes customers present an overly rosy picture of a competitor’s pricing. For them, the sport of getting the lowest price can be more important than buying the best product. Effective salespeople don’t automatically give in to every demand for fear of losing the sale. They take the time to mutually explore alternative trade-off opportunities.
8. Does the salesperson waste time on price grinders who are not serious prospects?
There are prospects who are so focused on price that they can’t be sold. For them, price is everything. Ultimately, many price grinders are not worth doing business with. They can drain you of energy and time with more demands than their business is worth. It can be a short-term benefit if you do sell them.
9. Did the salesperson offer a win-win outcome?
Salespeople can overcome the pricing problem by showing prospects they want a win-win outcome, not just a sale. The biggest barriers to a win-win situation are often egos. If salespeople don’t manage their own egos or help customers manage theirs, they risk losing sales. Customers are much more agreeable to negotiation, rather than simply demanding price cuts, if they feel salespeople are genuinely working on making fair deals.
Take the initiative
When it’s time to discuss price, it’s a good idea to take the initiative. When salespeople proactively sell value, they usually avoid price objections. Before they can speak with authority on value, they must be able to recognize their strategic advantages and weaknesses.
To raise the subject comfortably, salespeople can start by talking about a prospect’s budget or pricing terms. Doing it confidently can establish the right tone. After stating the price to prospects, it’s a good idea to stop talking and give them the floor.
Too much talking at this point may lead to price backpedaling. Resist the urge to say any more until the prospect reacts. Listening to the buyer here is crucial to handling price objections.
Adapted from: “Crush Price Objections,” by Tom Reilly, a sales consultant and trainer.
