The most common objection during a sale is the price objection. It’s the challenge that every salesperson comes across several times per week. Unfortunately, many think there is a tactical way of overcoming these objections. This may have worked in the past. But buyers have grown up. They are armed with knowledge about you, your products, and your competitors. And they have seen every trick in the book. So overcoming the price objection is not a matter of new closing techniques. Instead, to move forward when your prospect says you are too expensive, you need to understand how they look at your price from their perspective.
First, there are four things we need to realize why they are asking you to sharpen your pencil:
- It’s their responsibility to get the best price. Whatever your offer is, it is their job to get the best deal they can. So, you should not act surprised. Keep the emotions out of it. The best reaction to a price objection is to be prepared for it.
- They do not perceive enough value to pay the price you are asking for. You shouldn’t forget, your are replacing the incumbent competitor. Your prospect is paying a price now, and you haven’t convinced that your offeeing is worth paying more for. You are seen as equal as your competitor and that gives the prospect all the right reasons to start bargening with you.
- The moment you discount, you have just agreed with your prospect that you are equal to your competitor. A psychological moment. Once you give in, you cannot go back. Diving under the competitor’s price is the riskiest tactic. You have just given your prospect a reason to go back to your competitor for an even better price.
- In case you discount, from a buyer’s perspective, they got the best deal: changing to a similar service, at a better price. The stakeholder you are dealing with has good news for their buying group. He or she proposes a switch to an argueably better service (that’s what you told them) at a cost saving!
IT IS ALL ABOUT THE “COST VERSUS VALUE PERCEPTION“
Not to give in to discounting you have to raise the value perception. The buyer will always compare your higher price as an additional cost versus the cost they have now with the incumbent competitor. The delta is what they will focus on. Is it worth paying more? Does the extra investment return into an additional value? What will that value mean to them and their customers? Will the delta advance them strategically, or is it just a mere tactical benefit to their operations, finance, or customer service function?
If you are convinced your solution will deliver that additional value, you should justify the delta. Do you not succeed in this, then your prospect will look for a bargain. But, on the other hand, not delivering on your promises will move the customer’s perception towards the rip-off viewpoint, and their loyalty is now at stake.
THE VALUE PERCEPTION STARTS AT WHY CHANGE?
Solution sellers will explain the delta from their solution’s features, advantages and benefits. Although this is important to master, in the end, a return on investment needs to be justified – raising the value perception starts earlier in the buying process. This is where you make the difference versus your competitor sales reps.
You are comfortable talking to prospects that are not even thinking about changing suppliers. They are in Why Change? Selling with the buyer’s perspective creates value differently. You are helping your prospect:
- to understand their challenges better. The information and insights you share provides them with a different perspective they did not think of before.
- to make sense of the uncertainty. The stories you share gives the prospect more confidence that things can be done differently. You come with ideas how to save costs they have not considered before. Or you have suggestions how to grow additional revenue income.
- to make sense of the complexity. Companies are overwhelmed with information and often do not know where to turn when it comes to making decisions. You help with driving consensus in the buying group.
- to look at different strategic options. They don’t know what you know. Your ideas, for example, on how to create better customer experiences is something they didn’t know or well enough. Every company wants to make strategic advances because that will set them apart from their compatitors.
Value creation starts earlier in the buying process. And the additional value is you. For the buyer, a price to pay for a well-chosen investment.
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