Have you ever had a client say, “your price is too high”? All sales professionals have heard this much more often than they’d like. Why? Because in the absence of a clear value proposition, all your prospect can see is the price.
Several years ago I went shopping for a new car and when I finally found the model I liked I prepared for my favorite part of the sale, the negotiation! I like to shop at the dealership at the end of the month when hungry sales people are desperate to make their numbers. I start walking past all the sales cubicles and look on their walls to see how many “Salesperson of the Month” plaques they have. As I walked past the fourth cubicle, there he was – my ideal sales rep – the one with a nice clean wall behind the desk with absolutely no plaques. Yep, that’s my sales person. It’s not that I’m dissatisfied with the price of the car; I just want to see how good of a deal I can get. I’m betting that the one with no plaques is much more likely to negotiate so he meets his sales goal by the end of the month. My primary objection was price – that was the only value I saw.
According to recent research in the life insurance industry, 29% of clients perceive the price as too expensive. There are 3 reasons which are true for most industries today.
1. Value of the solution. Most of the time the real value of your solution is not known or understood by your prospect. It’s your job to communicate the benefits so that they can see beyond the cost. The formula for this is quite simple; Value = Benefits/Cost. If you lead with features of your product or service instead of benefits, your main objection from the client will be cost. When you uncover their needs and then present the benefits of your products and services that meet those needs, the client will see the real value. Just try to buy a Toyota Prius when gas is over $4.00 a gallon and see how much the sales person will come down on price-nada! Why? Because as gasoline prices increase, so does the demand for fuel efficient cars. If the Prius meets that need then you are much more likely to pay the asking price. The value is greater than the price.
2. Client expectations. What expectations are you setting? To be the low cost solution or the high value solution? Do you set expectations of impeccable service or downplay your service offerings. Expectations help the client understand your position in the market. Before any client meeting, you need to know what this prospect/client can expect. The more you learn about their needs, the better able you will be to manage their expectations appropriately. If you know that the processing time for a new insurance policy typically runs 30 days, let your customer know that. In fact, you might add a couple of days to that timeline so that you can surprise them with an early delivery. If there is a particularly difficult aspect of your sales process, help them to understand the impact this may have.
3. Educate your clients. Your prospects will not know all they need to know about your solution. To help them understand your solution, you must ask good questions and then listen carefully. You have to first understand their needs before you can educate them on the benefits you can offer. Although for many sales professionals it’s difficult to be quiet, great sales professionals are great listeners. When you listen to their needs more than you’re thinking about what you want to sell, they will see that you care. You want to build trust and to be seen as a consultant – this approach gains the respect of your client. They value what you have to say because you cared enough to ask the right questions.
To stay out of the price driven conversation, you must:
– Communicate value
– Manage expectations
– Educate your clients
Only when you’ve mastered these skills will you succeed in providing a great solution at the price you want.