Crush price objections: Learn to sell value, not price

by Tom Reilly

Salespeople should never lower their price unless it is a strategic decision where they call the shots. When you compete on price only, you send the wrong message to the buyer. Indirectly you’re saying, “because price is all that matters, whenever somebody else comes along with a cheaper price, you should jump on the opportunity to buy cheaper.”

You’re sending buyers to the competition.

The ugly reality of price selling is that you discount the importance of your company’s value. The aggravation of dealing with price shoppers is high. They worry you to death. In negotiation, it’s called nibbling. They swamp you with nickel-and-dime requests and pick you clean.

According to a recent survey of 8,000 industrial buyers, one out of six buyers is a true price shopper who shops only price. One out of six is a value-added shopper who is more focused on the total solution, not just price.

This leaves two-thirds in any industry that is up for grabs.

One out of three shoppers are probables for value added, and one out of three are questionables. Two-thirds of the market is up for grabs at any given time.

When asked to rank price on a 10-point scale, where 1 is not important and 10 is very important, buyers rated price 6.9, according to a survey from Tom Reilly Training. When price surfaced, it appeared as “help us control our costs and maximize our profitability.”

Incidentally, salespeople rated it 8.3 on the 10-point scale, which says salespeople make a bigger deal out of price than buyers do. Nearly 14 percent of respondents would be willing to pay for a better quality product, and 9.4 percent said they would pay more for better service. 

The survey also revealed the top 12 things buyers look for in a solution are:
• knowledgeable salespeople;
• quality products;
• product availability;
• technical support;
• ease of doing business;
• product performance;
• follow-through;
• ability to get things done;
• acquisition price;
• inventory levels;
• accessibility; and,
• post-sales service.

What’s the problem?
If your best buyer called you and said he needed relief on an order, what percent discount would you give? Write down a percentage anywhere from 0 to 50 percent. Many responses fit into the 10 to 20 percent range. That’s a significant amount of money left on the table. Why do salespeople cut their price? There are internal and external reasons.

The internal reasons are:
• Lack of knowledge about a product or service and why it’s worth the higher price.
• Lack of skills in selling at higher prices.
• Lack of confidence in a product.
• Philosophical problems with selling at higher prices.

The external reasons are:
• Poor service by your company.
• Inferior product quality.
• Being outsold by the competition.
• Market conditions.
• The buyer is out-negotiating you.

Value in Purchasing (VIP)
Salespeople can defuse price objections use different methods. Make a list of 20 value-added extras, print it on a sheet of letterhead and make it a visible item with customers.

Here’s a sample of things to put on a VIP List:
• electronic data exchange;
• 24-hour service, seven days a week;
• custom service;
• ease of doing business;
• partnering;
• customer training;
• toll-free customer ordering and assistance.

Purchasing check-off
Another way to de-emphasize price is to make a list of key areas where you enjoy a competitive advantage. Turn the list into a check-off sheet you provide your customers, showing key things to consider when purchasing. 

An example list might include:
• Does the supplier have a track record of success with like customers?
• Is the supplier conveniently located?
• How easy is it to do business with the supplier?
• Will the supplier’s quality meet our needs?
• Does the supplier offer 24-hour service?
• Does the supplier offer post-sales support?

Understand customer needs
Two-thirds of the objections salespeople hear come from a failure to qualify and fully understand the buyer’s needs. Superficial probing by the salesperson or a narrow field of vision by the buyer may cause this. And where there is no value to the customer, price rears its ugly head.

When you get a price objection, your immediate reaction should be to slow down the process. Buyers know if they push you to make a quick decision on price, emotion will drive the decision. When you make an emotional decision, the buyer wins. Following are five types of objections and strategies to deal with them.

Information-based objections
The buyer lacks the information needed to make a buying decision. 

Your strategy should be to:
• Help the buyer develop a better understanding of needs.
• Educate the buyer about the total value of your solution, the unique way in which your company solves problems.

Lack-of-resources objections
The buyer lacks money, time or authority to buy your product or service.

Your strategy should be to:
• Determine if there is a way to create money. Can you offer variable payment schedules? Is there discretionary budget money for you to pursue? Is it a credit problem?
• Is there a way to help your buyer get the time he needs to make the decision? When is the timing better?
• If you’re not selling to the real decision maker, can you get to him? Who can say “Yes” to your ideas?

Attitude-based bbjections
This could be a fear the buyer has for being gouged. It could even be that the buyer feels it’s risky to pay too much for something. The buyer has some arbitrary upper limit and has committed to not exceeding it.

Your strategy is to:
• Demonstrate that there may be even greater risk in paying too little for something.
• Remember that the buyer wants to feel good about what he’s paid.
• There are times when a buyer needs permission to indulge himself.

Wrong-solution objections
There are times when your solution is too much or too little for the buyer. Are you selling a sledgehammer to kill a fly? Are you selling a peashooter to stop a tank? You may need to add or subtract value from your package to suit the buyer’s needs.

Competition-generated objections
Your competitor has offered the buyer a cheaper deal or they’ve started a price war. 

Your strategy should be to:
• Make sure it’s an apples-to-apples comparison.
• Determine if it is a bona fide competitive offer.
• Determine if you want to play the game. Remember, your price may be just fine. It’s their price that’s too low.

Presenting price
When discussing price with your customer don’t:
• look down or stare into space when presenting your price;
• apologize for your price;
• cover your mouth or your face;
• duck when you’re presenting your price;
• say, “here’s our asking price”, or  “here’s your price.” 

On the other hand, do:
• use the three words “the price is”;
• maintain steady eye contact and project confidence;
• present price matter-of-factly. 

It’s the natural next step in the process. Explain it without apology. Defend without defensiveness. Inform without embarrassment. Frame the price within the context of what they get vs. what they give. In other words, sell the value.

Clarifying the price objection
The first step in dealing with any price objection is to clarify what the buyer is really saying. Uncovering the motive will suggest ways to deal with the price objection.

These are just several principles for crushing price objections. Of course, there’s more to it. As Cicero wrote, “The skill to do comes from doing.” You gain mastery in application. I believe this is especially true in mastering the art of selling.

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