30 Oct 2016

Selling Tips-Overcoming Price Objections

As many sales people will agree, one of the most common objections that customers raise is with price.
This is a hurdle that has to be overcome for a business transaction and co-operation to take place. It can be a time consuming and stressful negotiation if it carried out incorrectly.

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A price negotiation is actually a very great thing, as it shows progress in the potential business cooperation and is a perfect time to build rapport with your customer.

At the time of reaching the price negotiation stage the seller has clearly found the required solution for the customer and the customer is also in agreement that they are in need of that given solution.
(I am making assumptions here that by this stage all offerings made by the salesperson are targeted and in accordance with the buyers complete requirements. If not then the salesperson needs to revisit the customers requirements to ensure that they are before entering into any price negotiation. The offering must be perfect and the vendor must always be able to deliver to the customers complete expectations.)

It is normal and expected for customers to shop around to find the best deal. However finding that best deal is not bound to price.
We have all bought things in the past, we all know that to obtain the best products and services costs money. Most essential is that vendors are certain that their customers are confident in the money being well spent and offering the best return for them both during the sale and more importantly after the sale. The offering must be fair, clear and never misleading.

You get what you pay for:
Much in the same way as to live in a desirable area, or to wear brand design clothes there is always an accepted and understood premium cost to doing so. The same applies to all provided products and services.
A customers goal may be to pull the price down as much as possible to test the limits of price flexibility. Customers want the best deal, we all do. The vendor though has to be careful not to sell themselves short leaving them unable to provide the efficient service that they plan to. Anything other might achieve the sale initially, however will undoubtedly end in stress for both the buyer and the seller. Be fair and clear and concise when it comes to costing. Often companies have this rigidly set which is by far the best way.

At the negotiation stage the salespersons aim should be to display from all angles that the quotation that they are offering is justifiable, worthwhile, fair and will offer maximum benefit to the customer.

Barriers:
Everyone has been sold to in the past. Even the best, most reliable and trustworthy salespeople are often initially tied to the same “salesperson” brush and barrier.

Every industry employs salespeople and some approach the sale in an incorrect manner using shoddy and occasionally forceful sales techniques which are in no way beneficial to the customer. The best sales people know how to and are often easily able to rise above this.

A “bad” sale generally occurs when inexperienced sales people jump into the sale and attempt to sell customers products and services that are of no use to them, ones that are then then later refuted. The sales process itself may have even been carried out in a forceful manner, using persuasive techniques, which some customers accept at the time of sale but then ultimately regret.

This is not what sales is about. Sales people should never pressure buyers and buyers should never feel under pressure to buy.

Consulting Not Selling:
An effective sale is only complete when a customers complete requirements are met with the ideal solution. The most important job of a sales person is to be as transparent, realistic, knowledgeable and honest at all times to ensure ongoing customer satisfaction and growth for their company in promoting their products and services.

We live in a climate of global competition and indeed the internet, whereby we are able to search for any information we are uncertain of. However having ability to discover information is not the same as having real knowledge and understanding, therefore many customers may not necessarily be well versed when it comes to understanding the up to date value and benefits of offered products and services.

Before talking about price, withing the sales cycle, it is essential for sales people to become trusted advisers and go beyond just attempting to sell, working toward guiding customers to a deeper understanding of the optimum solution for their needs.

Pricing Negotiation:

If a customer is not happy with the price it is usually for a few simple reasons:

  • the price is wrong or genuinely overpriced
  • a competitor company has given a cheaper quotation
  • a friend of theirs told them it should be cheaper
  • there is a limiting budget
  • the customer puts up a barrier to being sold to

If any of these situations occur then the customer is not completely confident with the offering that the salesperson is portraying to them.

The first is self explanatory. This is a company and procedural issue.

If the second and third instances, then the details of the offering need to be made clearer and compared. Of course, never belittle the competition or dispute what their friends may have received. Questioning is required here, you may even learn from the experience. Service offering comparison is fair also. Especially if other vendors are directly mentioned by the customer. Ask more requirement revealing questions.

If the issue is regarding budget, then this should have already have been addressed by the salesperson at the early instances of the process. If it hasn’t been already addressed by this time, then this is the time to do so, negotiate and agree on the most important elements to begin working together. Definitely also work to establish a timeline to increase the offering in the future when all goes well.

If it a barrier to the customer being sold to in general, then this needs to be realised. Many people including sales people themselves do not wish to be sold to. They want to be consulted to reach a desired goal. In this situation the customer is looking to become more confident in the sales person themselves as a consultant and not just as a salesperson on commission.

Example:

You have determined aim to purchase an item of clothing, perhaps not today, although today is not out of the questions. You are in a relaxed happy browsing mood, perhaps even ready to buy when you find what you are looking for. The need for the buy is already realised and imminent. You know what you need and want.

Then you walk into an interesting shop which has some interesting things similar to what you are looking for.

Then as soon as you step in, the sales person comes running over to you. Desperately try to force upon you anything and everything you glance at whilst also invading personal space.

This sales person then continues to stand awkwardly by you thrusting items of no interest by which point you have lost all interest in both the browse, the shop and the “sales consultant”. At this stage, you may choose to leave the shop completely, the rapport with the sales person has been damaged, you may even never return to that shop again.

Had the sales person approached the situation differently they may have actually been of beneficial aid to you and acted as more of a helpful guide in finding your required purchase. Now you have to go to find another vendor. A time wasting venture througout when that shop “may” have had what you were looking for. You will never know, the sales pusher ruined the experience.

If a customer displays a barrier to being sold to then this needs to be noticed immediately and the procedure needs to become one of consulting, not selling.

To attain great company sales, company bosses need to train their staff to quickly establish and understand the needs of their customers. This includes their buying traits and buying signals.

We cover this in our training modules.

Price Negotiation:
Often, especially in China many potential buyers will conclude and agree that the first figure quoted is often completely arbitrary, a useless figure, certainly not to be taken seriously and with scope for reduction. Strangely it seems that especially in China and with higher priced service offerings, no initial quotation given is ever final. Even comically unrealistic. There is always movement.

The belief here seems to be that the significant reduction in price will then lead to the contract being signed. This approach is confusing for sales people as well as customers. It is often used in China and is by all means and amateur close for a sale. It is also not good sales practice. A pricing structure should be set and adhered to.

Getting The Best Deal:

It is completely natural to always expect the best deal. Until we have used a service or product at least once, seen or been referred to it previously following it’s in action testing, we could never be truly sure about the value. We can only trust in the salesperson. Therefore, similarly when we are in the selling seat we need to provide that trust to our potential customers to make the whole experience far smoother and enjoyable for all concerned.

The best way forward is always to establish the pricing structure, establish the requirements. Once both are realised then provide the best price and offering, do not negotiate. Unless of course there are other influencing factors such as immediate multiple purchases. Even loyal and long standing valued customers will understand and not expect price reductions if they are certain to receive a continually great offering at their already agreed constant fair price.

Customer Satisfaction At Every Stage:
When we buy we want to have constant affirmation that the best purchase has been made. It has to add value to our lives in some shape or form. Therefore, as sales people it is paramount to ensures this experience happens for customers. The offering has to be what the customer expects at every stage, before, during and after the sale. No lies, no exaggeration, no misunderstanding. It is the sales persons job as well as the contract content to ensure that there is no misunderstanding at any stage.

To achieve complete customer satisfaction, customers must receive what they have paid for and if possible a little more also. This will then lead to gracious referrals.

Any failings on the salespersons part should result in sincere apologies and rectifying measures.

Objections:
I have put together a list of common price objections below as well as some suggested responses for each:

It’s Not in My Budget
Naturally, many customers are restricted by a budget, and if so they will usually inform of their price ranges when prompted or if a suggested scope of price range is dropped into the conversation.

(Usually a reaction as hypothetical pricing brackets are mentioned will enable gauging of limits and ideal package construction. Be careful though not to assume or misread, as this could lead in the conversation going off on a tangent wasting everyones time.)

Some customers may use the “budget excuse” to insist on receiving a lower price. We’ve all done it. Therefore my suggestion to sales personnel here is to consult rather than sell. With pricing structures in place guide customers within those options and limits. If too high then work backwards, establishing full and most essential detailed needs. With a concrete idea of budget approximation you can then better establish a contract.

Throughout the sales process it is best for all concerned to work towards a viable close.

Question for customer: “So if the price falls within your budget range and covers your complete requirements, will you be comfortable moving forward?”

There are many varying scenarios for this stage which we cover in detail in our training.

Just another quick one though for sales staff specifically…

If the customer does suggest a number before you have had opportunity to suggest your pricing brackets and options, you can ask how they arrived at that figure. Many sales people don’t do this, some sales actually become defensive at this point and lose the sale. This is actually where sales staff should be asking a lot of questions. Thereby placing themselves in a position to explain the true value of their proposed solution and offering in all it’s glory and why it is so much superior to the alternatives. This way it opens doors to opportunities, instead of as many see it, becoming a price negotiation slide. If the proposed ideal solution is presented well and displays maximum benefit to the customer at this stage there should be no more negotiation required. Always ensure that quotations are exact and fair to ensure success.

Shock and Awe
This is a brilliant customer buying tactic. A sure way to price negotiate played by many customers including myself on many occasion. The wide-eyed look of shock and amazement on the face of a potential buyer when the sales person presents the price, as if the price quoted has caused physical harm. It stops many including the best sales men and ladies well in their tracks. It is a lot of fun to use and very effective.

Sometimes the shock can be genuine, often though it’s a great bit of essential acting and a fun part of the process. A rapport builder.

Whichever it is, sales people, don’t cave in. It may be genuine or an academy award winning masterpiece, either way, just maintain the approach and if possible mirror and match the reaction equally surprised. It will work wonders and can even lead to friendships being built. It’s times like these that make it a joy to be in sales.

As a customer, if you are in awe, ask more.

As a salesperson, calmly and collectively ask why the customer feels so strongly that the price is too high. This is an ideal opportunity to connect benefits and features with needs that should have already been uncovered and now require clarification and confirmation.

Always Remember:

Price is only one of the factors that makes a sale. Sales people are not price quoting and reduction negotiators. They are consultants, solution finders and representatives for their company, continually looking to provide the best service at the best price for ongoing valued custom.

A sales persons primary and sole objective should be to offer solutions to aid their customers, thereby growing their personal and career growth.

A salespersons focus would always be on delivering quality to their customers. They are at the front of the front line. Successful sales people automatically become ongoing trusted advisers, always striving towards ensuring everyone walks away happy and then customers come back for more when they need more.

As a salesperson, when you do begin to see your returning customers, returning to you of their own free will and for your unrivaled expertise, empathy and consultation, you will find yourself becoming evermore successful and happy in your job as a salesperson.

Everything good only happens when it is prepared well. Preparation takes time and focus. So get preparing! Our training can help you with this too!

I hope this has helped. Please feel free to post any questions or comments.

All the best

Jason