 Sales
Strategies
Avoid Price Wars
Subject: Price competition,
Sales, Negotiation
By Victor Antonio
If
you speak with product managers about sales in general, one of the most
often cited complaints is the salesperson’s inability to hold the line on
pricing. “Every time I get a call from a salesperson, it’s always
about reducing the price a little more in order to win the business”, said
one product manager. Sound familiar?
What are some of the
rules of engagement when it comes to entering into a price war with a
competitor(s)?
Let's start with some
cautionary notes on pricing:
1)
When you lower your price you set a
precedence with that particular customer.
2) If other clients
find out, you will be forced to give the same concession under duress or
fear of losing them.
3)
If your discounts are great, what message does that send to the market?
To your customers?
The last note always
concerns me the most. The market may perceive such price slashing
measures as the beginning of the end. Statements like: “How can they
afford to be so cheap?” or “At these low prices, how will they survive?”
These statements can hurt and undermine a company's credibility worse than
having higher prices.
Now don’t get me wrong,
as a consumer love a great deal. But we all know that there are no free
lunches in life and somewhere along the road you wind up paying; usually
more than you expected.
 Having said that,
what is a salesperson to do in the face of price pressure? Sell the
value of the company? Absolutely. Sell the quality of the product?
Absolutely. Sell the customer service and quality of support?
Absolutely. This is sales 101, so I'll continue on the assumption you the
salesperson have already addressed these issues.
But what if your faced
with a competitor who can match your one-for-one on all three? How do you
as a salesperson get around that? I recommend the Question, Statement
& Silent Approach. The aim or goal of this approach is to sew the
seeds of concern.
A phone call or
face-to-face meeting should go something like this:
For example,
use the questions cited above, “How can they afford to be so cheap?” and
then add "I know what it cost to build and support the project and I'm
stumped!" First you ask the question and then you make a 'doubting'
statement. And, as soon as you make the statement, be QUIET and wait for
the customer to respond. You will either get one of two key responses:
1) A confirmation of
your thinking (i.e., I don't know either which makes me somewhat
suspicious of their intent) , or
2) An explanation that
might be useful to you (i.e., customer says, "I don't know if you knew,
but we guaranteed them a minimum for the next 3 years. That's why the
price is so low"). This is probably information you did not have before;
be alert and keep probing.
Other follow-on
questions can include, “At these low prices, how will they survive?” or
"Will they have to scale back on their support to you (the customer) in
order to give you these prices?"
Remember you goal is to
indirectly plant in the customer's mind your "shock and disbelief" that
you competitor has lowered their price.
This strategy works
for larger sales as opposed to smaller retail/commodity sales.
For example, if you selling a large computer network to a big company,
this approach can be used to stave off price slashing.
In smaller or more
retail-like sales, this strategy is less effective. For example, Cingular
Wireless recently initiated aggressive nationwide pricing plans that could
spark a pricing war. The strategy I outlined for selling a customer will
have little if no affect because the majority of customer are price
shopping. Technical support follows right behind pricing but is less of a
concern for two reasons: 1) Customer assumes good quality service, and 2)
if the customer doesn't get good quality service, they can switch to a new
phone (which at today's rate are almost being given away).
In large sales, a
decision a customer makes has long term ramifications on their business.
For smaller sales, the decision can be reversed with minor inconvenience
to the customer.
Victor Antonio
is a trainer and
Motivational Speaker with 20 years of industry experience. He has a BS in Electrical
Engineering and an MBA.
Copyright © 2005 by Victor Antonio All rights reserved. This article MAY
be reproduced in any form or by any means, electronic or mechanical,
including photocopying, as long as the author’s name, website and email
address are included as part of the article’s body. All inquiries,
including information on electronic licensing, should be directed to Victor Antonio.
|
The
LOGIC of Sales Success
