Mark Satterfield shared these comments with me:
There was a very interesting article in the 2/13/08 edition of the Financial Times about how the majority of small business owners are NOT seeing a downturn in their businesses; at least not in the first quarter of 2008. The article points out that an interesting bellwether of the economic future is the earnings reports for Proctor & Gamble.
Apparently one of the early indicators of a significant slowdown in the economy is people shifting from brand label products to less expensive generics. P&G reports no indication that this is happening, which correlates with anecdotal evidence from the Financial Times' survey.
Interesting article and I always appreciate the perspective of FT, which takes a less Chicken Little - "Sky is falling" editorial approach than a lot of other publications.
However, that doesn't mean that it is proverbial clear sailing. It's obvious that businesses that neglect to put in place a SYSTEM for continually getting new prospects, and then converting large percentages of them into clients, are setting themselves up for a huge fall in the not too distant future.
It seems a good time to remind the sales professional of some effective strategies for coping with price objections.
What is the meaning of a price objection?
- The prospect places insufficient value on the product
- A competitive product is a better deal
- The prospect just wants a bargain
YOUR PRICE IS TOO HIGH YOUR PRICE IS TOO HIGH!
Learn to respond to this objection: - It is inevitable
- Buyers will object just to get a discount
- Knowledgeable buyers know that there is often a standard discount for which they qualify
- Price objections are an opportunity to sell the value of the product or service
- The danger is to respond to the wrong price objection
- “Tell me more” or “Explain”
Fundamental price perspectives:
Price versus competition
Discover the difference between the competitor’s proposal and your proposal. The price is lower because:
- The product or service is less robust
- A time related “special offer”
- Price versus approved budget
- Was it a budget, or an expectation
- Was it based on old or unreliable data?
- Price versus buyer expectations
- Was the prospect told about a less expensive solution provided to a friend?
- Explore the friends solution
- The buyer can then accept the other solution at the lower price
The buyer can then accept the higher price for the original solution
Price versus a process alternative
- Your price is being compared to a process alternative
- Buying software may be compared to manual methods
- There are often new benefits that are simply impossible with the manual method
Price versus a percentage of the product price (for continuing services)
- Maintenance or support costs can be greater than the original cost
- 20 years ago hardware and software was more expensive than support
- Today hardware and software costs are low. Labor for support is high
- Support may be more comprehensive than in the past
- Understand and communicate these changes to the prospect
Price versus “do–it-yourself”
- Denies the cost of labor of the participant
- Denies the cost of extended time to implement
- Example: lawn care
- Everyone can cut grass cheaper than hiring a service
- Few enjoy spending time on this chore
- “Do it yourself” places less value on your time
