By Paul Reilly
“Your competition offered a better price and we’re considering their proposal.” Does this sound familiar? Every seller has experienced this scenario. Oftentimes, sellers don’t know how to respond. Sellers think, “How could this customer shop our solution when we create all this value?” On a recent coaching call, one seller shared his response to this price objection.
He said to the customer, “I understand that you’re looking to save money. However, if you buy from the cheaper competitor, we’re going to free up your reserved inventory and sell it to other customers. If this other supplier fails to deliver, we won’t be able to help you.” What a great response to a price objection! Booyah! The seller then dropped the mic and walked out of the room (or maybe I imagined that last part).
His response triggered the buyer’s core motivator, fear. Initially the buyer feared paying too much, until the seller emphasized the greater fear—a cheaper competitor that fails to perform. Rather than focusing the conversation on what the customer gains, the seller emphasized what they will lose. This loss loomed larger than the potential gain of a cheaper price.
Customers are often tempted with cheaper prices. However, a cheaper alternative that fails to perform is lousy value at any price. Remind the customer of what they gain with you and what they stand to lose if they go with a competitor. Here are three ideas to protect your existing customers from cheaper competitors.
Emphasize the fear of the unknown. People crave consistency (especially in uncertain times). People take comfort in the status quo. As the incumbent, you have immense power. The customer is familiar with your solution and accustomed to your value. The only unknown is whether this new, cheap competitor can follow through on the lofty expectations you have set. The fear of the unknown weighs heavier on the buyer than the gain of cheap prices.
Emphasize the opportunity value and opportunity cost. In Value-Added Selling, readers are posed with this question: “What does your solution give the buyer the opportunity to do tomorrow that they cannot do today?” Answering this powerful question highlights the opportunity value of your solution. You may help a customer gain access to new markets, solve a unique problem, or serve their customers better. Once the buyer is aware of your value, they are aware of what they forego by choosing a different solution.
Social pressure is a powerful ally. Our research shows that six people are involved in purchasing decisions. Out of those six decision makers, one is a price shopper. This is the individual pressuring you for the discount, while the other five will pay for your value added. For price shoppers, there is a stronger motivation than cheap prices—making a high-risk decision. When other decision makers champion your solution, the price shopper will follow suit. Ask your allies to sell your solution internally. The decision is no longer driven by pricing pressure, it’s driven by social pressure.
To protect your existing business and your margins, remind customers of what they stand to lose. Introduce a benign sense of fear to take the focus off price. You might read this and think, “These techniques seem a little heavy-handed for the customer-focused approach of Value-Added Selling,” but they are not. Customer-focused sellers are motivated to help customers make the best decision that generates the desired outcomes. Being customer focused often means helping customers get out of their own way.