Focus on Value Not Price
When you are in sales you will face many obstacles and objections, with price being right at the top of the list. Objections about price can sound like “your price is too high, we can’t afford this, do you give discounts, what if I do a certain volume”. My favorite, and the one most dreaded by sales people, is “your competitors charge less”. To me this objection gives an opportunity to learn more about the prospect and, if appropriate, discuss value instead of price.
Why would I say “if appropriate”? Well, because as you learn more about the prospect and not only their needs but what they don’t realize they need, you may discover that this isn’t someone you want to work with or possibly isn’t a real prospect for your product or service. Part of success in overcoming the price objection is having someone who not only wants what you have, but needs it enough to be able to afford it. Many people would love to live in a million dollar home and most of us can’t really afford it, regardless of what luxuries we give up. So while we want it, we can’t afford it so nothing the real estate agent can say or do will change the situation. If you tell the agent you can afford $500,000 and they take you to a $700,000 house you are likely to love it. BUT if even stretching to $550,000 gives you heartburn why spend time trying to convince you of the value of the $700,000 house?
Possibly what you are offering is more costly for what appears to be a similar offering from your competitor. The operative word I want you to focus on is ‘appears’. When I was recruiting, we were at the top of the range of what most recruiters charged. Most were charging 20-25% of the annual starting salary. A few were even at 15% and, while we were a contingency firm, our fees were 30-35%. That becomes a big number for the fee itself and a big difference from the competitors. I was placing managers in the salary range of $100,000 and up. You do the math. I was always at least $5-10k more than our competitors, and more often than not $20-30k more…a big hill to climb to deal with pricing.
How was I consistently able to have a steady stream of clients, at times having to turn away business as we were at or over capacity already when my price was so much higher than my competitors? I’m not saying it was easy, and I will say I couldn’t overcome the price objection. Why would anyone want to pay $5-30k more for the same service? They wouldn’t, nor should they. What I had to be able to help them understand was that we did offer the same service as our competitors. It was basically the same service with subtle differences and I would talk to them about the value of those subtle differences. They bought the value they perceived those subtle differences would make for them.
What were those differences? It varied by prospect, but I found out by asking questions. When they shared that there were used to paying 20% I didn’t try and overcome that objection. I would ask questions such as how many people did they typically have to interview to fill a position, or what percentage of the time did they extend an offer that wasn’t accepted? Here’s what you need to know. If they only had to interview a few people and they could hire someone, I wasn’t going to add as much value as if they said 15-20 interviews and only one in three candidates accepted their offer. Now I could discuss the value difference which was not simply bringing them candidates they were interested in hiring, but those they were interested in hiring who would say yes to their offer. Otherwise it’s like the real estate agent taking you to a house you can’t afford. You may like them personally and love houses they show you, but if you can’t say yes what difference does it make?
Earlier when I said prospects often don’t actually know what they need here’s what I meant. As a manager with an open position they saw their need was to fill the position with a qualified person. To do that they had to interview candidates that fit their qualifications. What they likely didn’t assess was the cost of the process to them. The cost of interviewing 15 people and they either aren’t qualified or don’t accept the offer. If they now realize the cost and still don’t care, price will always be a consideration. However, if now they recognize a need they didn’t realize they had, they will buy because of the perceived value.
When your price is higher than your competitors you can’t overcome this objection. Instead, first make sure the person you are attempting to sell to can actually afford what you are offering. IF the answer is yes you can focus on value, by asking questions.
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