
Authors: Lawrence L. Steinmetz, Phd and William T. Brooks
Rating: 8
Businesses Fail
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* 16/17 businesses fail – most in 2 years – life expectancy is 7.5 years
* businesses fail as a result of not making money – need to understand that you are competing with companies going broke when they slash their pricing (as a desperate attempt to stay alive – they think they can make it up in volume)
* businesses going bust experience three situations – (1) declining gross margin, (2) wages as percentage of sales begins to increase, (3) sales volume begins to increase
(1) declining gross margin (GM = Sales – Cost of Goods Sold) - indicates a pricing problem – which clearly sends a signal that price isn’t high enough compared to costs - three causes of gross margin decline
*** cut price
*** fail to raise price when cogs increases
*** raise price by the same dollar amount as cogs instead of raising by percentage
(2) wages as a percentage of sales begins to increase
*** too many people on the payroll
*** too many people making too much money
*** too many people with nothing to do
*** bottom line – executives must never allow wages as a percentage of sales to increase above a point where they have good profitability
(3) sales volume begins to increase
*** surprisingly businesses fail when sales volume goes up – business is not a game of volume (or market share) – business is a game of margin
*** if a business doesn’t maintain gross margin at an adequate level, it is going to go bust regardless of sales volume!
*** volume goes up because when a business begins to fail it has a cash flow problem which is resolved by selling volume at discounted prices which spirals out of control
Competition Cuts My Price
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* Your competitor does not cut your price; you cut your price - cutting price is a self-inflicted wound
* It is a false notion that people (and business) buy on price – and price alone - many say they buy on price; and many even think they do – and most of your customers will tell you they do because they are trying to get you to cut your price
* Price is virtually always more important in the mind of the seller than in the mind of the buyer – intelligent/experienced buyers are worrying about delivery more so than price – in fact delivery, quality, service is far more important than price
* Importance of delivery – delivery relates to all products or services
*** delivery problem is virtually always the trigger event that causes loss of a sale to an existing customer
*** customer doesn’t care about why you can’t deliver
*** customer doesn’t care about your excuse for non-delivery
*** screw up delivery one time and your customer will find another supplier because they have to – they have a need you’re not fulfilling
* We’d can any salesperson who worked for us who was a price-buyer! Can him or fix him.
*** price buying salespeople project their feelings onto their customers
*** price buying salespeople tell the customer they think their own prices are too high – inviting their customers to beat them up on price
* When you don’t talk price you’ve lost
*** says you’re scared – salespeople nervous about their price always signal to the prospect that they are nervous by the way they do/don’t handle price
*** you must be credible, comfortable, and confident when talking price – can you state the price as comfortable as you state the time?
*** never use adverbs and adjectives when you present or discuss price – these are typically used to “cushion” the blow which says you’re willing to cut price – such as our “asking” price, “usual” price, “quoted” price, “suggested” price
*** eye contact is important – breaking off and looking down when discussing price says volumes
Determine Your Competitive Advantage
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* Competitive advantage is price, quality, advertising/promotion/salesmanship, service, and delivery
* Price – intrinsically we believe that price reflects the quality and value of the product or service that we are buying
*** when you say your prices are cheap – that translates to quality and value – conversely, so does when you say your prices are higher translate into a higher quality and value
*** acknowledging that your price is higher triggers a response in the customer that creates the most receptive and responsive atmosphere in which to sell product
* Quality – can be the most important reason your prospect buys
*** selling quality is easy, but only if you have quality and you know what it is – quality is not best, quality is conformance to your prospect’s standards and expectations
*** said another way – quality is the “right” stuff – if it’s too good, then you’re cutting prices – example – walnut wood – not right for subflooring but good for building fine furniture – you’d have to cut pricing to use as subflooring
* Salesmanship (and advertising/promotion) – salespeople sell things to people
*** salesperson’s job is not to treat anything as a commodity – other things are NOT equal – customer needs knowledge on why it’s not – example is gas – different prices by station, cash or credit, car rental without topping off gas – all vary for a “commodity” product – it’s our quality, our service, our delivery, our company policy/procedures, our care and attention, etc. that a salesperson sells
* Service - Most companies don’t like to give customer service, nor the idea that service is the responsibility of all employees
*** Service can be the one single thing that makes or breaks a sale – easy to compete on service as few businesses really want to compete on service – typically the customer is treated as an unnecessary inconvenience – examples – banks 9-5 “full service” hours or government agencies there to “serve”
*** Great service example – Tom Monaghan built Dominoes Pizza which sold in 1998 for $1B by charging for pizza but selling service – he then delivered on that service promise on-time like he said he would
*** Better mousetrap theory is incorrect – if customers are beating a path to your door, then your prices are too low
*** Salespeople must personify customer service – historical studies show that the big dollar earners have one thread in common, they take care of their customers – they’re watchdogs that the promise they made is delivered – nobody pays big bucks for excuses!
* Delivery – you can compete successfully, consistently, and long term with delivery – furthermore, you must competitively compete on delivery if you want to sell at a higher price
* Delivery is why buyers spend the time and trouble to tell you they can get it cheaper somewhere else but don’t – ask yourself during negotiations as to why are they talking to me if they can get it cheaper elsewhere – the answer is delivery
* They can’t get it…
*** they misrepresent your competitor’s pricing
*** the same stuff isn’t available at this time – they really want your quality, your service, your delivery at the other guys price else they’d be getting it from the other guy
*** it really isn’t the same stuff – know/verify what the competition offers
* They can get it, but…
*** they don’t really want to (because you offer better intangibles/delivery)
*** they’d better not buy it there (because their boss or company policy said – due to past delivery or lack of delivery on your competitors)
*** they can’t get it there, even though it’s available (competitor won’t sell to them – typically related to payment)
* The ability to deliver the right stuff at the right place at the right time with good service will actually make you sales and help retain customers – therefore the most significant point to compete on is delivery – conversely, if you have delivery problems you will find it difficult to compete at any price
* Anybody can cut price, get an increase in sales volume, foul up delivery, have quality problems develop, find service falling to pieces, and go broke
* Products and services are sold at the desired price because a business gives its customers quality, service, and on-time delivery
* If you’re going to give your customers what they need and want; you have to charge a premium price – those companies charging a premium price survive the longest, make the most money, and are able to pay the highest wages
A Note About the Pure Price Buyer
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* A pure price buyer’s goal – you are not going to make any money on me – period
*** take all your sales time
*** they do all the complaining – receive concessions – want 100% satisfaction to their ideas, not yours
*** forget to pay
*** they tell others how little they paid – makes your next sale more difficult without price cutting
*** they drive off your good customers – little time left for your good customers
*** they’re not going to buy from you again, anyway – only loyal to the low price vendor at that time
*** require you to “invest up” to supply their needs – and they blackmail you for yet a lower price – “invest up” is to build up your business to suite them – such as equipment, inventory, people, etc.
*** they destroy the credibility of your price and your product or service in the eyes of the end users – these are resellers and they sell on the discount
*** they steal any ideas, intellectual property, information, and knowledge
What Buyers Need
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* Most in sales cut their prices because they have never really analyzed what the customer needs versus what they say they need. They will always say they need a low price, but they don't really need a low price - if they do, then it's better not to take their order because they won't pay
* They need two or more vendors - that by definition means that one vendor can charge a higher price and get the business
* Customers need on-time delivery - more than anything else!! If you deliver on-time, you don't have to sell low - note - most businesses eventually have a delivery problem from too much business as a result being too low priced
* They like the idea that they're cutting a deal - buyers are ultimately rewarded not on how much they spend, but on how much that they save - thus if your prices are significantly higher than the competition, you can discount and give a bigger savings while still maintaining a higher price
* They need respect - give a little, get a sale
* They need help and guidance on complex purchases - being an educator to a prospect gives you an advantage against the competition - you earn their respect and loyalty - however, don't expect a prospect to buy on that respect and loyalty, but instead, understand that by being an educator you will always have access to your prospect and the opportunity
* They need to buy what they are told to buy - typically those who own the problem, don't own the buying role - meaning that 85% of the people doing the buying have very little say in what to buy - reason why you need to do backdoor selling - find the real buyer, the end user!! Iron law of backdoor selling - forgiveness is far easier to secure than permission
* They need to get what they buy - deliver your product, provide excellent service, do just as you promised
* They need to minimize inventory without risk - another indicator that it is all about deliver and not price
* They need to purchase from a technically current and financially sound vendor - you need to be around to service
* Need more certainty on "a" type items - "a" items are critical to their business and they can never go out - example - airline "a" is fuel; "b" is beverages and ice; "c" is cocktail sticks - you need to know where your product or service fits in
* Need production / performance capable - all about delivering and being capable (capacity, know-how, or experience)
* Need timely action - accepting orders, answering questions, responding to order problems or delays
* Need speed/accuracy on invoicing and costs - allows your customer to make smart business decision
* Need order and service help - be an educator
* Need quality transportation carriers - even when it's not your fault - delivery will be your fault in the eyes of the customer
* Delivery - most significant component of selling at a high price - low price = high volume = not enough product = late shipments = rushing = bad quality = customer complaints = bad service
* Never compete on low price - concentrate efforts on providing the customer's needs - charge a premium price for your performance
* Easy to do business - they get what they want, when they need it, on-time, and in good shape
* Reliable and dependable - built on history
* Predictability - past relationship and reputation
* Reaction to their needs - be flexible and responsive to their needs
* Short delivery times - no matter what the product or service, everyone wants it yesterday
* Help reduce costs by realizing savings - this is not price cutting, but finding advice and assistance relative to uses and applications of your products and services
* Breadth / depth of quality - make sure your customer is getting the right quality and maximum utilization of your product or service
* Total product offerings - a full line of offerings makes it easy for your customer to purchase from one source
* Knowledge, competence, follow-up - being in good hands - there after the sale
* "Go to bat" - win customers for life when you're willing to help them in a crisis when problems arise
* Complete knowledge - know your stuff
* Knowledge of your customer - know how your customer is going to use your product / service
* Be prepared for sales calls - don't just wing it
* Regular, predictable sales calls - predictability = reliability
* Technical education - educate and you'll receive preferential treatment
* Short shipments - it happens, ship what you can, get the remainder there quickly
* Easy to understand pricing - confusion erodes trust
* Early notice of problems - if there is a delivery problem - let them know asap and help them through your difficulty
* Advanced warning of discontinued items - helping your customers through product changes and on top of developments
* Understandable and legible shipping docs - did they receive what they were supposed to receive and all documents match which makes it easy to do business
* Competitors delivery problems get you profitable sales - when a customer cuts a vendor due to delivery, quality, or service; they no longer qualify on price - they need to know that the current problems won't happen with you
The Math of Pricing or the Volume Myth
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* With typical real world margins - if you cut your price 10% - your company will have to sell double the current volume - the "make it up with volume" is a myth
* Ask yourself the question - what if I cut 10%, how much more do I need to sell - if you don't know the answer then you shouldn't be negotiating price because you don't know what you're doing - most businesses run a gross margin of around 35%
* Formulas showing that at 35% gross margin and $1m in sales that if you cut the price 10%, you would have to sell $1.8m to make up for that price cut which is doubling of the amount of inventory (remember it's sold at 10% less) - if the formula uses 25% gross margin you would have to sell 3x as much!!
* Think about it - you can't make it up in volume - even if you got the order your delivery system wouldn't be able to handle the capacity - also, do you really want to work twice as hard to give a 10% cut and not make any more money???
* You can actually lose volume and make more money! With a 10% price increase you can lose 1/3rd at a 35% gross margin
* Why raise prices:
*** premium pricing makes a positive statement
*** drop in volume allows better service, timely delivery, quality product - gets you more non-price buying customers
*** company will make more and able to provide higher bonus (tie commissions to gross profit percentage) profit making salespeople are well paid in contrast to order takers
* Good salespeople learn two things:
*** sell at a low price your employer eventually has to cut your commission rate (they have to as they start losing money)
*** sell at a low price - inflict an incredible amount of work on yourself to maintain paltry commissions
* If you make a mistake - go broke overpricing - it doesn't take as much work!!
* It's enlightening to look closely at the welfare of employees who work for discounting operations - ultimately they never make any money because the company doesn't make any money
* Funny conversation...
Person 1 - company xyz is going out of business
Person 2 - you're kidding - that's my favorite
Person 1 - somebody said they weren't making any money
Person 2 - they can't be - they have great discounts - it's always busy
* Point is they we're working their butt's off until the very last day, but went broke because of their gross margin percentage - most companies that go broke, when you ask the staff, they'll say they don't understand as they were so busy - even to the very last day!
* Most businesses go broke do so during a period of sales volume increase because they have cut their prices
* If you do cut your price 10% you would have to sell twice as much and only gain 80% additional commission - your competition will counter with their own price cut which will put you back on a level playing field - point is that the competition never fails to react - therefore, your chance to sell the more amount necessary based on price will go away
* Long/short - if you cut your price it might be short term gain but long term pain as you'll work harder, longer, with great frustration
* Sell at a premium price, keep employer profitable, make more money - employers want to keep profitable salespeople and pay big bucks
* You must accept that you will always be hammered by price cutting fools - you need to sell on quality, service, and delivery - understanding what is required to "make-up" for a price cut can instill a lot of courage in you as you battle against cutting your prices
Facing a Competitor's Price Cuts
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* Situation #1 - You don't know if competitor has cut or by how much
Solution - hold your price, gather intelligence, verify, are your customer's buying at that price, is your competitor both shipping and receiving (if they're shipping but not receiving, then they're dropping the line - don't cut your price - if they're not shipping, then forget about it - no reason to cut)
* Situation #2 - Customer cut, but your volume is not affected
Solution - hold price until your volume is significantly affected (remember how much volume you have to make up for a cut)
* Situation #3 - Customer cut, your volume affected heavily - now you're getting hurt on volume
Solution - hold price and see if extra advertising, promotions or other customer aquisition strategies will work - better service or package - spending money to give customer quality, flawless service, or perfect delivery is always less expensive than cutting prices
* Situation #4 - Customer cut, getting your pants beaten off
Solution - (1) have a temporary special (2) meet your competition (3) drop the product (4) hope you can outlast knowing that their delivery, quality, service goes down - but you have to have more money to lose than the competitor
** remember ** - a customer gained due to a low price concession invariably creates problems and destroys ability to sell to profitable customers.
Cardinal Sins
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Two things to avoid (at all costs):
* wowing - comminicating that your prices are too high
* cracking - showing you're willing to negotiate price
* focus on how and why customers hammer you on price
* customers are "trained" to behave a specific way - take the difference between renting and apartment and buying a car
* therefore if they're hammering you on price - very strong possibility you're inviting or encouraging that trained behavior
* when you are wowing a potential customer, you're telling prospects that you feel your price is too high - in return they are going to beat you like a drum
* how comfortable are you about talking price - can you discuss it credibly, comfortably, and confidently? Most let the customer raise the price "issue" - this is another form of wowing as by not mentioning it you're sending the message that it costs too much - there is a proper way to defer price if you haven't sold your value - that is to tell them you'll provide the exact price based upon their specific needs once those needs are understood (or give a range)
* cracking occurs when a salesperson creates a path of least resistance - "we'll work with you", "sharpen the pencil", "tell me where I need to be"... when saying anything other than that's our price - you've cracked - cracking tells the customer you negotiate - c'mon and beat me up!
* you have to ask for higher prices, learn to acknowledge your higher prices, and proceed with the full expectation that you'll make the sale
* other cracks - "usual" price - beat me up as what's the unusual price - same goes for "normal, regular, published, standard, asking, quoted, list, catalog"
* the price IS $### - then you've always sold it for $### - you never sold it otherwise and you fully expect your price
* don't put nouns or pronouns in front of the word price (ie - my price) - it implies that others in the company are selling for a different price - additional - don't put the company name in front of the price - it's asking for the customer to check other competitors
* just because someone asks for a discount doesn't mean you've wowed or cracked - it could be they're trained to do so - remember - just because they ask doesn't mean you have to give
* three rules for selling at premium prices
(1) rule of credibility - prospect has to have total belief in you - no misrepresentation - no excuses - no delivery problems - don't ever lie - don't mislead
(2) don't feel your own price is high - if you think it's high, go do something else - know your prices are higher, but it doesn't mean they're too high - sell value - ultimately people buy value - know that you're giving good value
(3)respect your customer - they're smart, they know they're paying a premium, they have an expectation for paying that premium, you can't have a delivery problem, you must never frustrate those expectations
* selling is a high paid position - giving it away isn't - don't ever forget that
Buyers Are Good Liars
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(1) They really believe they buy on price (they don't)
(2) They don't think they're lying - they're negotiating
* buyers do one of two thing - intimidation or denigration
* intimidation - frightening, scaring, bullying, pressuring - an effort to make you fearful to lose the sale in order to make price concessions
* denigration - defame, disparage, degrade, depreciate the value of what you're selling in order to get a price concession
* fundamental argument against intimidation/denigration - your product is not the same - the prospect knows the difference - the prospect cares about those differences - else they wouldn't be talking to you
* you must tell your customers about why your offering differs - up front and often - never concede that your products or services are the save - you can always differentiate on service
* they'll say they don't care - but they do - the users of the product care greatly about the differences
* the prospect is lying when:
** they won't look you in the eye
** they get personal and use opinion verbs - puts you into a situation whereby you can't argue the customer's point without offending by telling them they're wrong (good salespeople will tactfully correct, bad salespeople will crack) - remember if the personal argument is true, they would be already be buying elsewhere
* they use the subjunctive mode of speaking - exaggerate, fudge their position, there's an if statement being made or unless statement that contains hope (versus an imperative statement is a flat out no because they really do have a sweeter deal)
Hanging In Under Price Cut Pressure
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* acknowledge that your prices are higher - but be tactful - five methods
(1) so response - just say so... (note -- no additional words necessary)
* acknowledges that the price is correct as given
* acknowledges that you're not going to do anything about it
* puts the ball in their corner and makes them come back with a reply that opens up the opportunity for a sales presentation - then you jump into your sales presentation about your differentiation - but NOT PRICE! - talk about quality, service, delivery, support, product, durability, etc.
(2) why not response - or why - or why won't you
* you'll find out what your prospect is really thinking
* opportunity to sell on something other than price that meets their needs
(3) keep on selling - acknowledge and go directly into selling mode
* stand tall - be proud - we get a higher price
* premium price makes a statement - a credibility statement
* acknowledging triggers one of the most open, responsive, receptive frames of min in your prospect - it will trigger a demand for you to make a sales presentation
(4) testimonial or corraboration selling
* get strong testimonials - people don't mind paying a premium price as long as they're not the only ones
* name dropping is essential (a) acknowledge higher price (b) drop name of customer (c) explain why they bough at higher price
(5) look hurt/offended - mild statement of hurt - followed by why your higher prices are justified
* selling is about getting people to buy things they might not otherwise buy because they lack knowledge or information
Indicators that You're Underpricing
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* gross margin is getting smaller on same or rising volume - monitor gross margin by product line or service offering
* your net profit is going down
* prices are below your competitiors - low price makes a statement
* multiple customers tell you how much better priced your organization is compared to your competitors - they want you to continue feeding them that low price
* general absence of any complaints about price
* price hasn't changed over time
* prospects buy withing haggling about price
* getting new customers for no effort on your part
* sudden upsurge in business volume - particularly new customers
* customers want faulty product replaced instead of a refund
* cost of goods increased without a price increase
* a known price buyer starts buying from you
* you have a big backlog of demand - if a customer is willing to wait when your competitor can get it quicker or in stock - then they're buying for your too low price
* customers buy more than they need at the moment
* bad debt collection procedures are increasing in activity - you've become attractive to price buyers and they don't pay
* your customer's gross margin is getting bigger on your product - monitor your customer's gross margin - are they getting fat and making money
* request for quotations increases significantly
* win success rate significantly increases - have to learn how to lose (according to your market share)
* tempted to sell at a higher price than currently asking - go ahead and give it a try - worse that can happen is you lose a deal - you'll never know the top of your price range until you test
* your prospect tells you he would like to work in your sales organization
* your competitors start complaining to your customers
* a distributor is bootlegging your products or charging higher prices
* competition bow out or goes broke - typically that competition will come back against you in the form of a new competitor with cheap equipment
* your customers quit buying from you, but then they come back
* your competitor buy from you (unless there is something prohibiting you from entering a specific market)
* customer insists on you producing a bid/quote
* customer asks if this price list or quote is still valid
Indicators You Might Be Overpricing
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* all competitors are lower prices
* gross profit growing, but sales volume is not
* customer complaints/inquires about what is/is not included in price (customer is trying to validate the price in their mind)
* dollar sales volume is declining - although many caveats
* competitors share or market increases (risk is that they are "buying" it and eventually risk bankruptcy) - better to be small and profitable than big and bankrupt - many blindly feel that market share = profits
* receiving many price complaints and you're not inviting them (wowing / cracking)
* faulty problem or complaints lead to returns/refunds
* wholesalers ask if that's the retail price
* salesperson wonders if they take less commission
* rough time explaining price
Prospects Will Attempt to Get You to Cut Price
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* stiff arm - stating "I can't pay anymore", "I can only pay x amount"
- ask why not or how did you come up with that figure
- you'll find out who is the decision maker
* state/imply your competitor is better
- if competitor really is, then he wouldn't be talking to you
- might be competitor is, but can't buy from him for one reason (maybe bad payer and cut off)
* let's buy cheap now and see how you perform - "get the foot in the door" price
- they'll never accept a price increase later
- customers talk to one another and they'll all want the lower price all the time
* we only care about price
- call their bluff - they always care about delivery, quality, and service
* they change the quality, service, or delivery expectations after the deal is done
- always come back to pricing if it was discounted for a discounted quality, service, or delivery
- if your prospect wants to change anything - you must always change the price - changes in the original deal always ups the price
* big boss comes in and says something intimidating like "you're still buying from these guys"
- if they didn't want you there, you wouldn't be there - this is simply price hammering
* they buy on their own turf
- alternative of above - price hammering
* they ask you to be at a specific price and start to unbundle your packaged price
- never, ever unbundle a packaged price - you'll only get a partial order and lose the remainder of the deal
* they criticize your quality, service, or delivery
- don't argue, don't disagree, explain how it's fixed and don't drop your price
* fudge on how much they are going to buy
- charge them for what quantities that they order and give them a credit at the end of the year for the discounted price (a) they have to order the total amount to get discount (b) get to use their money during that period (c) giving them credit (not cash) ensures future business
* use their name as a reference
- you can use their name anyways - it doesn't mean you have to cut your price
* they keep stalling - looking for concessions
- stall tactic always goes in favor of the buyer - be patient - eventually they will burn out their time
* insist there is no difference in what you're selling
- ask to talk to those users who don't see a difference within their company - gives you opportunity for backdoor selling
* they do homework and know about xyz problem(s)
- they're trying to scuttle your confidence
- sometimes it's simply a fishing expedition such as "we hear you have problems" - don't fall prey to fishing
- if it's real - acknowledge, explain fix, don't drop price
* appear busy - just want the price
- offer to come back when he/she has the time - ask to make an appointment
* they use the old rock bottom price ploy
- ask them if they are ready to buy right now - tell them they have two minutes - give them a price you want
- get the order or leave - it's a yes/no decision at this point
- if they're not really ready to buy - ask them when they're willing to commit
* act unreasonable and do crazy things
- remember, the more bizarre behavior, the higher the probability that they have to buy from you - they're under pressure to do so and get your lowest price
* hit you with terms to their advantage / use false breaking-off pints
- you must sell at x price or your done - tell them you can't do that, excuse yourself, and let them know that you'll call them again in x amount of time
* the turnover game
- one talks about price - other talks about another attribute - in the end, they mix and match what they want to hear
- when this happens, the price goes back to the top original position with each and every player
* they ask for throw-ins
- happens at time of signing the contract - just say no
* we could buy, if only .....xyz
- ask for the signed order first before committing to the if only
* they learn to get tougher at the end
- when you sense a deal - stop negotiating - push time delay onto them to come make the deal
* reduce our vendors - so cut your price
- push them into the you must buy at my offered price within the next two minutes
* sit you so you face the sun and can't see (or any other tactic to make you feel inferior)
- acknowledge what they did and ask for a remedy (such as I'm in the sun, is there another seat)
* ask for a prototype first
- charge for it - it's your time, money, efforts, ideas, creativity, etc.
- put a copyright on it - keep original
- apply price to purchase price
- if they don't agree, then walk away
* they have competitors information on their desk
- acknowledge the competitor - and sell your quality, service, and delivery
* split up your sales team as in salesperson x said they'd sell it cheaper
- simply state that you're not authorized t make that concession - they'll have to speak to x or buy it today at the current price
* but we're a really great customer
- being a great customer doesn't mean price reduction, they are supposed to be a great customer just as you are supposed to be a great vendor
Finalize a Transaction
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* know your competitive advantage and use it! - it's quality, service, advertising, promotion, salesmanship, or ability to deliver
* sell to users and decision makers
* FAB strategy - features, advantages, benefits - emphasize how product/services features and advantages translate into benefits
* feature any price objections - acknowledge high price and explain quality, service, and delivery
* use testimonials - customer don't want to be the only one
* explain benefits of all your services
* use unique selling points - differentiate yourself and tell everyone why you are unique and different
* get personal and provide inside information about what's coming next
* make the prospect beholden to you - a hero - genuine thoughtfulness - people buy from people
* ask prospect what you can do for them and their organization
* call at the right time - don't drop in or cold call - always have a pre-arranged appointment - be on time for appointment - additionally, if they're not ready, ask for a new appointment - be respectful and courteous
* don't be lazy or lethargic - selling takes energy - return phone calls, follow-up on leads, study call reports, analyze trends
* listen and pay attention
* sales techniques to use for a price buyer
- know their needs (they always need more than low price)
- never argue - it's a scare tactic
- explain why other customers buy at your price
- explain how product/service will help the user
* explain the economics of price - they need to buy more to get their price
* determine why (delivery, quality, service but not price) the customer is unhappy with their current supplier
* don't invite price comparison - talk value and not price
* learn to use stoppers (no longer willing to negotiate)
- I can't do any better and then be willing to walk out
- explain to them what they'll be losing
- clear statement of we are better
- use the non-quote - I'll come back later after you've looked around
- I'be to to get to my next customer - puts pressure on customer to sing the deal
- we are pushing capacity - no reason to make a deal
- quality requirements - again no reason to make a deal
* make sure your customer knows that all things aren't equal
* tell your prospect that this (quality, service, delivery) is what their users really want (and not low price)
Guidelines on Pricing
======================
* mature markets price low - new/developing markets price high
* intensive market coverage tends to price low - selective market coverage must price high
* low promotional costs allows lower prices - high promotional costs need higher prices to cover margins
* commodity product prices low unless sell service and delivery - esoteric/exotic products have higher prices
* mass produced products equates to low price - custom products equate to high price for uniqueness
* single use product with only one purpose demands a lower price - a multi-functional use product that has multiple uses demands a higher price
Final Thoughts
===============
* you can not have late deliveries - period! - nobody pays big bucks for excuses
* you can not have defective products, parts or unqualified people
* you can not have poor ethics or integrity
* business is a game of margins - not a game of volume
* your competition does not cut your price - you do! - it's a self-inflicted wound
Labels: business, sales