By Tibor Shanto – tibor.shanto@sellbetter.ca
How important is price is always a key question, crucial to some, especially to those sales reps and organizations that sell on price. Most studies examining client satisfaction find that price is not as important as some make. Even in today’s climate surveys show that price is not the key reason given for losing or winning deals.
In most instances factors such as availability and responsiveness, R&D commitment, innovative, speedy invoice and error resolution, and the ability of their rep to marshal resources on behalf of the clients all ranked ahead of price.
Selling on price has always been a fool’s game. Many rationalize that it can be used to market share, or to close the year strong but few could execute it in a way that paid off. I worked for one company that offered a 20% discount every December, hoping to lock in clients and figuring they can get the price back up to full rate the following year for year 2 and beyond. They never did, the clients always won the argument because the price had been set the first time around.
I worked with one firm that as a policy would offer discounts on their initial sales of copies or subscriptions, the VP of Sales telling her team to offer the discounts and once the client was basking in the glory of the product they could raise the price to “where it should be”; never happened. Buyers are smart and understand how the game is played and the balance between being raised to “full price” and the vendor’s need to protect and maintain revenue, even when it is discounted, “cause it’s better to have 75% of something than 100% of nothing in the form of a non-renewal, especially when you have built it into your base assumption. It’s like crack, you know it’s bad for you, but it’s too late, you are addicted and can’t let go of a bad thing, because then you have even less revenue and less of quota.
Sadly, it is always the sales person who brings up price not the buyer; but once it is on the table it is the dominant subject and the sales reps’ kryptonite.
At the same time it is very easy to manage and avoid. Above we talked about the studies and surveys that show that more than prices, things like service, reliability, availability and responsiveness, R&D commitment, innovativeness, speedy invoice and error resolution, and the ability of their rep to marshal resources on behalf of the client and other factors rank higher than price in deals won.
So does it not make sense to focus the discovery process on using those factors to develop and establish value? Unlike other aspects of sales, this is almost as easy to do as it is to say. Use the interview, your questions to help the client evaluate those elements before and above price in the decision process.