By Tina Arnoldi
Price wars. You know what I mean. This is when you find yourself in a conversation with a prospect, and they mention XYZ competitor, and the quote from that competitor is lower than yours. The prospect says he really wants to work with you, but only if you can come down in price. Or maybe he wants you to throw in some extra services at no charge so you come out ahead of the other vendor, in his view.
It’s a lousy place to be in, but when you identify what’s happening and know how to address it, you will win the war–even if you don’t get the client.
Know who you are. Before this conversation comes up with a prospect, and ideally before you are even in this situation, make sure you identify and understand your value because otherwise you are just another commodity. When you’re a commodity who competes on price, it damages your brand equity and results in disengaged customers.
Part of knowing your value is having an elevator pitch that doesn’t sound like everyone else’s and isn’t only about the dollars. Once you identify how you are different–knowing your unique selling proposition and presenting it well–then you’re ready to have conversations around price wars.
Address price objections right up front. If price is truly the most important factor to a prospect, and you and XYZ offer the same exact value, encourage the prospect to go with XYZ.
This will disarm them immediately. They may be accustomed to price dropping from other vendors and expect the same thing from you. Don’t argue, plead, or beg; it reeks of desperation. In fact you may even offer to help them get the best possible deal from the other vendor and act as a partner in this process.
Focus on value. Acknowledge you are not the right solution for everyone. You are definitely not selling based on being the cheapest because you have value to offer which you identified earlier. Make sure the prospect knows that lowering the price devalues the service and is not fair to other customers who recognize what you do and pay full price for it. Value becomes clear when your conversation is benefit-driven (what they get), not features-driven (what you do).
The Post-War
As a result of this price war conversation, one of two things may happen.
The prospect walks away. They are clearly not invested in you or your skills. Their only concern is the lowest price and then you walk away too . . . with integrity and without the “non-decision” hanging over your head.
The prospect backpedals and indicates they really want to work with you. Get a little more information about this price issue. Are they being pressured by the higher ups to stay within a certain dollar amount? If that is the case, there’s an opportunity to be a partner with them. Ask if they need additional information to take back to the powers that be. You’re not offering free service and you’re not coming down on the price. It’s possible there’s another selling point that will resonate with the primary decision maker and enable your contact to get the proposal approved.
The biggest thing to remember is that you never, ever want to compete on price. You see this happen, such as when Kmart struggles with Walmart because they compete on price. However, if the price issue consistently comes up when you talk to prospects, examine whether there’s a strategy you need to adjust, such as reaching out to new markets or repackaging what you sell.
Never defend or explain. If the prospect is only interested in the cheapest service, you were never going to win that battle anyway–nor should you want to.
The post Smart Selling: How to Win a Price War appeared first on AllBusiness.com
The post Smart Selling: How to Win a Price War appeared first on AllBusiness.com.
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