Next time reps tell you they won’t win the order unless they can offer the lowest price, send them to a bike shop to look at helmets. Then ask them which one they would buy – the one that’s on sale for $10 or the sleek, ventilated $150 model that promises it meets all ANSI testing standards and is the same model worn by Lance Armstrong? Our bet is they would buy the $150 model. Why? You need guaranteed protection from your helmet in a crash; you need good ventilation; and if you’re racing you need a good aerodynamic design. All of which are promised by the more expensive model. What you don’t need is a low price. The same is true of your product or service. Your customers don’t need a low price. They’d like one, sure, but your job as a salesperson is to determine what they need and then show you can meet those needs. Most prospects will pay a higher price for those guarantees. In their book How to Sell at Margins Higher than Your Competitors: Winning Every Sale at Full Price, Rate, or Fee (John Wiley & Sons, 2006), Lawrence Steinmetz and William Brooks discuss some of the things buyers need. Which of these needs are applicable to your customers?
1. On-time delivery. More than anything else customers need on-time delivery. This is true regardless of what you sell. If you can deliver on time you don’t have to sell at the lowest price. Many low-price competitors eventually have delivery problems when they receive too much business from their too-low prices. On-time delivery is paramount.
2. Help and guidance with complex purchases. People who make multiple, varied or complex purchases often are not as knowledgeable as you might think about what they are buying. If you see your role as that of an educator or teacher to a harried prospect, you can get an advantage over your competition. “Recognize that if you are a knowledgeable, helpful representative of your products or services you always will have access to the ears of your customers,” say the authors. “This gives you the opportunity to present the reasons why they should pay you a premium price.”
3. Quantity, quality, timeliness, accuracy. Customers need to get what they’ve ordered. They need to have it on hand so they don’t have to shut down. They need it on time and in top condition.
4. Minimal inventory carrying costs. Your prospects might need just-in-time inventory, which means nothing is received late and they don’t have to keep too much on hand. “This is a tough requirement. If you can convince them that you can deliver on time you have a strong selling advantage,” say Steinmetz and Brooks. This requirement underscores again the importance of delivery over price. Prospects will tell you they want a low price, but they will cut you off as a vendor if you foul up delivery.
5. A technically current, financially sound vendor. Remember ValuJet? They usually had the lowest ticket prices, but their prices were rock bottom because their maintenance was shoddy, which ultimately led to a crash and the company’s absorption into another airline. That’s the story with many low-price competitors – they go broke fairly quickly because they’re cutting corners somewhere. Knowing this, smart buyers are far more concerned with the stability of your company, the quality of your product and your ability to deliver on time than they are about prices.
6. More certainty on A items than on B or C items. A items are those a business can never be without; B and C items are less important. In the airline industry, for example, fuel is an A item, ice for drinks might be a B item because they are important for passenger satisfaction and service, but not crucial for flight operation, and drink stirrers a C item. The lack of B or C items won’t put a company out of business; lack of an A item spells major disaster. Know where your product or service fits in the hierarchy.