All salespeople must understand how to handle the price-versus-cost conversation effectively. Those who can’t are going to lose every time to another solution that may be lower priced in the short term but often has a higher long-term cost for buyers.
If you’ve ever lost to a low-price provider – but know your product or service is far superior – then you may be willing to put in the work of identifying the cost or “consequences” for customers who don’t select your differentiating value (DV). Your DV is what you offer that is better than what competitors offer.
After you identify your DV, you need to demonstrate to the buyer what will likely happen when they try to implement without your help — or experience a less-effective solution from a competitor. Here’s how the process works.
1. Articulate the consequences of going without your product (i.e., translation).
Translation takes us from the intellectual concept of what’s unique about a product or service to the consequences of not having it. When customers realize these consequences, they base their buying decision on avoiding those consequences and the associated pain.
2. Make sure everyone on the buyer’s team understands the consequences of going without your solution (i.e., isolation).
When you talk only to the people in purchasing, then the people in engineering, marketing, sales, or customer service still don’t understand the real consequences of not having your DV. But they’re the ones who will be affected most by not investing in your solution!
Often you can tell this is happening when you’ve got a really strong business case, but the prospect won’t pull the trigger. Or it’s taking forever for the prospect to make a decision. The reason for the delay is usually the isolation between the person who makes the decision and those who will experience the consequences of not having your DV.
3. Be prepared to steer your customer away from features and benefits (i.e., core competencies).
Core competencies are the table stakes or the minimum characteristics a vendor must have to be seriously considered. If you have DV beyond features and benefits – and an appropriately high price – you must be prepared to influence the prospect’s decision process away from price and core competencies and toward DV. When articulated correctly, the consequences can trump core competencies and lower-priced competition nearly every time.
The price-versus-cost conversation is an advanced sales technique that takes longer to train and longer to pursue than the typical “features and benefits” or price-focused sales approach. It can happen only once you have identified your DV and also what I call the “emotional customer.” This is the customer who experiences the pain of not having your DV. This person can influence the logical customer (e.g., purchaser) to choose you.
You’ll know when you’ve missed the emotional customer when a prospect chooses a lower-priced vendor – but months (or even a year) later contacts you to say they want to talk again. They have spent the past year or more invested in a product or service that isn’t working. Instead of saving thousands a year with the lower-priced option, they have lost $1 million or more in delayed time to market, inaccuracies, missed deadlines, or lost customers.
Don’t let your potential customer make this mistake. If a well-qualified customer is pushing you to lower your price or requesting a discount, you are either talking to the wrong decision maker in the company or you haven’t convinced them of the consequences – the consequences of not having your high-value product or service.
Terry Slattery is the author of The Cinnamon Story: Competitive Differentiation When You Must Win the Sale, and has trained sales leaders and teams across the U.S. for more than 30 years. Visit www.slatterysales.com.