“Your price is too high!”
How many times have you heard that statement? And how many times have you been frustrated? And how many times are you going to lose sales because of it? And how many times does a guy with a higher price than yours come in and make the sale? A: Too many.
Price is only one factor in the scheme of selling, but it seems to be the most talked about because it is the most often heard (stated, hated, lied about) objection.
In my experience the price objection is valid less than 50% of the time it is used. (Please note this does not include the “send me your proposal, we’ll pick the lowest price regardless of quality,” scourge of American business.)
When the customer says your price is too high what they’re really saying is some combination of:
1. My perception of your value is lower than my focus on your price.
2. You have failed in your effort to distinguish or differentiate yourself from those who seek to sell the same thing that you do.
2.5 You’re foolish enough to believe me, and you accept the objection as a defeat rather than an opportunity to prove or improve your position.
NOTE: Some people only buy price. Avoid them. Lowest price means lowest profit. Let’s take an example. The biggest most competitive sales market in America is insurance. Everybody hates it, everybody hates to buy it, everybody needs it, everybody needs to buy it. If I say insurance, and I also say “necessary evil,” a smile comes to your face and a nod comes to your head.
The most interesting thing about insurance is that it basically all costs the same. The only difference in price, or should I say “the apparent price,” is the type of coverage offered and the amount of coverage offered and the deductible attached thereto.
My friend and insurance agent, John Cantrell, called me the other day and said, “Jeffrey, I’m bidding on a big deal with several other insurance agents and my price will be higher than the others. What should I do?”
My answer was simple and swift. Sell your value and sell yourself, or lose the sale to someone who’s not as good as you are, but has a better price.
John was selling property and casualty insurance, and I asked him to break the sale down. I made him WRITE DOWN the elements besides price that the customer was paying for.
TAKE ACTION NOW: What are your customers paying for? If you write down each element, you’ll uncover the value pieces and the reasons they buy from YOU! Take a look at the “insurance” model below, and then create your model. Your answers will create new, and powerful reasons for the customer to buy other than “price.”
When you buy insurance, you’re paying for:
1. The protection need of the person — The first thing in the battle for any sale is to discover what the customer needs to buy and what the customer wants to buy.
2. The coverage of the policy — The second thing in the sale is to tell the customer what he or she is actually buying, and if you are astute as a seller, there’s always a spreadsheet of subtleties that you can communicate to the buyer where the nuance of the product differs. Ever read an insurance policy? Of course not, no one does. When the average person has a claim, they can’t even FIND their insurance policy. The time to find out if you are covered is before you have a claim, not after. The customer needs to know what they are getting for their money.
3. The insurance agent for reliable insurance information — The person the customer must trust in order to feel comfortable about buying. John’s job as an insurance salesperson is the same as your job as a professional salesperson: get the customer to buy YOU. If they like you and they trust you and they believe you and they have confidence in you they are more likely to buy from you regardless of your price.
4. The “claim” if you ever need it — Which brings me to the final chapter “service.” After the sale has been made, that’s when the service kicks in. Insurance companies have the unfortunate reputation of fighting all claims and denying them whenever they have the chance.
5. “Me” — the biggest factor. How many customers buy from you BECAUSE of you? There’s a clue, Bubba. You are the added value (or the reason the customer buys from the competition).
All insurance prices are about the same when you get apples to apples. And they’re the same with what you sell. The difference in VALUE is the person who is selling it. That would be you.
“That product’s been discontinued.” “That salesperson is no longer with our company.” “That company is no longer in business.” Those are all words associated with lowest price. There’s an old saying that says “you get what you pay for.” Let me add to that, you don’t get what you don’t pay for. So, to the salespeople of America: differentiate yourself with value. And to the customers and consumers of America: don’t look at the price, look at the cost. The difference between price and cost is value. Ask anyone who drives a Ford Taurus. Ask anyone who drives a Mercedes-Benz.
All you have to do to make the sale is out-value the other guy that’s trying to out- price you! Be the value! Not the price.
Free GitBit — Want a real world example of the “value” not “price” sale? Go to www.gitomer.com — register if you’re a first time user, and enter the words INSURANCE VALUE in the GitBit box.
Jeffrey Gitomer, author of “The Sales Bible,” and “Customer Satisfaction is Worthless, Customer Loyalty is Priceless,” is president of Charlotte-based Buy Gitomer. He gives seminars, runs annual sales meetings and conducts training programs on selling and customer service. He can be reached at (704) 333-1112.