Most salespeople are scared to death that their prices are going to be too high when they quote. But most often, price is a much larger issue among salespeople than it is among their customers.
Of course, customers will tell salespeople that price is of primary importance to them because they are trying to get salespeople to cut their prices, but in the final analysis, price is rarely the customer’s overriding concern.
Consider pizza as an example. Domino’s is rarely given credit for making the best pizza in town. And they certainly don’t have the lowest price. Yet they have grown to become the second largest pizza company in the world.
If their quality is not excellent and their prices are not the most competitive, then why are they so successful? Very simple! They deliver! Most pizza companies aren’t willing to offer the service that Domino’s is willing to offer their customers.
What service advantages do you offer your customers that set your company apart from your competitors?
If you were to go to a purchasing agent’s convention and ask 100 buyers their number one criterion when making buying decisions, how many of them do you believe would say that it is price? My guess is very few.
When buyers get chewed out, what do you believe is the most frequent cause? It’s almost never for paying too much; it’s for not procuring products on a timely basis or for buying products that don’t perform to acceptable standards.
Buyers say that price makes the difference primarily because salespeople are so price sensitive. Naturally, they are willing to accept a lower price if the salesperson falls for their negotiating tactics.
Most consumers buy products that are actually of higher quality than is really necessary. Take golfers as an example. How many golfers do you know who play with the cheapest golf clubs that they can buy? If you see the latest and greatest Callaway driver in their bag, odds are you’re looking at a price tag close to $400.
How many of your customers do you believe drive the cheapest car on the market or live in the least expensive home they can find? When they tell salespeople that price is their number one criterion, they are simply not telling the truth.
Most buyers make buying decisions based on quality and service. It’s only when salespeople fail to convince a buyer that their company’s quality and service is superior to the competition that price becomes an issue. When it comes to price, quality and service, you can pick any two you wish. It is almost never the case that a company can offer the highest quality and the best service at the lowest price. Companies that adopt this marketing strategy usually go broke.
What’s the purpose of a salesperson anyway? The purpose of a salesperson is to impart upon buyers the value that they and their company represent. If salespeople cannot do this, they almost always fall for their customer’s negotiating tactics. It is the salesperson’s job to be professional enough to make sure that the products that they sell generate enough gross margin to produce a strong enough bottom line to keep their company on the top of the heap.
If price were the real issue, then only one supplier would get all of the business. The only supplier that would survive would be the supplier that had the most capital and, therefore, the most “staying power. ”
Companies with a sales force that must have the lowest price to move products continually struggle to produce a satisfactory bottom line.
To achieve an optimal gross margin, salespeople today must add more value to the products they sell than their competitors add.
When you analyze your sales force, what kind of salespeople do you have? Do you have a sales team that believes that they must have the lowest price to meet their sales goals? If so, your gross margin will be always under attack.
Invest the training dollars necessary to educate your sales force to deal with pricing objections. Your return on this training investment will be enormous.
Bill Lee is author of Gross Margin: 26 Factors Affecting Your Bottom Line ($29.95) and 30 Ways Managers Shoot Themselves in the Foot ($21.95). Both books are plus $6 S&H for the first book and $1 S&H for each additional book. Bill also is author of Master Selling Skills DVDs and CDs. To order, go to Shopping Cart at http://www.BillLeeOnLine.com Sign up for Bill's FREE electronic newsletters at http://www.BillLeeOnLine.com