For a few weeks now, I hope your sales motivation has increased as you follow our series Will Your Customers Leave You If You Raise Prices: 8 1/2 Questions to Ask Yourself.
We’ve dug deeper into the following questions:
How do you know they have even started the process of finding an alternative source?
How much will it cost the customer to switch suppliers?
Can the new supplier even handle it?
Today we look at questions 4. and 4 1/2:
How secure is the new price they say they can get?
Will it be only a temporary savings?
Anybody can offer a one-time savings. Let’s not kid ourselves. The easiest thing one of your competitors can do is to lower their price for a short period of time to gain new business. But will they be able to sustain the lower-price over a long period of time?
One of the oldest strategies used by salespeople to attract new business is to offer a discount on the first order and then quickly increase the price on the subsequent orders. A buyer then has to ask themselves if the one-time savings is worth switching to a new supplier.
Don’t be alarmed when a customer shares with you a lower price being offered by a competitor.
The first thing you must do is assess in your mind if it is a short-term offer. Knowing how the competitor has handled things in the past can be very important to help guide your response. If the competitor has a habit of offering short-term discounts to attract new customers, then don’t hesitate in calling this out to your customer.
When you call it out, don’t do it in a way that attacks your competitor. Instead, mention politely what you’ve seen them do this in the past. Be sure you can back up your statement with factual information. The worst thing anyone can do in this situation is throw out perceptions or random judgments, only to then lose credibility with the customer.
Another area to look at is if the lower price being offered is a valid price or only an estimated price.
Salespeople from your competitor may casually mention prices during discussions with a buyer — and not draw a lot of attention to the fact that the prices are only estimates. When the customer is ready to place an order, only then will the salesperson explain the firm price. Nothing can be more misleading and, unfortunately, buyers can sometimes be lulled into believing the estimated price is the real price.
No matter what, your response when a customer is threatening to switch vendors is not to offer a similar discount. Doing so only proves in the buyer’s mind that you’re trying to maximize the price you can charge.
If the buyer takes you up on the lower price — which they most likely will — then I guarantee they will do it again and again to you.
The reason they will do this is for one reason — they know you will cave on any pricing threat.
Don’t be the salesperson that caves on any pricing threat.
Copyright 2011, Mark Hunter “The Sales Hunter.” Sales Motivation Blog.