Dave has spent his career developing high performance organizations, from sales and marketing to executive management. He remembers when first started in sales that lowering the price wasn’t even an option.
“The price was the price—period,” he says. “It didn’t matter if you were the largest, most important customer or the smallest. The price was the same.”
Dave learned quickly that in order to be successful in sales, he had to learn how to sell without depending on price to win the day.
Pricing had little to do with the total costs our customers incurred in implementing solutions. The price was an element, but there were implementation costs and ongoing support costs. I started to focus on TCO (total cost of ownership), recognizing that even if I could do some discounting, often these had a relatively small impact on TCO.
Dave Brock, Sales consultant and speaker
He studied the company he worked for to find a great value they gave to their customers. Dave realized that the company did as much as it could to minimize the risks for customers.
“I learned to look at risk,” he explains. “Sometimes our competition had a far lower price, but they didn’t have the same track record of helping customers be successful. As a result, there was significant value in our solutions because there was very little risk in implementation.”
Sometimes that wasn’t enough. So he did his homework to better understand the business of his customers.
“I looked at their strategies, the performance objectives and things critical to their growth and success,” Dave says. “My customers weren’t buying stuff just to do projects, they were buying stuff to achieve their objectives.”
He began building his case around improved productivity, customer retention, accelerating revenue growth and differentiating their offerings for their customers.
“I learned that whatever I might have been able to offer in discounts,” Dave says, “was absolutely lost when you started looking at the business value.”
That doesn’t mean potential customers never asked for a cheaper price, especially when his competition was willing to offer it.
“I had to stretch myself and my team even further,” he says. “I had to really understand the differentiation of our solutions and the difference in risks. I knew I was fixed in pricing, but I needed to narrow the gap in perception between competition and others.”
Dave explains that by getting the customer to value the company and the services it could provide, customers wanted to work together. As a result, his customers had higher lifetime values.
If he ever lost a deal, he never blamed it on price.
“I lost because competition had a better solution. Perhaps my competitors did a better job understanding the customer than I,” he remembers. “Sometimes, I was just outsold. But I never recall losing because of price.”
Even today, Dave still doesn’t rely on price to win a sale.
“It doesn’t take a lot of talent to win at the lowest price,” he explains. “You don’t have to learn the customer’s business, you don’t have to know much about the alternatives, you don’t have to create any value. All you have to do is be the lowest price.”
Business Growth Consultant James T. Noble agrees that lowering the price is a dangerous sales practice.
“Providing services at a lower cost can be the start of an ugly cycle,” says James. “It forces you to keep prices low and before you know it, you’re in a hole too deep to get out of.”
If you offer lower prices, you have to make up for the shortfall by working harder than your competitors to make the same amount of money. This is bad news as there are only so many hours in a day, so you may not be able to make up your profits without exhausting yourself—if at all. This means your competitors can be more relaxed, and they’ll have bigger financial resources at their disposal for marketing and advertising too, making them more powerful adversaries.
James T. Noble, Business growth consultant
James explains in this Kissmetrics blog post that a discounted price implies that you have a lack of faith in your own product or service to sell it at its real worth.
“Setting a low standard makes it much harder to raise your prices as your business grows,” he says. “Even if you make it clear that the lower price is “introductory” only, this is almost always ‘forgotten,’ and getting people to pay higher prices once you go back to normal will be really tough, let alone when you inevitably raise your prices.”
Instead of selling by price, James recommends focusing on building your sale around customer loyalty.
“Loyalty gives your business the power to endure through a tough economy,” he says. “Your loyal customers aren’t interested in getting the cheapest price for what they want—they want real value, and that comes with the experience you offer them and the benefits they perceive your products give them.”
James explains that creating customer loyalty starts with the very first sales conversation.
“Emphasize the virtues of your product or service, and not the price,” he says. “Step back to see the bigger picture, then hone in on the all-important details. It’s those details that keep customers returning to you over and over, not dropping your prices and making compromises.”
The sales experts agree: Researching your customer and focusing on the real value they’d receive from your product or service is a better sell than slashed prices.
“You will be a far better salesperson,” says Dave. “You will win more and you will create greater value with your customer.”
16 Vorlagen für Vertriebsprozesse für B2B-Pipelines
Ganz gleich, ob Sie Ihren ersten Verkaufsprozess erstellen oder einen bestehenden überarbeiten, diese Nutshell-geprüften Vorlagen werden Ihnen einen großen Vorsprung verschaffen.