As the market gets tougher, it seems that the main focus of our clients is on reducing price. At least, that's what they say it is. In meeting 30 clients last week and discussing current issues and problems, this price competition beast reared its head about 90% of the time. So I'd like to share a few ideas that you may be able to use.

Price is not what it seems. You can take it too far. For example, imagine a computer network specialist offering to maintain your network. When you ask him what it's going to cost you - he says it will be R3500/month for his standard service level agreement. So why don't you buy?

If he did the sales part of his job correctly, he would ask you a few questions before even tendering his price: "How much have you invested in your computer hardware?" "How much have you invested in your software?" "How much have you invested in your cabling and infrastructure?" "What is your investment in backup systems and uninterruptible power supplies?" "What is your investment in staff training and skills?" "What would it cost your firm if your systems were down for a day?"

Only once one has the answers to these questions is he remotely qualified to offer a price. If his standard SLA [service level agreement] is R3500/month, but the customer has R5 million invested in systems, he is going to look cheap and under qualified - simply based on the price he is asking. If the client has a huge total of 1 PC - then that R3500 is going to be a tad steep! In this case it’s time to look at the product and base its price on the amount of responsibility taken!

Our standard response to being asked our price is to blurt it out. And when the potential client remarks that it "seems a little high" we immediately capitulate and offer to meet any price! Where is the dignity in that? Where is the challenge in that? Your sales job is simple. Show how a price that seems higher at first glance actually represents a lower cost. Once you understand that, then it's simply a matter of getting your responses right.

For example, if your client says "Your price is much higher than your competitor."… Your immediate task is to pin that statement down. "Why do you feel that?" [Ask this question with humility - not arrogance.] Your client will look at you as if you're an idiot - but he will pin it down by doing a direct comparison between the headline prices. The headline price is the final figure written down somewhere.

That's not his cost. Your job is now to show him how your higher headline price translates into a lower cost to him. You must do this - no matter who is actually doing the buying. If it's a buyer type person, then you need to equip him with enough knowledge to defend his decision to his boss. It's not enough for you to know about all the good things he's missing when he goes to the competition - he must know it as well. Otherwise he faces the prospect of his [probably pain in the butt type] boss taking him to task for a bad decision.

Sometimes the product or service is so inexpensive that it shouldn't be an issue. For example, most SA factories leave the management of their boilers [a piece of water heating kit that costs between R500,000 and R20 million] to an unskilled operator and a buyer who believes his life goal is to shave another rand off the monthly R2000 cleaning bill! This simply doesn't make sense. Why would any MD allow a resource that sucks up coal or oil in huge quantities to run inefficiently? Probably because he doesn't know how much it's costing him, or how to solve it.

In this case the sales effort shouldn't even look at the price of the service, but at the benefits of the job being done right. If the boiler is maintained correctly, it operates at close to 100% efficiency - which saves R2000/day! If it isn't - and Lord knows there are a bunch of cheap operators out there - then it will cost an extra R2000/day - and the MD won't even know it. The salesman adds value by sharing this information. If the person buying is the boss, then you need to show him how your product/service combination will save him money. [Or effort - which translates into money.]

The bottom line is that you need to identify ALL the benefits of your product. Every time! Every salesperson that I know has at least one horror story of losing a sales to a competitor - simply because the competitor emphasized a benefit that our hero didn't realise was important to the client. How do you put your price into the clients perspective? You ask questions.

Here are a few that you might be able to use. "How much have you already invested in...?" "What would a systems failure cost you?" "How much does it cost you to support your suppliers' mistakes - incorrect invoicing, for example?" "How much does it cost you to support suppliers with poor ordering systems?" "What is the cost to you of a late delivery?" "What does it cost you when you have to return a faulty product?" "How do you assess the value of the service you're getting?"

Interesting question this, because how do you know you're getting a good service? Easy enough to see that the floors are cleaned each day, but how do you evaluate the service you're getting from your attorney or accountant? If you know nothing about the law, how do you know his advice is good?

Questions serve a number of roles. Firstly, they beget answers - and you learn more than if you were the one doing all the talking. Nextly, if the questions are well chosen they tell your client that you actually do know what you're talking about - much better than if you told the client that you know what you're talking about. And they get your client talking - which the role he's happiest fulfilling. Honestly - would you rather listen to your own voice describing a problem you have, or my voice describing a problem you have?

In asking questions you also force your client to think through issues and arrive at his own conclusions. That's much more effective than you arriving at those conclusions and then sharing them with your client.

© Peter Carruthers, www.petesweekly.co.za

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