All sales people know that there’s always a cheaper supplier. But most sales people still allow buyers to beat them up with the cheaper alternative. Like this: the buyer says, “Look, I just haven’t got the budget that you’re asking for. But if you can meet the lower price I have in this quote that I’ll share with you, then I’ll give you the business today.” Does this sound vaguely familiar? Well it is taken from buyer training class 101, so you probably hear it a lot. I know I do on my sales training courses.
So what should you do? You don’t want to risk losing the deal. The easier option is to give the discount. You get the deal, you still get paid, a little less but you keep your job….we just lose a bit of profit. No big deal, we’ll make that up on the next deal.
Not so fast! There is a way around this. When the buyer asks you to match the competition on price, indicate that you could possibly do that, but you’d need to also match the competition on specification too. There’s always a reason they can do it cheaper, as the image of the bridge shows, they are putting less capability and resources into their solution. So take the elements that the buyer values off the table to get the price down. If they are buying purely on price that could be acceptable. But if they are just beating you up for a discount, they will not be happy little bears.
This is especially the case if the competitor is the incumbent supplier that they are planning to get rid of. Here the buyer is telling you that they are willing to change. This means there is real and defined dissatisfaction. Change is painful and a risk, companies do not change their suppliers lightly. They are not doing it because they like you, they are changing because their business is being negatively impacted by their existing supplier.
If you are plugging that dissatisfaction gap, then that is ‘value’ and it means you can charge for it. You need to be clear on what value you are creating which requires a deep understanding of your customer’s business. How much is the value worth? Well that depends on the level of dissatisfaction and the impact on the buyer’s business. That’s why you ask the question early in the sales process, “If we could fix that, what would it mean to you? Your colleagues? Your company strategy? Your customers?”
Conclusion: discounting may seem like the easy option, but it negatively impacts on your whole business. If you don’t charge enough, you’ll need to cut resources and it could be your company that ends up in the same situation as the unfortunate bridge builder.
Author: Alistair McQuade