Overcoming price objections is something every sales person must master.
In fact, a survey by Hubspot found that 35% of sales people cite price objections as one of their top challenges when selling. The key to overcoming price objections lies in understanding that price is very rarely the real objection.
Most buyers will attempt to negotiate the price, regardless of how good the proposition is and there are 2 underlying reasons for this: firstly, it’s their job. As a buyer, it is their responsibility to source the best solution at the lowest price. Secondly, they’ve got nothing to lose by asking (“if you don’t ask, you don’t get”).
Whether the customer purchases your solution (discounted or not) will depend on how good they perceive your solution to be or, more precisely:
the value they perceive your solution will deliver.
Note that there are two words I’ve highlighted in this sentence: value and perceive. It is critical not to focus on value alone because just having a solution that delivers significant value to your customer is not necessarily going to be enough to secure the deal. The sales person must be confident that the customer sees (perceives) the full extent of the value of the solution.
In order to capture value, we must first understand what we mean by it and there are two types of value that are important here:
- the measurable, quantifiable kind which has a monetary number attached to it
- the value that comes from how you make someone feel.
The first of these, which will shape your value proposition, is the easier to tackle and yet is rarely captured in full. When done correctly, it can really differentiate you from your competitors.
To explain this, think about what happens when you throw a rock into a lake – it generates waves, or ripples. Those ripples are biggest around the point of impact but continue for some time and distance out from that point of impact, decreasing in size but still having an impact. The measurable value of a solution can be thought of in the same way, with the largest ripples representing the most impactful, and typically the biggest, cost benefits of the solution. As with the ripples in the water, the value of your solution continues well beyond those initial big waves.
For sales people, capturing the bigger, more visible waves is easy. The key to success and to differentiating yourself from your competitors (who, it must be noted, are just as able to easily capture those ‘bigger waves’) lies in capturing the value that comes from all of the smaller ripples. Every single ripple carries a value that can be quantified. When these are added together and communicated to the customer, not only does the ROI improve significantly but you strengthen your proposition by demonstrating an in-depth understanding of your customer’s business.
In practical terms this means looking beyond just the value gained from solving the customer’s initial pain/challenge (the big ripples). Critically, you need to determine exactly what value is to your customer (remembering to consider all stakeholders).
As well as looking at other business functions where your solution has a knock-on effect, also explore things like how quickly you can deliver your solution, what levels of support are available to your customer, etc. Find out what’s important to them and build this into your value proposition. To do this, you are going to need to know your customer’s business inside out and to have a great relationship with them. You need to be able to ask the right questions and for your customer to be comfortable sharing information with you so that you can uncover those less obvious areas where your solution has an impact and work with them to attach a numerical value to these.
The second type of value, which relies on the ability to make your customer feel some sort of positive emotion in relation to you and/or your solution, is influenced by the way in which you communicate with your customer. Emotions such as how much we trust or like someone play a significant part in whether we choose to buy from them. It’s why referrals and reviews are so effective in driving new business because they instantly make the buyer feel like they can trust the sales person. There is therefore huge value in a customer liking and trusting you. It might not be a value you can attach a number to but it is value that can drive your customer to choose you over your competitors.
Building this type of value is less black and white than capturing a number. It requires excellent relationship-building and communication skills. Good levels of emotional intelligence, doing what you say you will do and communicating information to your customer in a way that both suits them and ensures they have absolute clarity over the value of your solution are all critical skills in generating this type of value.
Identifying all of this value is pointless if your customer does not see it too. The sales person must ensure they communicate value in a way that leaves them confident the customer understands every bit of value their solution will deliver.
Tips for communicating value:
- Assume nothing – When it comes to their solutions, sales people are the experts. There are things they just know about their products and services. Unfortunately it is these things, that can get left out of value-based conversations either because the sales person feels it’s so blatantly obvious and assume the customer sees it too, or because they don’t see it as significant enough. What is obvious to one person may not even register to another, so it is critical the sales person works hard to be as objective as possible, removing their own biases and assumptions to ensure they capture and communicate every single element of value.
- Use a Value Waterfall – Using a tool such as a value waterfall to capture the quantifiable value in relation to the cost of your solution creates a powerful visual representation of the ROI and in so doing, enhances the customer’s ability to see the full value of your solution.
- Check understanding – Arguably the most important stage in communicating value is to check your customer has understood. Use questions to clarify understanding and avoid relying on guesswork and hope!
- Use storytelling – When pitching your solution, a really effective way to gain the second type of value we outlined above, in which we move our customers beyond knowing to actually feeling and seeing, is to make them part of a story. Effective storytelling in a sales context takes the facts and weaves them into compelling, engaging narrative, which evokes emotion and drives buying decisions. (For more tips on storytelling in sales take a look at ‘Why Great Sales People need to be Great Storytellers‘ and ‘My Top 5 Storytelling Tips‘.)
- Map to the Buying Cycle – Communicating value doesn’t just sit at the point of pitching, but should be present throughout the entire process. You need to make sure that you have fully explored your customer’s requirements at each stage of their buying cycle before moving on to the next stage. Doing this will ensure you build and communicate value as you go, leaving your pitch/proposition as a chance to pull everything together and really showcase your proposition, building on the groundwork you’ve already laid.
When it comes to overcoming price objections the most effective way to do this is to build such a strong value proposition that price becomes almost irrelevant. If your proposition is compelling enough the customer will be willing to pay for the added value they perceive. At the outset, find out what value it is they’re looking for, i.e.; what is important to them. Your value proposition should start with this; how your solution solves their pains. Then move on to the additional value your solution delivers, that which your customer was not necessarily looking to gain or was even aware of. Throughout the entire process build rapport with your customer, demonstrating credibility, likability and trust so they also see the value to be gained from working with you, specifically.
If you’d like to talk to our team about how we can help your sales people have more effective value-based sales conversations and overcome price objections, drop us a line at email@example.com or give us a call on 01778 382733.