Insthinktive Influencing
Leveraging pricing in Sales
Handling Pricing in a Tough Environment
You? want to have been living in a bunker for the last few years if you haven? been confronted by the pricing Firewall. Or Firewall as most envisage it to be. I am amazed by the fear this question, raised by a prospect seems to create in the minds of the sellers.
YouWe delivered a brilliant presentation you followed the PRESENT model verbatim and you get to the close, and you hear ?you’se too expensive?
And you run the gambit of emotions, fear, trepidation, and panic. And you offer a discount on the spot. You need to be very wary of this it could have serious longterm consequences.
We met with a businessman several years ago. His sales had dropped by 25% over the last 2 years. And he informed us that he had recently decided to drop his prices by 25% also.
Now this wasn? a decision that was based on any tangible reasons. He hadn? restructured his manufacturing process and streamlined his business. He was a distributor. He hadn? assessed that the market would grow by 25% plus. He actually anticipated that he would just consolidate sales numbers. He hadn? negotiated a lower price with the original manufacturers. No he had made an arbitrary decision to lower prices.
We simply asked what impact this would have on the pro?ts of the business. He admitted he hadn? thought about this. Would he sell more to compensate? No the market was shrinking. And you know what so was his business, and pro?ts. He was out of business in under a year.
Get Proactive on Pricing
Reactive decisions on pricing can be serious and can be very difficult to reverse once you embark on this road. Once you have created an expectation it is very hard to break this.
Discounting leads to more discounting, and can create a vicious downward cycle.
I worked for a large greeting card company, many years ago, and we were faced with an increasingly competitive market from a pricing perspective. One of our major competitors was literally going in to our clients and offering an additional 20% discount over above anything they received from ourselves. On top of that they offered full sale or return of their product. This did initially hurt as we lost some clients. But we didn? react. We continued to focus on the quality of the product and service we provided.
The competitor continued to be aggressive in the market place. The result of which was that their clients bought more than they needed ( it was on sale or return anyway ). They would often send back up to 40% of what was bought unsold.
The problem was that the competitor started to recycle that stock again at a later stage. They were losing money and couldn? invest in either product or service. Eventually they went out of business.
New owners came on board. The new owners tried to break the cycle of discounts and sale or return, but couldn?. The expectation was so engrained that they also failed to rejuvenate the business. And they closed down for good only two years later.
Focus on your Value Proposition
We’ve all done it. Given a discount too hastily and guess what? You are asked for more, and more and more. Why not? TheyWe sensed a weakness and they want to expose it.
It is a recipe for disaster and endless negotiation. You need to focus exclusively on the value you offer. When you give a price, you must give it with con?dence. When you are asked for a discount you say NO! If you have the belief that you product or service can deliver the value. Stick to your guns and you will be rewarded.
Not the naysayers amongst you will immediately highlight the deals you lost on price, and justify the practice of discounting. But that is missing the point entirely. The exception does not determine the rule.
You need to commence all business relationships with a negotiation that is bene?cial to both parties. And that means you make a pro?t and your clients get huge value.
There is always a section of the marketplace that buys on price and price alone. But these are not your ideal clients. They are not the ones you will target. If you have a business that is dogged by negotiations on price then it’s time maybe for a rethink.
Having a clear pricing policy and strategy will enable you to achieve better results. Be careful not to allow too much Wexibility for your sales team to make decisions on pricing.
This can fall foul of the weaker sales person, who?l always default to the highest level of discount.
Simple, but not easy…..
Next session; You need to add value to the sale
