Every sales person hates getting price objections, at one time or another, and every salesperson has heard these infamous words: "Your price is too high," or "I can get the same product a lot cheaper from someone else."
Tom Reilly, author of 10 books on selling and a nationally known sales expert, conducted a webcast with INDUSTRIAL DISTRIBUTION on overcoming price objections. Here are some statistics Reilly noted during the one-hour webcast:
- 90 percent of salespeople offer a cheaper price, unprompted, to close a deal.
- 75 percent cave in when the buyer says, "your price is too high."
- Only 18 percent close without discounting.
These statistics can be huge in terms of tremendous bottom line opportunity. If we could all improve by 15% in handling these types of objections what would happen to sales? They would go dramatically up!
Price objections can be nerve-racking to handle for sales professionals. When receiving a price objection sales professionals must realize they may have not done their job of fully understanding the clients needs or driving specific benefits to those needs. A price objection is not a personal attack from the customer rather it's a cry for value.
Handling price objections can give you a significant advantage over your competition. Every organization receives price objections; therefore, getting better at handling price objections provides your organization with an incredible opportunity to not only close more sales, but to also do it without discounting.
CSO Insights provides the selling industry's most valuable data in terms of trends. In one survey, over 50% admitted to needing improvement in selling value and avoiding discounting. If 50% of the sales staff are discounting versus selling value, imagine the impact on profits if those reps were given the proper tools to succeed when faced with an objection.
HANDLING THE PRICE OBJECTION:
Step one when getting a price objection is to never respond with a price reaction. If you do, you ultimately will end up doing one of three things:
- You lower the price- Yes you may win the business but you have also devalued your product offering
- You keep price the same - All you are really doing here is saying no.
- You raise the price - Well this defies logic and will never occur.
When getting a price objection you must drive value, and this requires confidence and practice; so second, push the objection to the side for a minute. This can be done by sayin, "Outside of price, what are the two or three major factors that will go into your decision-making and why?" This question prompts the customer to revisit or even at times discover their own value drivers. The customer will either respond with specific value drivers or potentially have an inability to quantify what they're looking for. It is at this point you have a choice of how to react. If the customer can quantify their values, you can revisit how the benefits of your products and services help drive those values. If the customer cannot quantify their own values, the sales process potentially needs to be restarted because the customers are only left to buy based on price.
If you must discount your price, get something in return. During this interaction, you will have a choice as a sales professional- should you decide to lower your price get something in return such as, five leads, an introduction into a new company, an opportunity to bid on an upcoming project early, etc. This way you make the customer happy while creating value for yourself.
Price objections are tough because sales reps will typically want to lower the price due to the fear of losing the customer. Handling price objections takes time and continuous practice to build up the nerve as well as skill sets to handle such situations. Management cannot simply tell salespeople what to do, rather it must facilitate practice sessions to help build confidence in handling price objections.