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Price-sensitive prospects? How low do you go?

Many customers have a knee-jerk reaction to price now. They say: “You charge me less, I’ll do better. You charge me less, I’ll make more.” It’s our job to turn that around.

Sometimes, as sales professionals, we’re actually more price sensitive than our customers are. Why? Well, we hear it every day! We lose deals over price, we have to negotiate over price, we get beat up over price, we get pushed around over a nickel and dime here. We have relationships that end over price.

We become so price sensitive that it becomes a much bigger issue for us than it ever is for our customers. If we truly were to listen to our customers, we’d know that when they say “I need a better deal,” they are not always saying, “I need a better salesperson.”

I have a few food distribution companies that I work with throughout North America. Whenever the truck rolls up to their customer, basically the view of the customer is, whatever is on your truck is on your competitor’s truck. If they don’t have it, they can order it. So, whoever gives it to me for the least cost, well, they’re going to get my business. And because that’s the feeling of the restaurant owner, it becomes the feeling of the salesperson.

So as salespeople we are in a tough spot. And we hem and haw over whether we need to makle concessions. ‘Well, our fuel charges have doubled over the course of the past year, do we raise prices? Do we give them a fuel service charge of $4 or $5 per stop, or something like that?’

I challenge any relationship that would be lost over $10, $15 dollars a week in delivery charges when fuel has gone through the roof. If you were to temporarily lose an account and it would go to the competition over that $10 or $15 dollars a week and, say, they take two or three deliveries, then I’ll challenge any strengthened relationship that you have in that organization.

That being said, the message has to be delivered correctly. It has to be well thought out. You will have earned the right to get that fuel service charge.

Here’s what I’m saying: It’s not always about the price. Through our studies, we find that 17% of all buyers out there make their primary buying decision based solely on dollars and cents. Seventeen percent. Well, that leaves 83% that sees the bigger picture.

So we have to decide, who do we want to do business with? Is it those people who are going to shove us around and expect a heck of a lot more for a heck of a lot less? It typically tends to be the ones who are the most frugal — the ones most focused on what they pay – who give us the biggest pain in the rear end.

We gave a repeat client a break on our fee. I piggybacked some business in the same city. I rolled in some travel expenses and things like that into the thing, and he’s getting a considerably fairer price based upon us jumping through some hoops to piggyback some other business and roll some expenses together and so on.

Since we gave in on that to earn his business. Well, he’s wanted to nickel and dime us over travel expenses and handout costs. He wanted additional books thrown in. He’s called 17 times to talk about content and things like that, micromanaging the whole process.

Here’s the situation: It’s those people who are the most focused on what they pay that turn out to be the biggest nightmares. Now, I’m not saying that the frugal businessperson is the dumb businessperson. I’m not saying that the person who is concerned about dollars and cents is always a pain in the rear end. It just happens that those people who want the most for the least turn out to be our biggest nightmare, and we end up spending a lot of time with them.

I have salespeople out there who spend at least 50% of their time in dealing with the lowest margin customers. And you’d like to say, well, maybe it’s high volume. That’s not always the case. It’s not always high volume and thus, low margin. It’s just, the low margin people tend to want the most. A colleague of mine, Jeffrey Gitomer, wrote it in his book. He says, “Cheap bastards are a pain in the ass.” And that can be the case.

See, you need to decide in which pool do you want to swim. In which pond do you want to fish?

I’m a big believer that low-price leader is low-profit leader. And the  low-price leader is also usually the low-commission person. If that salesperson is spending 50% of his time serving the low-margin customer, then I’m going to challenge, where could he be spending that 50% of his time improving the value that he provides to his high-margin customers. In effect, continuing to earn the right to do business with them, driving value to that relationship, enhancing, developing and growing those relationships.

Smart sales people understand what it is that they want and how it is that they’re going to go after it.

Photo by jswieringa, via Creative COmmons 2.0