Paul discusses some techniques to safeguard your customers from the lure of cheaper alternatives.
Focus on the unknowns your customer may face with a cheaper competitor. Will they have the inventory, the service, the quality?
Highlight what the customer would lose by going with the cheaper alternative (i.e., your reliability and knowledge).
Social pressure carries a lot of weight. Utilize your internal champions and influencers to remind the customer of why they went with you in the first place.
Being customer focused means acting in the best interest of your customer. This may mean helping them get out of their own way.
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How do I protect my customers from cheap competitors?
(Transcribed from podcast)
Today’s question is coming from a recent coaching call that I had with a group of salespeople. Here’s the basic situation. This one salesperson had a customer who said, “Hey, I can get this cheaper somewhere else.” You know, whatever the discount is, it doesn’t really matter. But the seller had a cheaper competitor coming in and trying to steal the business. That is today’s episode. We’re going to answer the question: How do I protect my existing customers from cheaper competitors?
Before we get into that, the techniques that I’m going to talk about today really stem from both Value-Added-Selling and Selling Through Tough Times. Both of these books are available wherever you get your books. So check it out. In Selling Through Tough Times, we do talk about the fear of missing out, which is going to be one of the techniques I focus on today. Also, we talk about the fear of the unknown in Value-Added-Selling. So we’re playing on both of those themes today. Again, Value-Added-Selling or Selling Through Tough Times. Available wherever you get your books.
So let’s get back to that question: How do you protect your existing customers from cheaper competitors? Now, here’s what happens. Customers are often tempted by some of your cheaper suppliers. I don’t care whether you’re selling widgets, whether you’re selling software, whether you’re selling construction equipment, tools, fasteners, plastic, you name it, there’s always someone out there that is willing to do it cheaper. And whenever they’re willing to do it cheaper, they’re going to try to go after your best customers to steal them. Because your best customers are your competition’s best prospects. So, you have some of these cheaper competitors out there that are trying to tempt your customers.
Now, there is a better way to respond than simply lowering your price. And that’s what we’re going to talk about on today’s episode of the podcast. So, the overall theme here is you’re kind of reminding the customer of what they stand to lose, what they’re missing out on. That’s what we’re trying to do.
So the first thing we’re going to do is focus on the fear of the unknown—the fear of the unknown. And one salesperson I recently spoke with, here’s how they invoked that fear with the buyer. What they would do is they would say, “Hey, look. This competitor came in here and offered a cheaper price. Now here’s what we’re going to have to do. If you decide to go with that competitor, we’re going to have to free up all of the inventory that we had reserved for you for the rest of the year. We’re going to put that in the open market so all of our customers have access to it. Now, the real concern here is whether that one competitor that’s promising the cheaper price, if they’re able to take care of you and your needs and your concerns, and if they have all the inventory there for you. I mean, are they really going to be able to take care of you the rest of the year? Because if they can’t, and you come back to us, there’s a good chance that your inventory is already spoken for.”
So, you see, what the salesperson is doing there is they’re tapping into that fear of the unknown. They’re letting the customer know, “Hey, if you decide to go with one of our competitors, we’re going to free up your inventory so other people have access to it. And if that other competitor, they fall on their face so they can’t take care of you, or they don’t have the supply to meet your demands, then, man, you’re going to be out of luck.” And that fear, that fear outweighs the gain of the cheaper price that they could get. Fear looms larger than gains. And so, we’ve got to remember that what we’re doing is we’re tapping into that fear.
Now another technique here is we want to talk about FOMO. We call it the fear of missing out, or I call it the fear of missed opportunities. FOMO in B2B sales is real. It’s real in all sales. What we’re doing here is we’re letting the buyer know what opportunities they’re going to miss out on if they choose to go with a competitor. I remember working with a SAAS company. This company, they offered different solutions in the industrial space and all that. And a lot of it was based on automating different manufacturing processes and all that. It helped people produce parts more efficiently, saving more money. That’s the basic value proposition.
Now, their particular software had certain capabilities that their competition simply did not. And I remember working with one salesperson in one of our seminars, and he started sharing an example of how a competitor was looking to just chip away at their top customer. And what this competitor was doing was offering some free software, free upgrades, things like that. So he was competing against free, which is pretty hard to do. But here’s what the salesperson did. The salesperson went back and did a side-by-side comparison of that software (the competitor), and their software solution. And he identified three or four key areas that they were better than they were different. And there were a couple of examples of how they can help increase speed to market. They can help the customer go after new markets quicker than the competitor.
So, this salesperson went back to the customer and said, “Look. I know they’re offering free upgrades. They’re offering free this, but let’s consider what you’re giving up if you decide to go with them. Here’s what our software gives you the opportunity to do. We’re able to help you prototype different products quicker that help you improve your go-to-market strategy. That helps you speed up your time to market, which is going to help you capture an early-mover advantage. The other thing we can do, our new software is going to give you access to new markets that you can go after, that you can pursue. With our competitor, you’re not going to have those options.”
And so, what that salesperson was doing, they were simply highlighting what they’re going to lose if they decide to go with the competition—that fear of missed opportunity—what opportunity they’re going to lose.
Now, the next thing. We can’t forget about social pressure—social pressure. Again, what we’re trying to do here is remind the customer of what they stand to lose. Social pressure is such a powerful motivator because we look to crowds, we look to market leaders, we look to other people to help guide us in making our buying decisions. And so when we are going up against a cheap competitor, one thing we need to remind them of is all of the other, let’s call them influential targets, that are using our solution, that have partnered with us. Because the idea is, if all of these other companies and all these other people are using our products and services, we are establishing a little bit of pressure. We’re letting them know, “Hey, all of these companies, all of these people, have embraced our solution. Wouldn’t it make sense to partner with a company that is well-proven, that has that reputation?”
That’s one way we can use social pressures, just reminding our customers of all the other customers that are using our solution. And make sure they’re very reputable, well-known companies. Obviously, you want to check to make sure it’s okay to mention their name and do some name dropping as well.
The other way we can use social pressure is to highlight all the other decision makers that have already bought into the idea that we’re selling. You know, for example, this is common in in B2B sales. Let’s say you’re working with a procurement-type buyer, and they’re giving you pricing pressure. They’re telling you they can get it from a competitor cheaper, whatever it may be. Now you need to reach out to all the other key decision makers that had been involved. And that includes your technical decision makers, your operations managers, your high-level decision makers. Reach out to all of them and have them help you sell the solution to the procurement buyer. And what will happen is that a procurement buyer’s going to receive pressure from the engineering group. The engineers will go in and say, “Hey, we would really prefer to work with this company versus that one.” The operations team will come in and say, “Hey, you know, I know they’re offering a cheaper price, but we would really prefer to stick with what we’re currently using, and here’s why.”
What you’re doing is you are creating some pressure. You’re working through your internal champions to help take the focus off of price. And any procurement manager, yeah, they want to save money, they’re looking for a cheaper price, but if you get five or six other decision makers that are putting pressure on them, now it’s a high risk decision if they decide to go with the cheaper alternative. Because if they go with that cheaper alternative and something comes up, there’s an issue, it’s going to be them. They’re going to have a target on their back because they decided to make the change. So we can use social pressure in that case as well.
Now, I want to be very clear here as we finish up this episode. You may listen to this and say, “Wow, man. Paul’s really talking about applying some fear, and also, social pressure and all these things. This seems a very heavy-handed type of persuasion. Is that really in the spirit of the customer-focused approach?” And the short answer is yes. The short answer is yes. When we talk about Value-Added-Selling and Selling Through Tough Times, both of these messages are customer focused: customer focused meaning, we act in the best interest of our customers. You’ve got to remember, sometimes the best way to support your customer is to help the customer get out of their own way. And that’s what these techniques will do. They will help the customer get out of their own way. They’ll help the customer get off the pricing mindset and focus more on value.
So everyone, that is the show for today. Just a quick recap. Number one, focus on the fear of the unknown. Number two, focus on the fear of missed opportunities if they go with the cheaper competitor. And three, make sure you’re using that social pressure.
Make it a big day.