]In this episode, Paul shares five ideas to overcome price objections when the buyer apparently doesn’t care about value.
It’s hard to care about value that you can’t quantify. Price is concrete and tangible; your value should be tangible as well.
When the buyer focuses on price, minimize the difference. “You don’t need to sell your full value, just sell the difference…”
“You don’t have to sell value to the buyer, have your internal champions sell it instead.”
If the buyer wants a lower price, then lower the value. Once a buyer is made aware of the value, they won’t want to give it up.
You don’t have to go over the whale-sized opportunity. There might be a better way.
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How do I overcome price objections when the buyer doesn’t care about value?
(Transcribed from podcast)
On today’s episode, we’re going to cover price objections once again. I’m seeing a growing theme here lately with questions focused on price objections. This question didn’t come from the website. It actually came from a recent virtual training seminar. Over the past several months, I’ve been taking our Value-Added Selling training, which is traditionally a two-day training, and I’ve broken it up into eight virtual sessions. One of the companies I’m working with right now, a seller said, “I’m dealing with a procurement manager/buyer, and they literally told me, ‘I don’t really care about all the value. I just need a cheaper price.’” And so, his question to me was, “How do you sell value in this type of scenario? How do you overcome a price objection when the buyer tells you, ‘I don’t care about all that value’?” So that’s what we’re going to cover on today’s episode of the podcast.
Before we do that, a quick shout-out to Andrea and her team. As I mentioned before actually, the month of September was a record download month. It continues to grow in almost 55 countries now. So it continues to expand and a lot of the credit goes to Andrea and her team. She’s there to guide you, to help you, whether it’s editing services, launching your podcast, talking about equipment, she’s there for you, to help. We have a link to her website on this episode’s webpage, so make sure you check it out. Also, she has her own podcast as well. It’s a great podcast. I was on a guest on there a while back. So check that out as well.
Also, pick up your copy of Value-Added Selling. This new edition—the fourth edition—is updated with our latest research on price sensitivity and how to manage price resistance. So check it out. This book is your go-to guide to sell on value—to prevent price objections happening from the very beginning. We have a process that will help you do this. It’s been around for 40 years. This message, it’s stood the test of time. So, check it out. It’s available wherever you get your books. Value-Added Selling—Amazon, Barnes and Noble, wherever you get your books. Check it out.
So let’s get back into that question. How do I overcome price objections when the buyer doesn’t care about value? We’re going to go through five tips—five ideas to help you overcome this price objection.
The first thing I would recommend is to quantify the value that you deliver. It’s not that exciting if you tell a procurement buyer, “When you partner with us, we’re going to save you money. We’re going to provide quicker delivery. We’re going to help reduce your delivery costs.” All of those things sound great, but if you can’t quantify them, it’s hard for the buyer to wrap their head around. Remember, the price that you are charging. That’s tangible, it’s concrete. It’s easy for them to understand and to see it. But those soft costs like reducing delivery costs, reducing downtime, time savings from any number of things, those are softer. So you have to be able to quantify them.
When you quantify them, and make them tangible, it then becomes real to the buyer. So instead of just saying, “We can save you time. We can save you money on delivery” and all that stuff, you want a come up with an actual number and say to that buyer, “We did a quick analysis, and it looks like we’re going to be able to reduce your labor costs by 5 percent on this project by using our product. We’re going to be able to lower delivery costs by $300 per shipment. And you’re getting two shipments a week, so let’s count that up. That’s going to lead to $10,000 in savings over the next year. Our quick response time— We respond, on average, quicker by 15 minutes than our competition. Think about what those 15 minutes will save you.” You want to quantify it. You want to tie a number to it.
Next thing you want to do. In this particular scenario, the salesperson is selling a highly commoditized product. What I would do is go back to that buyer and say, “We’re selling it for 10¢ a pound. And our competition is selling it for 8¢ a pound.” I wouldn’t focus on selling your 10¢ per pound difference. Instead, you want to focus on just selling the buyer on why you’re worth two more cents per pound. Think about that. You focus on the difference. You don’t need to sell your 10-cent solution. You just need to sell them on why you’re 2¢ better than the competition.
And here’s how I would respond. I would say, “Mr. Customer, I understand price is one of the things you’re going to focus on, but let’s just look at the numbers here. We’re talking about 2¢ per pound. Here’s why we’re 2¢ better than our competition.” And then you can deliver your value within that context. You’re minimizing the objection. By minimizing the objection, it can help the buyer realize what little amount you’re talking about: 2¢ per pound. So minimize that objection.
Also, as I said on the show earlier this week, you want to leverage your internal champions. If you have a buyer that is purely focused on price, reach out to some of the technical influencers, the operators, other key decision makers that can help sell your solution. By the buyer feeling that pressure, they’re going to be more open to paying a little bit more for your solution.
The other tip hereؙ—offer to cut some of the value. This might sound a little odd, but let’s think about this for a moment. Anytime a buyer objects on price, at some level, they believe your solution isn’t fair. They just don’t believe that it’s a good exchange for their time, energy, effort and money. So, we need to make it fair for them. And there are a few ways you can do that. When someone has a question of whether it’s fair—the price they’re paying for the value that they receive—you can either increase the value to match up with the price so they feel like it is fair; you can cut the price which we don’t want you to do; or, you can cut the value to an appropriate level that’s equivalent to the price that they’re willing to pay.
Here’s what I mean. When I say cut the value, talk to that buyer and say, “Mr. Buyer, I get it. We’re at 10¢ per pound. Our competition is at 8¢ per pound. So there’s a 2-cent difference here that we need cover. The only foreseeable way that we can get you to 8¢ per pound is that we cut some of the value from our package. Currently, Mr. Customer, you are a priority customer, meaning you get key deliveries when there is a shortage of product. It also means that we respond quicker to your inquiries than other providers. It means that we provide you priority access to our technical people, right? If you would like us to match that, we’re going to have to cut out some of that value. So, you tell me— what would you like us to cut out?
What we’re doing here is we’re throwing the ball in their court. And what we know about loss aversion is they don’t want to give up that stuff because that’s the reason they partnered with you to begin with. By leading with that—by offering to cut some of the value—the buyer will start to realize just how important that value is to their business. Because loss aversion tells us that losses loom larger than gains, And by making them aware of what they stand to lose, they’re going to be more open to paying for your value-added solution.
The final tip: Don’t focus on just the purely commoditized product within this opportunity. The advice I gave to this salesperson, I said, “The product you’re selling, this is a high volume product. It’s the most sought after piece of business within this opportunity, meaning, all of your competitors are going after it. They’re tripping over themselves trying to get a cheap price in here just to take the volume business.
I said, “Why don’t you focus on going after some of the specialty orders, the specialty products, the one-offs?” The reason why? Those orders tend to be a little more profitable, actually, a lot more profitable in most cases. But, what you can do with those smaller opportunities, you can actually take those on, deliver a higher level of service, and then you’re creating an expectation in that buyer’s mind. You’re creating a benchmark from which they will grade every other competitor. Your goal is to set a really high bar. And when you continue to deliver that expectation, they’re going to compare that then to what they’re getting from other suppliers. And that’s going to create some dissatisfaction. This is a long-term game here. Remember, you’re setting a high expectation. You deliver on that expectation, that becomes the benchmark with which they grade every other supplier.
You’re setting up your competitors to fall below the buyer’s expectation. When the buyer is frustrated enough by that, it’s going to create more opportunities for some of the higher volume-type of opportunities in there.
Make it a big day.