On this episode, Paul shares a technique that every salesperson needs to know.
“If you can focus on the difference, it’s easier to ….”
Remember the basic process in handling price objections: clarify, acknowledge, respond.
Be able to explain in detail how you’re going to help them make more money.
Whatever that [dollar] difference is, fractionalize it over the lifespan of your solution.
Magnify and maximize the impact of your solution.
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How do you overcome price objections by focusing on the difference?
(Transcribed from podcast)
Today, we’re going to talk about price objections. On a recent virtual training seminar, we had a question about price objections, and we’re going to dive into a specific type of price objection. We’re going to talk about how to overcome a price objection by focusing on the difference, not just the total. And I’ll explain that further in today’s episode, but this is a technique that every salesperson needs to have in their back pocket. It’s a way to minimize and fractionalize the objection. It’s a very effective way to overcome the buyer’s mindset. Make sure you listen to this and share that this one with your friends and colleagues who face price objections.
Now, before we get into that, a quick shout-out to Andrea over at The Creative Impostor Studios. Podcasting is such a great way to connect with your audience. In fact, lot of my clients are starting their own internal podcast so they can connect with their customers during this strange time that we’re in right now. Provide information; provide training. I mean, you can really get creative on how you use podcasts, and as you do this, you’re going to need some help, do reach out to Andrea and her team. She is a great resource. She works with several different types of podcasts. She has answers for you, I promise. And she does a great job keeping us in the loop on what’s changing in podcasting. So make sure you reach out to Andrea. We’re going to have a link over to her website on this episode’s webpage.
Also in Value-Added Selling, we have a whole chapter dedicated to handling price objections. Some of the techniques I’m going to talk about today are in the book. However, I mean really, you just need to get your copy. It’s your go-to guide for how to sell. If you’re a new salesperson, even if you’re experienced, every year salespeople have got to continue to get better and develop themselves. Picking up a copy of the book is going to be a great way to do that. So pick that up. It’s available wherever you get your books: over at Amazon, Barnes & Noble, you name it, you can find it there.
All right, let’s get back to that question: How do you overcome price objections by focusing on the difference? Here’s what I mean when I’m talking about focusing on the difference. Let’s say you’re selling a million-dollar solution and the next best competitor is $900,000. You don’t need to sell your million-dollar solution, you just need to sell on why you’re a hundred-thousand dollars better. And this is true for if you’re handling an expectation, a budgetary objection.
When the buyer says, “Well, your solution is a million dollars and we only have $800,000 in our budget.” Okay, great. You don’t need to sell your million-dollar solution. All you need to do is sell them on why it’s worth taking an additional $200,000 investment or making it a $200,000 investment in your solution. So you focus on the difference. You don’t focus on selling the full package because that can be overwhelming to a buyer. But if you can focus on the difference, it’s easier to prove your value. So we’re going to get into that today. Remember though, there’s a basic process to handling any type of objection. You need to clarify, acknowledge, and respond.
So let’s talk about that first piece, which is clarifying. When a buyer tells you, “Hey, your price is too high,” we need to clarify. And we do that by asking a question, a clarifying question. When the buyer says, “Hey, your price is just too high,” respond with a question, “Well, what are you comparing us to?” Or “What do you mean exactly?” Or “When you say we’re higher, is that based on your budget, based on who else you’re speaking with? Please elaborate.” We’re asking the buyer to keep talking because when a buyer just says, “Hey, your price is too high,” that in and of itself, it doesn’t really give us enough. We’ve got to dig deeper. So you ask a clarifying question. It keeps the buyer talking. Not only that, but it puts you back in control of the conversation.
Remember, whoever is guiding the conversation, whoever’s asking the questions, that’s the person controlling the conversation. You want to maintain that control, regain it by asking a question. So start with the clarifying question.
Next thing. When the buyer gives you their response, we need to acknowledge their response. Acknowledge it and let them know by using these two words, I understand. I understand are very powerful words in sales because I understand, it shows that you’re listening, that you hear them, that you truly understand them. You’re empathizing with them. That lets the buyer know you’re not just brushing off their objection. You wholeheartedly are listening intently. You’re trying to understand it. So use those words I understand.
For example, I’m going to, I’m going to role-play with myself a little bit. “Hey Paul, your price is too high.”
And I’m going to clarify, “When you say our price is too high, what do you mean exactly?”
“Well, I’m looking at your solution and I’m looking at these two other competitors and you’re significantly higher.”
“Mr. Buyer, I understand.” Again, all we’re doing is I understand. We’re letting the buyer know you understand; you acknowledge their concern. Once you acknowledge their concern, then you can work on the response.
Let’s play this full objection out. And your response should reflect the real concern that they have. I’m going to go through the full process again.
So the buyer says, “Paul, your price is too high.”
“Okay, Mr. Customer, when you say our price is too high, what do you mean exactly?”
“Paul, I’m comparing your solution to this other solution, and your solution is $200,000 higher than the competition.”
“You know what, Mr. Customer? I understand the $200,000 might seem like a big difference, but the reason there is a difference in our price is because there’s a huge difference in what you’re going to get with us.”
So now we’ve prompt up the response and I’m going to continue by saying, “I want to explain to you how our solution is different, how it’s better. Here’s what you’re going to get with that $200,000 difference.”
See, again, we’re focusing on the difference. We’re not selling the full million-dollar solution. We’re just focusing on the $200,000 difference.
So you say, “Mr. Customer, when you invest that additional $200,000, here’s how you’re going to gain that back,” and you can give examples of how your solution can help them make more money. You’ve got to be able to quantify the impact that your solution is going to have on their business. Quantify how it’s going to help them improve efficiencies, reduce labor costs, whatever it might be. Be able to explain in detail how you’re going to help them make more money.
Now there’s another thing, a bonus tip here we can also do on the tail end of this. Think of the complete life cycle of whatever you’re selling to your customer. Let’s say you’re selling equipment. And let’s say that equipment is going to last ten years. It’s a ten-year lifespan on that equipment. You can now spread out that difference over that ten-year period. So you can go back to that customer and say, “Okay, Mr. Customer. I understand there’s a difference in our price, but there’s a big difference in what you’re going to get with us. For example, our equipment—for a $200,000 investment, our equipment is going to last for ten years. It’s going to help produce parts profitably for ten years. When you think about that, we’re talking about an extra $20,000 per year. An extra $20,000 per year is going to help you get this result. It’s going to help you gain this return.” And then you fill in that blank. And now you’re minimizing that dollar amount even further.
Let’s think about this from a broader standpoint. You take your million-dollar solution, you shrink it down to a $200,000 difference and you shrink that down even further into a $20,000 difference every single year. And you’re able to break that number down to where it is more manageable. So whatever that difference is, hey, minimize it; fractionalize it, and then space it out over the lifespan of your solution that you’re selling.
But when it comes to the impact, you want to magnify the impact. You don’t want to say, “Hey, for an extra $20,000 a year, you’re going to get an extra $40,000 per year in revenue.” No, you want to say, “Hey, for making that investment, that $20,000 investment per year, that’s going to lead to over a $400,000 profit over a ten-year period.” Magnify and maximize that impact. That’s going to be absolutely critical.
Make it a big day.