PRICE: The Biggest Sales Hurdle You'll Need to Overcome
“I like your product, but it’s too expensive!” How many times has a sales person heard these words and felt trapped? The price or financial component is very important and can mean the difference between a sale or an almost sale – depending on how you approach it of course.
Throughout recent months we’ve been discussing the component framework of every successful sale (previous articles can be found here). Those components, of which there are three, are: The Person, The Product and The Price. We’ve examined the overall framework and we’ve looked at how the first two components can – and will – determine the fate of your product. Finally we now examine the third and final component in depth – The Price!
Is my product too expensive? Is there another option I could sell the doctor? In general, pharmaceutical salespeople have little flexibility in this area and often resort to “justifying” the higher price. However there are a number of strategies that a salesperson may adopt to maximise the chance of getting a sale on the best possible terms.
My first assertion is to consider all price “objections” as false. This is not strictly true of course; however it is a good place to start understanding how price fits into objection handling (a subject that deserves an article in and of itself and which we’ll address in coming weeks).
Given that readers of this column are likely to be experienced salespeople, I am sure you will all have heard that “an objection is a negative expression of a need.” It is your job to establish what need the doctor (or any other customer) is expressing when he states “I like your product…but it is too expensive”.
To begin, stop the focussing on the negative half of this response. Half of this sentence talks about liking your product. Do you know what the doctor likes? Do you know why? Do you know where the value lies for your customer in your product. These are the questions that you, our intrepid salesperson, should be asking yourself when confronted with the price discussion.
I do not propose that the salesperson bombard the doctor with these questions. The sales person should always focus on any element that the doctor expresses an interest or appreciation in during conversation, understand it and elaborate on it.
In my last article I focused on the need of the sales person to understand the customer and communicate the “product” as a series of solutions meet the personal need of that customer. This tailoring of the product value to the customer is (in my opinion) the reason for having salespeople as opposed to simply using other communication channels.
OK, that’s all very well but what about if you only get the negative half of our sentence, what to do then?
The first thing to do is to isolate the objection. Understand whether it is really the hurdle to a sale or just a meander, a diversionary tactic. How do we isolate an objection? A simple and effective technique is to ask “if price was not an issue, would you use my product?” If the answer is yes, then follow up with “why?”
What benefits does the customer see in using your product? in this way you can move away from price to value, from cost to delivered benefit. For products that have higher unit costs, it is likely that a discussion based on delivered value is likely to be most productive.
If the answer is still a resounding “no” then you have not sold the product and you’ll need to resell your product. Start by asking what the doctor is missing from your product or what would he/she need in order to use my product. There is an important distinction between sales and negotiation.
It is counterproductive for a sales person to “negotiate” the deal if the product has not been fully sold. In fact, the more sold the product is the less pressure there is on the deal. To understand this, think of any must have product. The price is always greater for it than its competitor. A great example if this is Apple and its products. All sell for far greater than competitors which often deliver more for a lower price! Selling is making the customer want your product; negotiation is finding an acceptable price/deal.
Assuming that the customer genuinely wants your product and only the price is an issue, now you must negotiate. Negotiation and the techniques and strategies involved have been the subject of many books and training programs (including ours). Here I will present only a crystallised offering. The key to a successful negotiation is preparation. The most important part of preparation is to understand the customer. The salesperson has to consider what he can do to add value for the customer while minimising the impact on his own profitability.
The following is a list of scenarios starting with most preferable to least preferable.
1. If affordability is the issue, (e.g. there may be budgetary constraints) a negotiation of terms where payment is made over a period of time or deferred may be acceptable.
2. You may be able to offer terms on how you supply the product, reducing stock levels thus reducing the overall operating costs and allowing budget to be freed up for the higher unit price.
3. You may be able to offer terms on expired goods which may reduce wastage and thus improve efficiencies, again liberating budget for your product.
4. Although prohibited in the EU, a theoretical option is to offer additional products in your portfolio to boost sales of less competitive products (basket deals).
5. Offer additional discount as free product e.g buy 10 get 1 free.
6. As a last resort reduce price
Reducing price is a last resort because it comes directly out of your profit. Items 1-3 take advantage of your existing processes so have the lowest impact on resources and bottom line, items 4-5, product has a greater value to the customer than to the manufacturer because the customer values the product at retail price where as the manufacturers cost is due to manufacture.
This short guide is intended as an instructional piece for those of you who might find the pricing hurdle a little too high to overcome. If you have other solutions or practices that have worked for you in the past, feel free to share your ideas in the comments section.
For more information on the theories and ideas put forward in this article, you can contact Ifti Ahmed directly at firstname.lastname@example.org.
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