Let's face it. If you are in sales, like I am, we would all be very interested to increase our market share. Even when the market is growing, we sure would like to have a piece of our competitor's business. However, when we were to approach our competitor, these are the more common responses:
* "Yes we are interested, but can it be cheaper?"
* "I already got a better price from your competitor"
* "What you are offering is good, but I'm quite happy with what I have now", etc.
While customers are constantly looking for better conditions, they inadvertently cause the price. At the same time, sales people who are desperate for the facts and figures taken inadvertently agree on the price that hardly acceptable. But even if you could offer a very attractive price, not your competitors are large customers willing to pay more attention to you.
"Why do you need to buy from us, aside from the price"
In an attempt to ensure that customers buy manysales people often give customers a whole list of selling points so that customers see the seller's Unique Selling Propositions (USPs) and other product advantages. For the uninitiated, here are some examples:
* "When it absolutely, positively has to be there overnight!" (Federal Express)
* "Pizza delivered in 30 minutes or it's free." (Dominos Pizza)
* "The milk chocolate melts in your mouth, not in your hand" (M&M's)
Unfortunately, life isn't as simple. Whatever products you deliver, your competitors can do so too, and at lower prices. This is why customers keep on referring back to price, since they could not differentiate between you and your competitors, at least superficially.
The good news is that customers do NOT just buy from price only. In our discussions with a number of buyers (or procurement managers), we do find that they usually DON'T buy from the cheapest nor the most expensive quotations, not even in public tenders. What they do really want is to get the best "value for money" or have better "reasons to buy".
As we probe deeper, here are some of the factors that make up customers' perception or definition of "value" or "reasons to buy" apart from price, which you can call the 4 "R"s:
* Reliability. Whether you, as the seller, can deliver your promises in ALL aspects ranging from product quality, delivery lead times, maintenance schedules etc.
* Responsiveness. Not just service responsiveness, but also sales team's responsiveness to the customers' needs and concerns. This also includes sales people who are stationed on-site at the customers' plants, offices or facilities to help customers solve problems when using your products
* Resourcefulness. Can you take the initiative to generate creative ideas to help your customers do more with less resources? Can you get the buy-in from your own company to support your customers' objectives?
* Relationship. Apart from cultivating guanxi with some key decision makers, seek to build relationship with everyone that has an influence over whether this customer should or should not buy from you. These people include the gatekeepers, fault-finders, end users, and just about anyone who will be affected by the products you provide, or who has some contributions with regards to how your products can be used (or not be used) in their company.
"What IF I Don't Buy from You?"
The reason that your prospective customer is not buying from you yet, is that they haven't seen the negative consequences of NOT buying from you yet. In their minds, they are subconsciously asking "What IF I don't buy from you?" And if your sales team doesn't have a good response to that question, you won't get the deal.
Supposed your company is a leading provider of an industrial equipment that is "mission critical" to a certain part of your customer's operating process. The situation that you are facing can be prioritised as : Follow
1. Compounds. Customers purchasing manager has a strong relationship with your competitors, which is the incumbent. Competitors also sold 15% below the target price. However, it seems that your opponent has no relationship to significant others, particularly in the final planning and director / production grew.
2. Reliability. While the equipment your competitors' offers reliable performance in day to day, but security cancompromised if there's an accident, such as a fire. Since the customer is not so much concerned about the possibilities of "accidents", they view your competitor's product as being Reliable.
3. Responsiveness. Your competitor is Responsive when it comes to maintenance and repairs, but their sales people only drops by when they are taking sales orders. They are rarely on-site to provide assistance and insights if the end-users encounter problems and difficulties.
4. Resourcefulness. While many players in your customer's industry are taking steps to upgrade their plants and equipment to achieve higher levels of safety, your customer has yet to do so since they deem the upgrading too expensive. Your competitor has yet to give a good response to this issue.
Most sales people following on this customer would have lost the sale, since the competitor has a strong relationship with the procurement manager, sells at a lower price and is perceived to be reliable. What you can do is to give priority to new approach
1. Ingenuity. Since the main obstacle for the customer to improve their equipment is cheap, perhaps, can do what the sales team to implement a way for the customer, the process of modernization in small steps, so that their development costs to be spread over time.
2. Reactivity. Your sales staff can help the end user customer premises, end-users solve problems in everyday use, even if the operation of yourcompetitor's equipment. Such problems and your suggested solutions can then be documented and be presented to their head of engineering/ production, and explore if you can help them eliminate some of the recurring problems.
3. Reliability. Your sales team's Responsiveness is going to enhance the trust between you and your customer, such that they will be more convinced that they need better Reliability in case of accidents and emergencies. Your Resourcefulness will also convince them that it may not cost as much initially if they want to upgrade part of their production system first.
4. Relationship. By leveraging your Resourcefulness, Responsiveness and Reliability, even if the customer's procurement manager has a strong Relationship with the incumbent competitor, the voices in the customer's organisation will switch to your favour. By developing Relationships with the end users and other key influencers, you can even influence how the scope of their next public tender can be written in your favour.
So to answer the customer's question of "What if I don't buy from you", you can confidently state that they will incur more losses and subject themselves to more danger IF they stick to their current vendor. It may be in their best interest to start working with you and your team.
"What if I Want All You can Offer, and Still Demand a Lower Price as well?"
At this point, some sales people will say that there will be customers who will demand that we deliver the results through better Resourcefulness, Responsiveness, Reliability and Relationship, and yet still want us to sell at the same price as those who don't.
Well, if that is your only customer, or one of your few key customers, then perhaps they know that they are paying your bills. Hence, they will squeeze you real hard if they know you need them much more than they need you.
However, if you have a good prospecting process that allows you to generate enough leads, you can stand firm and insist on your prices. Chances are that if a customer is haggling with you over price, that usually means that they are interested in buying from you. If you stood firm and refuse to give in, you have a 50/50 chance of still winning the deal.
If you have a number of high quality leads in your sales pipeline, that will be a risk that may be worthwhile to take. The ones that are willing to give you a try will be more than worth your effort.
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