December 11, 2013
How do your customers define “best price” or “lowest price?” I was conducting a training session for a major company recently on how to sell at a higher price, and one of the first questions I was asked was how to deal with a customer who was only concerned about price.
One salesperson asked me the question, but I could tell from how others in the room were focused that it was something nearly everyone had been facing. My response was, “How do you know the customer is 100% focused on low price?”
The salesperson said it’s the only thing the customer ever wants to talk about. My response was, “Do you know how the customer defines low price?”
I suggested that: The definition of “low price” can and does mean any number of things. Does the customer place value on inventory, do they measure turns, and do they care about rotation? I followed this by saying, “Would the customer buy 10 times their normal amount if they could get a price 25% lower than what they’re getting now?”
The lowest price one person might pay could be dramatically different than the lowest price another person might pay if the order quantity doesn’t fit their needs.
A customer who is asking for a low price is not necessarily asking for a low price as many people would define it at first glance. What they’re asking for is a price that fits their needs and the value they expect to get from it.
Next time you hear a customer ask you for a lower price, don’t budge until the customer has told you specifically how they define price. A few of the criteria I look for include:
• What is the cost of money to them?
• How much does it cost to inventory items?
• How much does their supply-chain add to the cost of each item?
• What is the number of inventory turns they expect per year?
• What is the risk of dated inventory?
• What is the liability they incur with inventory?
• Are there quality control issues that arise with inventory?
Not all of these questions work for every salesperson and buyer, but I’m sure as you read the list, you will find at least a few that do, and you can then develop even more.
Your objective is simple – until you have a very clear understanding as to how the customer defines low price, you have no reason to believe any pre-conceived ideas that the only way you are going to secure a sale is by lowering your price.