You Can Always Sell More, By Helping Your Sales Team Hold Their Prices |

An ongoing challenge to any sales leader is how and when to give a price concession when a sales person asks for pricing help to win a sale.The Six Realities of Giving Price Concessions.As a sales and sales management consultant and trainer I’ve been constantly asked how to handle this situation from both sides, from the side of the sales manager as well as from the sales rep’s side. There are six realities to understand and communicate as a sales manager if you want to do anything other than just granting the price reduction request, (and giving away significant profitability for your company).Reality #1 – You Are Not In A Price Driven Market.The first reality of any business is that you are not in a price driven market. There are no markets that are truly price driven. The only time price is relevant to a buyer is as the second driver of any buying decision. The first and primary decision of any buying evaluation is a differential in value. If a buyer perceives no differential in value then they will of course buy based on lowest price. However, the more of a differential in value they see then the higher a differential in price they will be willing to pay.The bottom line of all selling and buying is that a buyer can always find a vendor who will be willing to offer a cheaper price for the same products. The way to compete against these low price sellers is to not fight them on the differences in your price but instead to fight them on the differences in the increased value and lower total cost your company can instead offer this buyer. A sales person does not have to be the lowest price to win the business when they can prove they can provide a lower total cost solution.The Trap of Trying To Own the “Lowest Priced” Vendor Position in a Market.The easiest position to win, but also the easiest and fastest position to lose, is that of the lowest price position. It takes little to no selling skills to sell a message that “we’ll be the lowest priced vendor.” However, winning business based on lowest price means you have to be constantly cutting your price against your competitors to be able to keep this customer and their business. If a buyer was able to negotiate a discount for their original purchase then of course they will also demand and expect similar discounts for any additional products or services purchased in the future.A Sales Person’s Goal Is To Exceed a Competitor’s Value Instead Of Only Matching Their Low Price Demands.Customers naturally want to buy the lowest price possible, wouldn’t you? However, the lowest price quoted will not necessarily also be the lowest total cost to a buyer. In fact, the lowest price will never be the lowest total cost in a competitive marketplace when all costs, opportunities, risks, and exposures are considered.Customer loyalty is achieved when your customers see enough extra value and uniqueness in your company that they will be willing to build a relationship with you at the expense of your competitors. Otherwise, why would they be so loyal to you when they could save money by buying from a lower priced competitor?However, the lower the experience and skills of a sales person then the more likely they will only have enough skills and awareness to sell a “lowest price” message to their buyers. It takes time and selling skills to communicate and prove how and why you can lower a buyer’s risks and total costs.Reality #2 – By The Time A Price Reduction Request Gets To You (The Sales Manager) Your Sales Professional Has Likely Already Positioned Themselves As A “Low Price” Competitor In Front Of Their Buyer.There are really only two alternative positions available to a sales person selling in a competitive market. They can either communicate or “sell” a message of lowest price, or of increased value and support, (offering a lower total cost). No truly competitive market will allow any one vendor to offer both.So what competitive message of uniqueness has your sales person already been communicating to this buyer? Have they been pushing their ability to be the “lowest price” or have they been selling their “higher price but lowest total cost and risk” message to their buyer? How have they been answering their buyer asking them “Why, based on all the competitive alternatives available to me as a buyer do I want to buy from you and your company?”If a sales person thinks the only way they can win this business is with the “lowest price” then it is also a safe assumption they have also already positioned themselves and your company as a low price player who will cut whatever price is initially quoted. They’ll also be constantly asking their buyer for a “last look” as a strategy to win business…a strategy that also means they can only win business when they offer the lowest price…killing your profit margins. By the time they come to you asking for more pricing help they have most likely already positioned and trained their buyer to expect them to come back with either a “lowest price” or at least an offer to match the lowest price quoted by your competitor.Now you, as the leader of your sales team, are in a lose-lose situation. Either you give them additional pricing help so they can finally close the business, giving up profit margins, or you push them to hold their price and most likely lose the sale due to the buyer’s already established expectations they will be receiving a significant price break as a condition of signing an order.Reality #3 – Even If You Cannot “Save The Profit Margins” In This Sale You Can Still At Least Begin Repositioning A Sales Team On How They Need To Be Selling In The Future.There is not much you can do to hold your pricing and refuse a price concession request if your sales person has already told their buyer, “I’ve done all I can do on price…Let me talk with my manager to see if I can get any more concessions on your quote.”Even if you cannot save the profitability on this sale, you can still use this customer situation as the reason to begin working with your entire sales team on how to win without having to drop your prices. You will be approving fewer price concessions as soon as your sales team increases their selling and positioning of your uniqueness and added value.Reality #4 – The Key To Getting Stronger Margins Is In Your Sales Management Coaching And Leadership Efforts.The average sales person has minimal concerns for the long-term pricing and profitability of their company but instead is only focused on closing the next sale. One of the jobs of a sales manager is to help their team better communicate your organization’s lower risk (and greater value) so buyers will buy from you at a higher price.Use this pricing request as the opportunity to lead your team in the discussion of what they can do long-term to increase the value and support they can be promoting to all their buyers to win a “lowest total cost” message, at a higher margin. A critical responsibility as the leader of your team is to help them package and communicate this “lower risk and lower total cost” solution available from your company.Reality #5 – You Can Use This Price Reduction Request To Push The Need For More Sales Coaching And Training So They Can Learn How To Win Business Even When They’re Not The Lowest Price.Keep talking about ways to strengthen your team’s message and positioning of your ability to be a higher priced, but lower total cost supplier due to your ability to best lower a customer’s risk as well as save them the most money in the long-term.Reality #6 – You Do Not Have To Give In To a Sales Rep’s Price Cutting Demands.Defending business against lower priced challenges is a normal and ongoing effort of any sales person with an established customer base. Buyers today more than ever are evaluating, or re-evaluating, if they can buy what they need at a cheaper price. Most sales reps I meet are being forced to spend significant amounts of time defending their existing business from competitive attacks, especially lower priced competitive attacks. However, a sales person can win this “higher price” battle if they take more proactive control of their multiple-stepped selling processes and take a more proactive position from the beginning that they and their dealership “…will not be the lowest price, but will be the lowest total cost.”All sales reps talk about their “added value” and uniqueness. Now is the time to take a realistic look at how often they are actually working to communicate and prove more uniqueness, value, or savings than their competitors.Value is always a part of any vendor replacement evaluation. Your competitor will take business away from you when they can show a buyer they can provide the same (or greater) value than you, but at a cheaper price. Very few buyers will take the personal risk of being responsible for switching to a lower priced vendor who has significantly lower quality or service levels.So how much value, uniqueness, and savings are your sales people currently communicating and providing to their customers? The simple reality of business is…the more of a differential in value you see then the more of a differential in price you will pay.A sales rep asking for price concessions is only a symptom. The real problem is your sales team is not improving their selling skills and ability to communicate successfully a consistent message of increased uniqueness and value to their buyers. When your sales team increases their positioning and communications of lower risk and increased value, then all of these price reduction requests will start to disappear.After all, we know you as the leader of your sales team are good, now the question is are you good enough…, and strong enough to lead your team’s “higher priced” selling efforts?Jim Pancero