Tell your salespeople that price is not everything

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Keith Dugdale

Workplace Staff

In an increasingly competitive sales industry, the salesperson’s relationship with the buyer is of utmost importance, according to Keith Dugdale, co-author of Smarter Selling and founder of the Smarter Selling Programme – the IOWEU approach.

Dugdale will be in SA next month, working with The Consultant Powerhouse, running workshops on how to build relationships with buyers and sell “smarter”, on July 11 and 12.

The Consultant Powerhouse is accredited to train teams on the “Smarter Selling and Relationship Management” programme.

The Consultant Powerhouse’s Vanessa Bluen says customer service and sales people in corporate and retail environments need a change of perspective.

“In this highly competitive, technology-driven world it isn’t about selling but about extending yourself to help the client. Then they are more likely to purchase and repurchase from you. Building trust is the strategy,” she says.

This article focuses on why salespeople should shift their selling point from price to value.

“All my customers care about is price” is a commonly held belief among sales people. This is especially true when they start losing market share in a tight economy.

For some buyers price is number one. But for many more, price is just one of a number of factors in their buying criteria. The weighting allocated to price can be lowered if the value of other elements is increased.

There are three types of buyers:

1. Price-busters care first, last and foremost about price.

2. Deal-hunters care about quality of product or service, but price will often be the deal maker or breaker.

3. Value-buyers trust their supplier, assume that quality will be appropriate and care less about what they have to pay. The trust is personal, not organisational or brand trust.

As trust builds, other criteria – including price– become less critical. People can be taken from being price-busters, to deal-hunters, to value-buyers.

The extent to which a customer focuses on price depends largely on the salesperson. If the salesperson has provided nothing of value (other than the product or service itself), and if the same product or service can be bought elsewhere, then the customer has little to focus on other than price.

If, however, the salesperson has provided value and is proving trustworthy, then they can move a customer from a price-buster to (at least) a deal-hunter.

The benefits of moving buyers from price to value are many.

l Value-buyers seek more help, so sales increase.

l They look for opportunities to refer you to colleagues and broader business contacts.

l The organisation has a more motivated sales force; revenues increase because more customers are buying more; profit margins increase and prices increase; all leading to higher market share and a higher share price.

In many cases, the reason a customer is a price-buster or deal-hunter is that the sales organisations themselves have driven their customer to focus on price. They promote price as their number one differentiator; their marketing focuses on the offering and its features, rather than on the customer, and their salespeople are much more comfortable with talking about their product than with understanding their customers.

For every R1 000 that the typical large corporate spends on advertising and marketing, very little is spent on training salespeople.

Typically, over 80 percent of sales training is devoted to product knowledge. That’s important, of course, but this inevitably leads to salespeople spending most of their time talking to customers about the technical features of their product.

If the desired shift in approach is so obvious, why do many organisations not go down this path?

It could be that they have not really thought about it, and the shift appears to be laced with risk.

One reason to change now is that the world economy has changed. Price has become more important to customers, and if you start by leading them in that direction, they will push harder on price than before.

Also, there is an increasing number of competitors in all industries. It’s easier for customers to find a preferred supplier if they are encouraged to focus only on price.

l Keith Dugdale is director of Related Vision and co-author of Smarter Selling, published by FT-Prentice Hall. If you would like to attend one of the Smarter Selling workshops or exclusive engagement sessions in July, contact The Consultant Powerhouse at training @theconsultantpowerhouse.co.za

Workplace and The Consultant Powerhouse are giving away a free seat at one of the workshops. Send an e-mail to training@theconsultantpowerhouse.co.za with the word “entry” in the subject line.