Monthly Archives: April 2011

How to Sell at Higher Prices

If you’re going to be CompetitionProof, you’ve got to be able to sell at prices that are higher than your competitors because slashing price is a frequent competitive tactic.

Based on my poll of salespeople, price objections are by far the most frequently heard objection. “They’re a good customer, but now they want me to cut my price?” “Why do buyers always ask me to cut the price, even when our prices are competitive?” 

Buyers ask for a better deal because that’s their job! Your customers are often held accountable for getting the best possible deal. Yet that doesn’t always mean getting the lowest price.

I can get you a better deal. . .

Most salespeople volunteer to cut their price without being asked! There is a clinical term for that: stupid. They will drop hints like “of course there’s a discount schedule,” or “It’s the end of the quarter and we want to make our quota.” 

Or they invite price negotiation from the start because they do not believe their product is worth the price they are asking.

Believe in your price

Some salespeople won’t say the price. They’ll offer, “Let me get you a quote…” or they’ll write the price down on a piece of paper and slide it across the table. This behavior signals a lack of personal commitment to the price, opening up a price negotiation. 

If you want to believe in the value of your product, practice this: double your price. Go ahead, double it. Now justify this new price to a colleague. Then roll your price back to the original figure. It will feel like a bargain.

Don’t hesitate to discuss price. Practice saying your price out loud until it rolls right off of your tongue. Deliver it with the same conviction and tonal inflection that you would use to give someone your phone number or telling the time (neither of which are negotiable).

“What’s your phone number?”

“800-743-4349″

“What’s your price?”

“One hundred-seventy-five-thousand dollars.”

Same inflection. You try it.

What to say when you hear “Your price is too high!”

Your customers probably have been trained how to negotiate with sales people. Basic buyer negotiating training tells them to ask for a discount at least twice before making the deal. You’ll have to resist pricing pressure several times to get back on equal footing.

Frequently salespeople respond to a customer’s price push back with a price cut. But wait a minute! Before you do that, find out if a lower price is really what’s necessary to get the business.

When a prospect says, “Your price is too high,” find out what “too high” means. 

“Too high? When you say ‘too high,’ what do you mean? ‘Too high’ compared with what?” 

Find out if you’re two cents too high, two dollars too high, or two million dollars too high.

Make sure that you’re making a tit-for-tat comparison when your customer declares that your price is too high. Odds are it’s not a direct comparison.

“But I can get it cheaper!”

Your customer may try to use your competitor’s lower prices to extract pricing concessions from you. They want your quality, your reputation, your delivery, your support, your guarantee, and your terms, but at the competitor’s price. They’ll compare your competitor’s apples to your apple pie, and ask for the cheaper price.

Frequently your customer has no intention of buying from your competitor. They’re just using the competitor as a negotiating tool.

You can counter this but-I-can-buy-it-cheaper tactic with the negotiating phrase: “We have no argument with those who sell for less. They know best what their product is worth.” 

Or as a vendor in Maine said, “Well, it’s a lot like buying oats. If you want good, clean oats, you pay a fair price. If you be willin’ to settle for oats which have already been through the horse, well. . .”

Now, you’re CompetitionProof!

If you like these ideas, you’ll like this podcast that goes deeper into this topic. 

 

13 Ways to Sleuth Your Competition

What you don’t know can hurt you. Consider this: What if you spent weeks with your R&D, marketing, and sales staff creating your next product introduction and one month later, read in the trade press about a similar announcement from your competition? How would you feel? What would your boss say? What would your customers think? Why didn’t you know about the competition?

As Yogy Berra said, “You can observe a lot by watching.” There are several good reasons why otherwise savvy companies are ignorant of their competitors. Most assigned to the task of gathering competitive intelligence loath the job. They feel it’s a painful, drawn out process, and mostly pointless. They don’t know how to start, where to go, who to call, or what to ask.

Gathering competitive intelligence is actually fun and easy to do. It can make you a hero in your own company. You’ll avoid “stepping in it” and you won’t be doomed to repeating the failures of your predecessors. Your well-thought-out marketing plan won’t be shot down since you can demonstrate that you know what the competition is up to. With a successful plan, you’ll get more marketing dollars.

When you know more about your competition they know about you, they’re dead!

Make yourself the “Corporate Colombo” and have fun sleuthing your competition. Here are 13 ways to get intelligence on your competitors in no particular order.

1.    Adjust your viewpoint.

Most sales and marketing people look at their competition with disdain and contempt. These emotions create barriers to clear thinking and effective planning. Fear and loathing lead to competitive blind spots where you are vulnerable. View your competition as your prospects and customers do. They are curious, open minded, and excited. They’re trying to solve a problem. We tend to be more critical than most customers. We usually focus on things that they don’t really care about, such as, “I hate that color,” or “That’s a bad place for the on/off switch.”

When you analyze your competition, do so as if you were a prospect, someone with positive expectations. Go in with an “I’ve-got-money-to-spend” viewpoint. Or better still, watch a real prospective customer review your competition’s products to get an idea of what they think is important.

The next step is to look at what your competitors sell as if it were the first time you’ve ever seen them. Or ask someone who’s unfamiliar with the competition to review it. You’ll be surprised at what you’ve missed. In the passion of looking for dirt, more than one company has been baited by false information, or worse, has redirected their marketing plans down a dead-end path. Savvy business pros don’t let the competition blindly set their strategy.

Objective intelligence leads to a precise and successful market attack.

2.    Create your own intelligence network

Enlist your colleagues, associates, and vendors in your quest for competitive intelligence. Let them know that you’re always interested in competitive information. Then reward those in your organization who become “industry experts.”

Make competitive intelligence gathering part of your everyday awareness, and you’ll never be blindsided by your competition.

3.    Watch for their publicity

Have your entire staff looking for news items and advertising about your competition. This is really easy with Google alerts.

Watch the employment help-wanteds. Often they’ll reveal information about upcoming projects. You can determine a lot from staffing requirements, especially when you’ve been watching them for a while.

4.    Get all the materials you can

Get on their web site and download everything you can about them and their products.

Study their materials, just as if you were an excited customer getting ready to buy. Print them out and three-hole punch these materials for a three-ring binder and add them to your training library. If you’re a sales manager, you may want to have a pop quiz with your sales people on competitive knowledge.

5.    Ask them!

You’d be surprised what information you can get by asking your competition. For example, Mike, who’s the sales manager at a major hotel in New Orleans had an association executive previewing the property for an upcoming conference. Mike asked, “Where was the best conference you’ve had?” The exec mentioned last year’s conference at a high-profile hotel in Las Vegas.

After the meeting, Mike called the sales manager of that hotel. “Hello, I just had one of your customers in here raving about you. Would you do me a favor? Would you fax me last year’s contract?” It was no problem because the deal was done and it wasn’t a competitive situation.

Mike patterned his proposal after the Las Vegas contract and won the business.

Just because you wouldn’t give your competition the information doesn’t mean that they won’t give it to you!

6.    Go where they hang out

Where do the workers go after work for a drink? Where do they go to lunch? You can pick up lots of interesting information by just sitting back and listening. Or encourage them with a round of drinks and then listen to them complain.

We’ve heard about more than one industry secret revealed in an overheard conversation in a restaurant, bar, or airplane.

7.    Interview disgruntled ex-employees

Check the grapevine for someone who has just left your competitor. Invite them out for dinner and drinks. Pick their brain by asking questions such as,

  • What do you think they do really well, better than us?
  • Where are we falling down?
  • What three things should we be doing that we’re not?

Steer clear of asking them to violate any non-disclosure agreement they may have signed. You may be liable for misuse of obviously confidential information. Or not.

8.    Take your competition’s customers to lunch

If you want to understand your competitor’s marketing strategy, ask your sales force about a deal that was recently lost to the competitor, and offer to take the buyer to lunch. Explain that you’re only interested in finding out how to improve what you sell so that next time around, you’ll have a shot at earning their business.

Sure, this feels like eating humble pie, and so you might be tempted to reject this idea. But you’ve already lost the sale, so swallow your pride and don’t lose the intelligence the sale generated.

Objectively, without arguing with you hear, ask questions such as,

  • How did you find out about them?
  • What steps did you go through as you made your decision?
  • What were the factors you used to decide?
  • Comparing how we did with them, what did we do well?
  • What could we have done better?

Focus on what the competitor does to win customers, not on how to save the deal. When customers are pushed to reconsider a decision, their natural reaction is to defend and exaggerate the deciding factors. Right now, you want the unvarnished truth.

So consider the lost deal an investment, perhaps an expensive investment, in planning the next battle.

9.    Take stock

Call a discount stock broker and order one share of your competitor’s stock. You are now, in the truest sense of the word, a shareholder. You are entitled to all the information and privileges of a shareholder, and the company information will be automatically sent to you. You are also entitled to attend the shareholder meetings. If you really want to have fun, buy a share of stock for everyone possible in the company. Take a road trip to the annual shareholder’s meeting, and sit on the front row.

Don’t disrupt! But can you imagine the impact on your competitor’s CEO when explaining how they will increase sales next year, and the competition is literally hearing it first. Enjoy the look on their face when you ask for a plant tour.

10.  Become their customer

Experience your competitor first hand. Buy from them. When most companies buy from the competition, they rip apart their purchase and look for the bad things to point out to their sales people. This works in creating a traditional competitive analysis. But you still don’t have an insight on why others buy from them.

What works better is to use the competition’s products just as their customers do. Most buyers gleefully bring their new acquisition into their lives. To truly understand the mind set of your competitor’s customer, you must (begrudgingly or otherwise) do the same.

Treat your competitor’s orders as you would for your most important customer. Scare them with your exceptional customer service. They’ll assume that if you give this level of attention to your competition, you must really be going out of your way for customers.

11.  Use trade show reconnaissance

A great source of competitive intelligence is trade shows. The booths are often staffed by those in-the-know who haven’t been briefed on what topics are safe and which are out-of-bounds. Because of the unfamiliar show environment, these people are just insecure enough to feel that by talking about “insider information”, they’ll command respect. It only takes a little prodding to get them started.

At trade shows the unwritten rule is: “Seller Beware”. Walk up without your badge and start asking questions. Entire marketing plans have been unwittingly revealed to competitors at trade shows.

12.  Get on-line

Compile competitive profiles that include on-line research from LinkedIn, Google, and Bing. Go to newsgroups that customers are likely to frequent and post questions about competitors’ products as well as your own. You’ll find the responses pointed and pragmatic.

13.  Get mug shots

Grab photos from www.google.com/imghpLinkedIn, or other social media sites. Make up a “Wanted” poster so that your staff will recognize them when they see them at events or trade shows.

Adapted from Guerrilla Trade Show Selling with Mark S A Smith, Orvel Ray Wilson, and Jay Conrad Levinson, published by John Wiley and Sons.

 

Getting Prospects to Commit

Sometimes it’s difficult to get your prospect to commit to your solution. Prospects get pulled many directions by your competitors, by their colleagues, and by the fear of making a bad choice.

How can you deal with their lack of commitment?

You might have a thousand reasons why your prospect should choose your product. Ultimately a prospect will decide based on something you probably don’t consider important. To get commitment, you’ve got to figure out what that thing is and make it important to yourself.

You probably already know that people don’t always buy what they need; they buy what they want. Yet many sales people try to sell prospects by telling them what they need. But telling isn’t selling. “If I’ve told you once, I’ve told you a thousand times!” Obviously, telling doesn’t create commitment.

So how do you turn what you have into something that they want? Most people don’t know what they want, but they know what they don’t want! You can rapidly build commitment by finding out what they want and don’t want, and initially focus on just those two areas of your product.

Here are some scenarios and solutions that can help you create commitment.

  1. “We don’t want to commit right now.” Your answer: “I understand. If the timing was right, what would you need from me to commit?”
  2. “We’ve changed our mind.” Your answer: “I’ve changed my mind before. What was it that caused you to change your mind?”
  3. “But I promised the competitor that I would…” Your answer: “I’m confused. You told me that we had a better solution yet there seems to be some loyalty to the other brand. Can you help me understand what’s behind that loyalty? If I called them for you, would that help?”
  4. “We can’t get budget commitment until. . .” Your answer: “O.K. Would you be willing to consider writing a letter of intent because I want to make sure that I can reserve your place in the delivery queue. I don’t want you to suffer because someone can’t yet make a decision on the budget.”
  5. “This has to go to committee for review before we can make a commitment.” Your answer: “I see. Is this something that you’d like the committee to approve?” If the answer is ‘no’, you have lots of work to do. If the answer is ‘yes’, say, “Great. Let me help you create a strategy to get the committee to approve your choice.” Then evaluate what each committee member needs to agree and deliver that customized information to each committee member before the meeting.

Look for ways to create commitment and you’ll be CompetitionProof.

 

How to Sell Against an Entrenched Competitor

When you sell into an established market, if you’re going to grow your share, you’ll have to take business away from your competitor. Dislodging an entrenched vendor isn’t easy, but it is possible and I’m going to show you how!

Try these tactics next time you hear, “We’re happy with our current vendor, thank you.”

1. Don’t Slash Price

When stealing business, many sales people are tempted to slash price. “I’ll beat whatever price that you’re paying and guarantee the quality, too!” they’ll boast. If you have spare margin to cut your prices below your competitor’s, you’ll be able to take some business, but it’s not a sustainable business model. Besides, the competitor probably will retaliate and if you’re going to keep the business, margins will get even thinner. Deliver new value instead of cutting your price.

2. Keep ‘em Honest

Ask your prospect, “When was the last time you went out for a competitive bid? Top negotiators strongly recommend that you get other bids at least every six months to keep your vendors honest. Let me help you keep an eye on the market by allowing me to quote your business at least twice a year. Worst case, you’ll have a better handle on the market. Best case, you’ll get a better deal.”

3. Spare Tire

Say, “Let me ask you a question. Does your car have a spare tire? You have four perfectly good tires that keep you going, so why do you need a spare? Because you might need it! And you’ll probably need it when you’re short on time and need to get somewhere fast. Well, let me be your spare tire. What would happen if for some reason, your vendor misses a delivery, delivers short, or has a blowout? Well, call me and I’ll back you up. Will you agree to that?” And then request an evaluation or certification so that you’re poised when the entrenched vendor slips.

4. What Do They Do Well? What Do You Want to Change?

Try this proven tactic next time you hear, “We’re not looking for any more vendors.”

Say, “Great! I’m so glad that they do everything that you need to your complete satisfaction. I’m always working to improve how I serve my customers. Please tell me, what do you like best about them?”

I know, it might be difficult to say the first time. But, try it, and really mean it! You’ll be delighted at how candid your prospect will be if you ask with honesty. Keep asking, “What else do you like about them?” until they run out of kind things to say.

Your prospect just gave you a list of their criteria for selecting a vendor. You’ll have to deliver on all of these points, and then some, if you’re going to get a shot at the business. Don’t start selling yet. You have a couple more questions to ask first.

Next ask, “What do you like least about them?” With this question you’ll get the criteria that you need to dislodge that vendor. You’ll find the cracks in their armor that they probably aren’t even aware of! Keep asking, “What else?” until they run out.

Then ask, “If you could have things any way you wanted, what would you change?” These are the good reasons for the prospect to switch.

And finally ask, “What would motivate you to change?” And now you’ll discover exactly what you need to do to get them to pull the switch.

With all of this information, you’ll be able to present a compelling reason to give you a go. “Based on what you’ve told me, you owe it to yourself to give us a try. At the worst case, you’ll have a validated second source. Best case, you’ll get everything on your wish list. When can we start an evaluation?”

5. Second Source

Or tell them, “Great! Then you’ll need a second source, just in case.” Pull out your business card and write, Second Source. Hand it to them and say, “Just put that behind their card in your card file. If they slip up, can’t help you the way you need to be helped, or if their performance slides, call me.”

6. Would You Like to Know How We’re Different?

Most companies believe they know why they are different or better, and they believe that their prospects and customers know why they’re unique and superior. It’s a sad fact: frequently, neither of these beliefs are true.

When you hear, “We’re happy with our current vendor,” say, “Great! Would you like to know how we’re different?”

Why You Don’t Want to Lead with the Claim That You’re Better

Notice that you don’t tell them that you’re “better.” Not yet! Better is a personal judgment. Don’t claim that you’re better until you know their criteria for what constitutes better. For example, a fast-food restaurant may be better if you want food in a hurry. A fine-dining restaurant may be superior if you’re celebrating a special occasion.

If your unique points are meaningful, they you’ll be perceived as better than the competition. If they aren’t, then asserting that you’re better destroys credibility because in the prospect’s mind, you are making a false claim.

Identify how you’re different and then determine if those differences mean anything to your prospects. And here’s how you can do that.

7. Your Top Ten Differences List

Prepare a list of ten ways that you’re different than your competitors and share this with your prospects. Your differences must meet the following criteria to persuade your prospect:

The differences must be relevant to yor prospect. If they don’t care, it’s not a point of difference. 

The differences must be specific. Use exact figures because the more precise the number, the more convincing it becomes.

The differences must be credible and believable. Don’t quote numbers that no one will believe. I frequently see this claim; “We can increase your productivity by 53 percent.” Saying that to a prospect is telling them they’re stupid. You’re telling them that they don’t know their business and you, an outsider, does. Stick to a number that’s smaller and more believable, even when you can deliver those outrageous figures.

The differences must be provable. Back up your claim with testimonial letters, case studies, and reference accounts.

The differences must be demonstrable. Do this with ROI worksheets, analysis and assessment tools, and demonstrations.

The differences must be real differences. Avoid the “Cheaper and Better” claims unless you can bring to bear strong evidence. You’re better off claiming “Value and Reliability.”

When your prospect agrees to examine your differences, hand them the list. As you review each point, ask if it is important to them. If so, check-mark it. At the end of the list, count up the check marks and ask, “Are these enough reasons to explore us as a second source?” If they say, “Yes!” begin the evaluation process.

If they say “No,” thank them for their time and leave. Then occasionally send your prospect reminders and proof of the points of difference they found useful and wait for the entrenched vendor to fumble the ball.

8. Don’t Convince Them, Make Them a Hero

If you attempt to convince your prospect, you’re going against the grain of their normal behavior. To be convinced, your prospect will have to admit that they were wrong. And you know that prospects hate doing that.

Your prospect may view switching as an admission that they had the wrong vendor in the first place. Not a politically correct action. So if you’re going to get them to switch, it’s got to be more than helping them save face; you’ve got to make them a hero.

9. Upgrade Them

Take the position that choosing you upgrades their strategy. Before you present your arguments on why you’re a better choice, say, “You know that as time goes by, companies make improvements in every area of their business. They upgrade software, improve productivity, and decrease costs. That’s progress and it keeps you competitive. You make improvements by changing processes and procedures. Usually, that means making an investment, whether it’s money or time. And part of that investment in change is upgrading vendors and suppliers. Would you like to know why our customers choose us as part of their upgrading process?” 

10. “Why Don’t You Give it a Try?”

After presenting your points of difference, say, “Why don’t you give it a try?” This is an easy way of letting prospects check you out without making a commitment. And right now, they aren’t ready for a commitment to you. Of course, you’ll under-promise and over-deliver, making the switch easy to defend to their management.

11. Make the Trial Confidential

They may be worried that talking with you may damage the relationship they’ve worked hard to establish with their current supplier. So offer to keep the trial period confidential so that they won’t risk any exposure. Just sign a mutual non-disclosure agreement and keep your mouth shut until you’ve earned the business.

12. “You Can Always Change Your Mind”

If they’re still reluctant, say, “You know that you can always change your mind. But try it before you decide. You can’t make progress without trying new things.”

How have you penetrated new accounts? I’d enjoy hearing your tactics.