We find ourselves in the middle of one of the greatest wealth transfer periods of all time. Those with wealth must decide whether they want to make transfers, and if they do, they must decide how much, to whom, when and in what structure?
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A friend of mine recently bought a home in Boulder, and with a real estate resurgence, the price wasn’t cheap. But, if you want to live in Boulder, you’re probably going to pay a little more.
Many salespeople and prospects believe price is the ultimate factor in the decision-making process. However, the salesperson who buys into this becomes a barrier to their success while the prospect may simply be using price as a negotiating ploy.
According to a study from The Harvard Business Review, “39 percent of business-to-business buyers select a vendor according to the skills of the salesperson rather than price, quality or service features.”
How does that stat affect those who believe they can only sell on price?
When most people buy, they have standards and limitations for the purchase. Some people might set higher level budgets for some purchases and be more bargain-oriented for others. For example, they may want the top-end product for their shoes but not so much for their pajamas.
For the sales professional it’s important that they understand where the money concept is for each purchase. Qualifying a prospect has three buckets, the second being the budget they have and are willing to spend. That must be investigated prior to telling people about your product or service, your features and benefits, or your price.
The budget step of the selling process has to be linked to the specific needs of the prospect after all; we aren’t there to sell but to help prospects make the best buying decision and discover what fits the real reasons they are buying in the first place. It’s the relationship difference between being a vendor where price is the only factor and being seen as an adviser where there is a fit with what’s been qualified.
Sometimes salespeople can be their own worst enemy when the price objection comes up. They don’t want to lose the business, and they haven’t created value that overcomes the prospect’s need to negotiate. The key is to prevent the money objection rather than trying to handle the objection. Do your salespeople effectively do this?
Are your salespeople comfortable openly talking about money and budgets in the sales process, early in the process? Many salespeople will tell you that they don’t want to look like a vulture in the selling interaction, so they will save any talk about budget for the end of the sales interview. Still others won’t bring it up at all, opting for “surprising” the prospect at the end of the presentation or proposal with “sticker shock.”
Another barrier that cripples many companies margins are when the salesperson doesn’t believe the product or service is worth what the company is asking for it. This is also a “money-concept” issue.
For example, let’s say that Steven sells vacation homes for a high-end custom-home builder in the $1 million to $2 million range. However, Steven has never owned a home that costs more than $350,000, let alone a vacation home. When the buyer brings up price questions or even asks questions that border on value questions, how will Steven react? All too often, salespeople let their own personal “money concept” issues get in between them and making the sale.
The difficult part is that the salesperson’s money-concept limitations are operating in their subconscious – they’re not even aware that they have them. No amount of role-playing or training techniques on handling price objections will fix this salesperson’s problem. That requires an entirely different approach.
In the real world there will always be price buyers. Is your goal to be the volume low-price leader? Do you want that business? Sometimes prospects may not be qualified and don’t fit as your ideal client. All buyers will buy if they see the value and are comfortable with the investment. It’s the salesperson’s job to help the buyer come to that self-discovery without letting their own preconceptions get in the way.
Bob Bolak is president and owner of Sandler Training in Boulder and can be reached at 303-376-6165 or firstname.lastname@example.org.