Getting Squeezed on Price
See how “Getting Squeezed On Price” learns how to sell value and protect his hard-earned margins…
I am working on landing what could be a huge opportunity. But the buyer only wants to squeeze out any margins in order to get a lower price. I’m desperate to win this account because it means I’ll hit my quota. I’m meeting with Susan the buyer this week. What do I do?
Getting Squeezed on Price
Dear Getting Squeezed on Price,
I always say if you sell on price, you LOSE on price. As soon as someone cheaper comes along, Susan will not give you a second thought before cutting you loose. Instead of getting caught up in price wars, you need to steer Susan’s attention to other issues. This means you need to ask her about VALUE. What characteristics does her organization value in a vendor? Are they most concerned with good customer service, high quality products, speedy delivery, or ease of use? Once you get her talking about these areas, you can determine what her needs are and how you can position yourself to get those needs met.
For example, let us say that Susan’s organization places a high priority on speedy delivery because they promise their customers that they can fulfill shipments within 72 hours. Once you find that out (by asking her about her organization), you can illustrate to her how your nationwide distribution system beats the competition by shipping products regionally. You can give her concrete evidence that shows how quickly your shipments move.
Sometimes the “Susans” of the world are not forthcoming as to what their organizations value. In those cases, you might need to do a little more detective work. One great method is to ask her, “What is motivating you to make a switch in vendors at this time?” When a company is actively seeking bids, it usually means something drastic has happened to disrupt their existing vendor relationship. Many times, salespeople who are approached by prospective clients are so eager to sell their products and services that they never take the time to ask why the company is looking for a new vendor. Don’t make that mistake! Finding out that the existing vendor failed to meet delivery times or had products that did not meet quality assurance standards is priceless information that will be vital when it comes time to make a sales presentation.
No matter what, you want to minimize the price discussion. It is your job to educate Susan about how you can help her and her organization shine. Keep the bar high at the beginning of a relationship, so she will know to expect premium service from you, not rock bottom prices. This is especially true if you are hoping that this small contract will turn into a much larger contract later on. You do not want to box yourself in with a tiny or nonexistent profit margin and then have to explain why you need to greatly increase your price when Susan’s organization wants to expand their business.