Don’t play chicken with your pricing

November 23, 2009

87719758 Remember the old game?  You'd aim your bike or your car at another bike or car and barrel towards each other.  Whoever swerved before the collision was "the chicken."

Lots of businesses play the same game with their pricing.  They lock on with a prospect and offer up their price.  The prospect says something to the effect of…."we really want to buy it, but that's a little expensive. What can we do about the price?"

The metaphorical headlights are in your eyes.  You want the sale.  You know you can do the job well.  So maybe if you knock a few dollars (…or hundreds, or thousands) off, you can earn their business and prove to them how good you are.

Stop right there.

If you do that once, you'll be asked to do it every time.  By playing chicken and being the one to swerve, here's what you've communicated to the potential buyer:

  • My prices aren't firm — you should always negotiate
  • I wasn't being as fair with you as I could have been…I had some pad in my pricing
  • I don't have enough confidence in my product/service to sell it for full price
  • We don't believe in our own brand — we're willing to compete on price

Do you really want to communicate any one of those things to your clients and prospects?  I doubt it.

Instead, here's how to handle price objections.

First — price fairly.  To them and to you. Be confident that you can over deliver on the price paid and be a genuine value.  Don't price to be a loss leader or get in under the other guys.  Charge what you are worth but with a nod of consideration to the market and being competitive.

Second — never apologize or over justify your price.  You can't do either without sounding defensive and you have nothing to be defensive about.  And once you've lowered your price — you will never be able to charge full price again.

Third — acknowledge their concern by helping them stay within budget.  Try something like…."I completely understand your budget constraints.  If you only have $5,000 to spend, let's look at our proposal and see what we can modify (# of options, turnaround time, features, add ons, etc.) to get you down to your ceiling."  In other words….take something away or somehow modify your proposal to accommodate their budget. 

This is you respecting your original pricing AND respecting their checkbook.  In our experience, 90% of the time, you will not lose the sale.  They'll either opt for your modifications at their reduced budget (if their budget constraint are real) or they'll end up accepting your original proposal (if they were using budget as an excuse to try to get you to reduce your price.)

Fourth — recognize that sometimes this is your brand's way of helping you recognize that this is not a good customer for you.  If you just can't make the numbers work for them — they aren't your customer.  Be gracious and if you want, even suggest some lower cost alternatives.

Bottom line is — don't de-value your work by playing chicken with your pricing.  If you are good at what you do, about 20-30% of the time — people should push back on your prices a little. 

I have a very successful friend whose philosophy is…"I want them to gulp a little when they hire us.  We're an investment, not a commodity.  Then it's our responsibility to make sure they come to believe their investment was a wise one."



Confused stock boy…or brilliant product placement?

October 27, 2009

Picture 11

So simple…and yet so smart. 

Check out where BBDO got grocery stores to stock Campbell Soup's Chicken Noodle soup.

Sometimes you don't have to spend millions on a campaign.  You just have to ask a different question.

In this case:

"Would you be willing to stock some soup in your cold meds aisle?"

Smart, smart, smart.

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Who is your sales call nag?

September 9, 2009

Shutterstock_31469638 Let's face it…staying on top of sales calls and sales efforts is grueling.  Good salespeople know that it's a numbers game…how many people you contact, how many touches per person, over what period of time yields X sales.

Do relationships matter?  Of course.  Is it about being a straight shooter and actually caring about what they need, not just what you sell?  You bet.

But, if you don't stay in touch and keep the sales process going, you can't build a relationship or learn what they need.

But that sort of diligence requires discipline.  Or, if lacking the discipline…a nag!

That's what a new website called Client Lunchbox is all about.  Client Lunchbox is all about (and only about) consistent reminders for following up with hot prospects.  It's targeted at realtors, but I am telling you — if you do any regular sales, you'll love this tool.

In a nutshell, here's how it works. 

  • You load up your prospects (name, phone and e-mail)
  • Build a cycle of sales activity (follow up call #1, send sales sheet #1, etc.)
  • Set the timing of when you want to do each activity
  • Be ready to get those reminders!

Then, every day — you get a reminder e-mail with your To Do list, including the person's name and contact info.  So you can react right from that e-mail, without looking anything up.

One of the best features of this site is that you can just hit reply to the reminder e-mails and key in a new prospect's information….and the website automatically adds them right into your system and gets them loaded into your sales cycle.

So you never had to log back into the website to add names to your prospect list.  The site is clean, simple and easy to manage.  Don't be put off by the realtor slant, if you sell — you will come to quickly value this tool.

There's a 7 day free trial (click here and then scroll down past the pricing to get to the free trial button) so give it a spin and let us know what you think of it.  Or, check out their free online tour first.

Photo courtesy of Shutterstock

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Too many choices paralyze buyers

July 8, 2009

Shutterstock_32991415 When television was first introduced, there were 3 black and white channels.  Today, 500+.  Many in my baby boomer (I would like to point out that I am on the very tail end of that demographic!) demo grew up reveling in the idea of many choices because it was new territory.

But fast forward to today and you see those same baby boomers being overwhelmed at the array of decisions (based on choices) they have to make every day.

Walk into any mobile phone store and just count the number of phones available.  It's staggering.  Then, you have to figure out what each one does…and why it matters to you.

No wonder it is often easier for us to check out, than to check all the options.

Consumer research shows that the American consumer is suffering from choice fatigue. A study (by Sheena S. Iyengar from Columbia University and Mark R. Lepper from Stanford called "When Choice is Demotivating") found too many choices actually frustrated shoppers. People were offered either 30 choices or 6 choices of jam and then given coupons to purchase what they sampled.

Of those that had the opportunity to sample 30 only 3% made a purchase, while of those given 6 choices ten times as many or 30% made a purchase. That's a huge difference.

To better understand how we all react when faced with too many choices watch this brilliant TED talk by Barry Schwartz -  author of The Paradox of Choice: Why More Is Less. In this talk, he explains how and why the too many choices are paralyzing us.

So what does that mean for you and me?

It means that there is power in simple.  Our customers are time-starved and information-saturated.  Make it easy.  If you have to give your customers a lot of choices — group or organize them in a way that allows their brain to sift through the options more logically and quicker.

It also means that we need to recognize that having more choices doesn't necessarily give us an edge over the competition.

If you are going to offer lots of variety — be sure you have a good reason for doing so, and be sure you help your consumers navigate through those choices.

Or they might not choose you at all.

Photo courtesy of

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The #1 reason why your prospect said no sale

March 18, 2009

 Your big mouth.

It's sales 101.  Listen.  Ask questions.  Listen some more.  But we all know that in most selling situations, it's hard to shut up.  You have so much to say.  You're so good at your job.  Your case study is so compelling.

So you just talk, and talk and talk some more.

Long time readers of this blog know I have an incredible respect for the smarts found at  Excellent articles, time-worthy webinars and insightful research and reports.  In their recent benchmark report, How Clients Buy 2009, there's lots to chew on. You can download an excerpt of the report here:

But here's the chart and summary that really stopped me cold.

Picture 8

According to the report:  “Service provider did not listen to me” is the most widely experienced problem faced by 38% of professional services buyers. Additionally, 55% of buyers said they would be “much more likely” to consider hiring the provider if they listened better.

Holy cow.  Everyone is in a panic about how to get more sales and there's the answer right in front of us.  Shut up.  Listen.

And it you add up the didn't listen and the talked too much….that's 63%.  2/3rds of your sales calls are being wasted because you talk too much.

What do you say about that?

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