When it comes to dealing with customers who use your price to lower other competitive bids, there really isn’t any way to guarantee it won’t happen. However, you can do something to make sure it doesn’t happen too often. In fact, once you decide that you’ll do something about protecting your pricing, you’ll find it much easier to make sure you control how many times a customer tries to shop your price.
It's not easy, but it can be done.I've put together some simple steps to both protecting your price and making sure only your best customers get that price. You can stop customers from using your price against you. It simply involves making a decision to stop it.
Before I get into the why and how to protect your price, let me first start by stating that you should not put your price on-line for your competition to see. Therefore, rule #1 is never put your price list on line – on your web-page, or discuss it on your blog, etc. Concentrate on features and benefits and entice your customers to call you for a pricing request. The only time I suggest ever putting pricing online is for over-stocked items that must be liquidated.
Should a Company Offer Up-Front Discounts to Entice Customers?
Now, I won’t argue with the validity of offering discounts at department stores or chains to entice customers into the store and start buying, but when it comes to business to business sales, this is a definite no-no.
The fact is, discounts, rebate programs and credits should only be used with existing customers who have bought from your company in the past. An e-mail advertisement with announcements of huge 50% discounts does nothing. It may entice a couple of customers, but overall, it’s simply not the right approach for the following reasons:
- It forces the customer to measure your company’s value on price
- It forces the customer to view the products as low value or quality
- It forces the customer to see the products as outdated or overstocked.
- It diminishes the value of your current customer relationships.
Again, use up-front discounts on overstocked items and those that must be liquidated but refrain from using this approach with new customers and with top-tier products. Discounts are best used as a reward for customer loyalty.
Here is a post that shows how to use the back-end rebate program to reward customer loyalty, keep customers and gain market information: The Customer Retention Plan That Keeps Customers Grows Sales! The video above explains this rebate plan in detail.
What Should You do When a Customer Does Use Your Price against You?
Let’s assume you’ve been working hard to secure business at a customer account and every time you provide pricing, this customer uses it to lower other competitive bids. In essence, they need your price to keep their own pricing in line and will tend to give your price to their preferred vendor to match. So, how many times should you allow this to happen? Well it really depends, but the fact is, salesman intuition is best used here. In my own case, I’ll try about three or four times before I drop the hammer. Some do it sooner, and some do it right away. It’s entirely up to you, but make no mistake, you must do something about it.
Your customers can not continue to use you as a pricing resource. When a customer does admit to using your price, this is how you can correct their behavior. You must now use the “Trial-Close” or “Pre-Sell” technique. This is a simple and extremely effective way to take control of the situation, and essential to using it, you must understand the following points.
The above video explains how to defend price, handle customer scare tactics and manage concessions in business-to-business negotiation. You can learn more by going to: Sales Negotiation: Defend Price, Customer Scare Tactics & Managing Concessions
- Customers need good suppliers: Regardless of whether they are currently buying from you. They might need you in emergencies and like to have options.
- Customer must respect you: You must explain to your customer that you can not continue to offer this pricing as your management will not support it indefinitely. In essence, you only be able to offer standard pricing, and won’t remain competitive.
- Your customer needs your pricing: Your customer must understand that without your price, they don’t save any money. If you mention that you’ll no longer be able to offer these aggressive prices, it will cause a problem – they won’t get the savings anymore.
- The relationship must change: Is it reasonable to assume that you should continue to provide great pricing forever? Of course not. You can’t keep feeding the market you sell to your best offers. So, the relationship with this customer must change.
How does the Trial Close technique work?
The basic approach is to make the customer now provide you with the pricing they will purchase at. It’s not impossible and sales people use this approach all the time to protect their pricing. So, in this case, you’ll explain to your customer that you can no longer provide them with pricing, and in this case, your customer must give you the price they’ll purchase at, and you’ll see if you can secure this price from management. However, the stipulation is, if you get this price, your customer must order. This works for several reasons:
- Fear They'll Lose a Vendor: Once your customer realizes you’ve had enough, and that they could potentially lose you as a vendor, they’ll either do the right thing, or leave – either way, you’ll know what kind of customer they are.
- Renewed Sense of Respect: Your customer will have a new, refreshed perspective on your relationship and should respect you more for standing up for yourself.
- Guilt Works: Finally, there’s a little bit of guilt at play here, and everyone is human. If you’ve played your cards right, this customer might come to realize the errors of their ways.
Here is a post that has some phrases at the end of the post that you can use to protect your pricing. it's a more in-depth analysis of the Trial Close sales technique.Using the “Trial Close & Pre-Sell” Technique to Protect Your Price Finally, there really is no way to guarantee your pricing will be protected.
The fact is, you company sells into a market and the market itself determines pricing. However, you can do these little things to make sure your pricing is respected, and you don’t have to continue to chase customers, constantly offering the best possible pricing.
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