In consumer markets, it’s expected that customers will comparison shop. After all, prices, offers, and discounts abound. Heck, you can comparison shop on smartphones. Not so with business markets. Why?
Sales cycles are longer in business-to-business (B2B) markets, and the process of nurturing prospects and closing sales is far more elaborate.
It’s that investment in time that your salespeople must protect by not allowing themselves to be used to lower your competitor’s offer.
Your customer has the right to buy whatever they can for the lowest possible price. However, that doesn’t mean your salespeople have to help them attain that low price by continually submitting bids. Unfortunately, getting into a bidding war is a recurring theme for some companies.
They continually go back and forth, dropping prices and matching offers, all in a vain attempt at winning over the customer. Unfortunately, their customer is in the driver’s seat, and there never seems to be an end to how low pricing will go – unless you refuse to be a part of it.
You’re likely asking yourself how to win business if you’re unwilling to play the game. After all, it’s not as if you can just take yourself out of the process, or can you? Actually, yes, you can. You can easily decide whom to target. In the end, it’s your decision. Will you focus on diminished returns by continually dropping pricing and reducing margins, or will you instead focus on those customers and brand champions who better understand your value and are willing to pay for it?
If taking yourself out of the equation with some customers is too drastic for you, then the following steps will not only help you protect your price but they’ll force your customers to think twice about using your offer against you.
Redefine Your Customer’s Pursuit of Lower Pricing
You’ve likely heard me talk about how a customer looking for lower pricing just wants to lower their costs. Once you get them to focus on cost reduction – and not price reduction – then you’re well on your way to staying firm on your offer.
There are several ways to help customers achieve significant cost reductions without having to continually lower pricing. I’ve compiled a small list below, but you could easily develop your own.
- Cost Per Use Benefits - Longer Life of Product: Define savings of a product that lasts longer
- Freight: Are you near your customer? Can you offer delivery to their door?
- Consignment Inventory or Favorable Stocking Arrangements: Focus on reducing your customer's cost of purchase and not just the cost to buy
- Quality: Do you offer a product with better quality? What does that mean to your customer?
- Define the Strength of Your After-Service Sales: Your strengths in customer service and support have value.
This post will give you some idea of how to defend your offer to different decision-makers. If you’re wondering how you get your customers to worry less about your price and focus more on costs, then ask them. The best approach is to say the following: “Mr. Customer, when you see our pricing and worry, what you’re really concerned about is rising costs – correct? So, how about we discuss ways I can lower your costs – would that help?” There are several questions and statements that can be used to defend your position and your offer.
Make Customers Appreciate What It Took to Make the Offer.
Every salesperson has, at one time or another, had to get their boss to approve a below-market price, and even though that approval isn’t needed all the time, your customer still needs to feel your pain. They need to be made to feel that you are always fighting for them, always doing what you can to give them the best possible offer, and always willing to negotiate internally to make it happen. The point is to take them through the process of how you get that lower price.
Explain to them that your bellow market pricing, special offers, and discounts only happen when management agrees to provide them. However, if you continually reduce pricing and never win the customer’s business, then management will, at some point, tell you to move on to something else. In the end, you’ll no longer be able to come to the table with these offers, which won’t help you or the customer.
You’re putting your customer in your shoes. They need to understand that at some point, the special offers won’t appear, and you’ll be forced to provide them nothing more than list pricing. It’s inevitable, and no customer wants to be left with vendors who don’t want to provide good pricing. This is a critical step to stop your customer from using your offer against you.
Why bother if you can’t win the business with the best price? Better yet, if your customer is committed to its current vendor, and you can’t pry them away no matter what price you offer, then why continue? Have an honest conversation with your customer about what it takes to win their business. You’ll be surprised at what you’ll hear.
Re-quote Only After a Commitment
How often have you re-quoted a B2B customer, assuming it was enough to win the order, only to find out that, once again, they’ve gone elsewhere? Unfortunately, as is so often the case, you work on a revised quote, send it to your customer, and then go through the entire pricing war again. Each time, your customer takes that official quote and uses it to show your competition that the offer they’ve received is valid. You think the revision is needed to secure the order, but your customer isn’t thinking that way.
Your customer wants you to put the offer down on paper. They want to have something substantive that they can then show to your competition. It’s their security blanket. Your job is to get your customers to commit to you before that happens. Your job is to get some kind of agreement from them that if you give them this price, then they’ll send in the purchase order.
Now, you can’t do this with customers you have no personal history with or with new customers. However, you can do it with someone who has continually used your offer to lower their price. What should you do when asked to requote a B2B customer who has used your pricing against you?
Ask your customer to sign and date your quotation with the price they want. Once you receive it, you’ll have upper management approve the price. If the price is accepted, you’ll send them a revised quotation with that requested price. They are then required to send in the hard copy purchase order. However, signing the order and forwarding it back to you is their agreement to move forward if you can grant that price.
Value Your Time by Keeping a Full Sales Funnel
The more opportunities you have for sales, the less likely you’ll be bothered by customers who aren’t serious. Better yet, the less likely you’ll have time for them. A full sales funnel means you’re working on the most important opportunities. It means that you’re properly focusing on all customers and not just a select few who use your insight and offers to lower costs.
I’ve always maintained that the busier the salesperson, the more likely they will win better business. Ultimately, they’re forced to focus on customers with the most to offer, and they’re less inclined to react to customers who take advantage of them. In turn, those customers take notice.
They see that the salesperson has moved on to other things and is less likely to respond to fabricated emergencies and rush requests. And, when those customers ask why the response time is taking longer, the salesperson feels much more confident in telling them why.
Increasing your opportunities is the magical elixir for customers who never purchase. You’ll concentrate your efforts on better opportunities and work with customers more willing to respect your time, effort, and offer.