We have all heard prospects or even current customers mentioning that our prices are high. Some even go far as demanding that we reduce our prices if we have to continue the business with them. Be sure to read my blog on a similar topic, as it’ll give you good insights on how to handle situations like that.
But this next objection that you are going to face is unlike anything you have seen before. It doesn’t happen quite frequently, but when it does, you are most likely to give up on the opportunity straight away.
Imagine this scenario: You’ve been at this deal for many months. Most likely, you’ve been trying to oust a well established big brand and have pulled out all stops to get you to the point where negotiations on the deal are about to begin. When you are about to think that you’ve got the deal, the prospect comes into the meeting and says, ‘Folks, this is all good, but the company XYZ whom you are trying to replace has decided to give their product for FREE’. So now the question arises ‘How do you compete against a competitor that is giving their product for free, especially when this competitor is a known brand and the product is the one that your clients are using currently.’
Let’s break down the question in a few parts to help understand how this situation has come about.
In the profession of sales, intelligence is the key. By intelligence, I don’t mean IQ (that has it’s own relevance) but the information that you have on the competitors, customers and prospects. Think about all the intelligence groups various nations have, and the reason they have them is to get the inside information of what’s happening in a foreign country that in turn could affect their country’s affairs. The same way, the competitors you are trying to displace or outbid have their own intelligence gathering methods of gaining information on you and your discussions with ‘their’ customers. So, when they realize that you are very close to getting them ousted from their position they have been enjoying for a few years, they in a desperate bid are prepared to give the product for free, in the hope that that will enable the customer to maintain status quo and they’ll have enough time to come up with a better proposition in the future.
Now, let’s get back to the scenario we pointed out to earlier. What do you do when you are faced with a question: ‘Folks, this is all good, but the company XYZ whom you are trying to replace has decided to give their product for FREE’.
The first thing I would hope is that this isn’t a question you were not expecting, because the way the competitors had their own intelligence on the issue, it’s important that you had yours too. Which means you don’t seem startled at the question. Now to the answer. Take a pause, gather your thoughts and calmly ask a question back to the customer ‘Hmm, but why do you think they are doing that?’ and then zip up. What do you think is running in the prospect’s mind?
1. They (the incumbent) will charge for additional services which will recover the cost they are incurring by offering the product for free. That also means that as a customer you’ll anyway end up paying them for their product, albeit in some other form.
2. They have a substandard product, which is why the FREE option was given out in the first place.
3. By taking the FREE option, you (the prospect) are at the mercy of the incumbent’s product that you were trying to get way from. This time it’ll be at a sub-par service since they are not even charging you for it, which means they don’t have too much skin in the game.
4. Also by taking the FREE option, you are just banking on the incumbent to continue to provide you the product at no cost. And if at some point in time, they decide that this arrangement is not making sense for them, they can simply pull out, leaving you to fend for yourself.
What you as a salesperson are doing by posing the question to the prospect is giving them the chance to think about the options they are faced with and since these thoughts are generated by the prospect themselves, they do not feel ‘sold to’ by someone else.
Obviously, there can be a situation where the prospect is just thinking about one of the above mentioned points or can in fact give a positive spin to the equation they have received from their incumbent. In those rare circumstances, it’s your duty as a sales professional to list out the reasons that any organization would offer their product for free.
You have to realize that, in a sales conversation, the reason you have got a meeting is because the prospect is interested in doing business with you. So the fact that you were given a meeting despite the prospect having the FREE proposition from the incumbent is reason enough to know that the opportunity is not closed. Most probably when the prospect threw that question at you, they anticipated that you would drop your price considerably to stay in the game, else the meeting with you wouldn’t even have taken place. In scenarios where you do have leverage on the price (I’m all for giving the best price to the customer, provided you are not undercutting yourself), then this might be a good time to keep that figure handy. Being clear with the customer that going below a certain threshold price will not work in the favour of both you and the customer is important.
CONCLUSION
Price is considered the final frontier for any deal, and also the toughest hurdle to cross through. While it’s not entirely untrue, the sales professional who has followed the sales cycle to create value at every stage has a very good chance of closing the deal. Even though price is an important consideration for any company looking to buy a product or solution, it is not the only thing most organizations consider when making a buying decision. Build enough trust with the customer and you’ll have a much smoother sail in the world of sales.
