No one truly wins a bidding war. Even if you’re the salesperson walking away with the business, you’ve shrunk your profit margin and lowered your product’s perceived value. You’ve also shown you’re willing to make extreme compromises -- which may cause your buyer’s future referrals to seek similar bargains.
But despite the danger of “race-to-the-bottom” tactics, many reps still find themselves embroiled in competitive deals they feel they can only win by cutting price. Successful salespeople avoid this trap with the four techniques outlined below.
1) Don’t Talk About Price Right Away
HubSpot Research found nearly six in 10 prospects want to discuss pricing on the very first call. But introducing cost into the conversation before establishing value can commoditize your product. Rather than thinking, The first option does A, B, and C, while the second does A, B, and C -- and D, E, and F as well, your prospect thinks, The first option costs X, while the second costs 2X.
This mindset hurts you and the buyer. He’s thinking about sticker price instead of ROI.
To satisfy your prospect’s desire for pricing information without shooting yourself in the foot, delay talking about price until you’ve shown him how your product can benefit his business.
For example, you could share the typical results of clients who struggled with similar issues. Once the buyer understands the potential impact or cost savings of your product, you can move to a price discussion.
If the buyer immediately asks about price before you’ve gotten the opportunity to establish value, HubSpot Director of Sales Pete Caputa recommends defusing this question with some humor. For instance, you might respond, “It costs more than a Snickers, less than a car. Should we discuss benefits and potential use cases before we talk about cost?”
The pricing discussion can take place as early as the connect call. In fact, talking about price early on helps you disqualify prospects who can’t afford your product. If your expectations are completely misaligned, it’s better to discover that information as soon as possible so you can avoid wasting each other’s time in fruitless conversations.
2) Highlight What Sets Your Product Apart
If your prospect knows exactly what sets your product apart, you won’t need to drop its price to close.
At some companies, the marketing department helps the sales team hone in on those competitive differentiators. At others, sales leadership is responsible for identifying them and training their reps to sell on those features. At others, individual reps rely on their experience and product knowledge to run their own playbooks.
But what if you don’t have help from Marketing, your manager, or years of experience? You can find differentiators on your own by reviewing your competitors’ websites to find benefits or capabilities your product has which theirs do not.
It’s also helpful to look for benefits their products offer that yours don’t: The absence of a feature is sometimes an advantage. For example, maybe a competitor’s product provides three different ways to accomplish an objective, while yours provides just one. Your product is therefore probably easier to use. Some prospects might be looking for a more robust solution, but your product’s ease-of-use will appeal to the right customers.
Once you’ve gotten some ideas from reviewing competitor websites, talk to your current customers. Ask why they chose you over the competition. Certain trends should emerge -- and if none do after numerous conversations, that’s a fairly good sign your offering hasn’t reached product-market fit. Perhaps buyers were drawn to the quantity and quality of your integration partners, or how you built a particular aspect of the product.
Even if you have feature parity with your competitors, you can still find meaningful differences to capitalize on. For instance, your company might have an extra responsive support team, lead the market in thought leadership, or host more customer success events than anyone else.
Once you’ve found your differentiators, figure out which resonate with each of your buyer personas. A startup employee who wears several hats will appreciate your product’s simplicity, while a corporate employee with a single function will like how customizable it is.
3) Position Your Product Strategically
Although badmouthing other companies will make you look insecure and unprofessional, you can -- and should -- ask your prospect which other vendors she’s considering. Her answer tells you how to position your product.
For example, if she’s looking at a product that’s similar but lacks in-person implementation services, mentioning the value of your complimentary on-site implementation will help you get ahead of the competition.
There are several ways to phrase this question. When it seems like the buyer has just begun investigating their options, you might ask, “Are you exploring any other strategies for solving [pain]?” Follow up with: “What about other vendors in [product] space?”
If your prospect is further along in their buyer’s journey, it’s highly likely they’re researching at least one other seller. Find out to which options they’re comparing your product by asking, “Out of curiosity, which vendors are you evaluating besides us?”
Prospects on formal buying committees are usually obligated to review and/or get quotes from multiple sellers. Whenever you’re working with a committee, you should ask, “Which prospective suppliers have you requested proposals from?”
4) Help Your Prospect Define Their Purchasing Criteria
If you’re selling a highly differentiated product, the buyer doesn’t have much experience in their current role, or they’ve never attempted to solve a particular business challenge before, it’s possible this is the first time they’ve bought a product in this category.
That gives you a fantastic opportunity to help them define their purchasing criteria. You automatically add objective value, which makes you seem more trustworthy and lends your product more credibility.
Let’s say you sell employee training programs. In your experience, the most successful programs include a variety of content, are split up over several days, and are customized to the customer’s industry. You pass along this insight to your prospect, who incorporates it into their decision -- and ultimately, chooses your business.
Of course, you should never mislead the buyer to make your offering seem more appealing. Make sure you’re giving them an objective list of considerations.
Wondering how to broach this conversation in the first place? During discovery, say, “Could you tell me about your experience buying products in [category]?”
Participating in a pricing war hurts your profits, your reputation, your relationship with your customer, and even your competition. With these tactics, you’ll win on value -- not because you offered the lowest price.
Originally published Dec 6, 2016 8:30:00 AM, updated February 01 2017