This past week an insurance agency called me for help because they just lost their largest account that they’ve had for the past 24 years. When I asked how that happened, the clear, confident response was, “Price!” The only piece of good news I could glean from this initial exchange was that my gag reflex is working perfectly.
If you think you lost your great, long-term customer based upon price…
First, understand that people don’t change for the sake of changing…
…especially if they’ve been with you for a substantial amount of time. The only way a long-term customer will change is if they see significant pain to staying with you coupled with significant benefit to moving. You blew it somewhere. Somewhere you dropped the ball related to the relationship, value, or both.
Possible solution: You have to get into that account and do anything to save it. In the process, find out why you lost it and start to correct the problem in the accounts you still have left.
Second, understand that if someone’s price is significantly better than yours, there’s a reason that you’d better make clear to the customer because they are in danger.
There is simply no way someone can deliver a superior product, superior service, and a much lower price. If someone is 33% cheaper (use this word when referring to the competition) than you, as was the case with the insurance company, you are selling apples and they are selling oranges. There are holes in the policy that can hurt them.
Possible solution: You need to get in there and scare the Bejesus out of them. You have to raise doubt that they are getting what they expected. For example, with an insurance policy, you have to show them where the possible holes are and where they might be exposed.
Note: The above assumes you still have a strong enough relationship and they still like and trust you. If they trust (believe) you, and like you (aren’t changing out of spite), you can raise that shadow of a doubt and that is your objective here.
Third, you didn’t lose this customer overnight. It’s probably been over a series of years.
Solution: You need to make some changes, most likely significant ones, to how you deliver value and build long-term relationships.
How to Eliminate your “Price” Problem
Step 1: Accept that only about 7% of people buy primarily on price.
Until you accept this fact, you’ll never be able to overcome the price problem. And no, your market isn’t different and the people you’re dealing with aren’t different. This is another excuse I hear weekly and in each and every case I’ve ever encountered, the top performing companies and salespeople are always selling more expensive products to the people who supposedly buy on price. Think about it. How many things do you buy solely on the fact that they are the lowest price? Do you buy your fiancé the cheapest diamond? Do you send your kids to the cheapest schools? Do you invest in the cheapest cancer treatment for your loved one? These are extreme examples but they highlight the point that if you’re like most people, the lowest price scares you. Dad was right, “you get what you pay for.”
If you truly believe people buy on price, you don’t have a price problem, you have a mindset and a sales problem. “Price” is simply an easy, throw-away excuse to justify hanging out in your comfort zone and being mediocre while simultaneously avoiding the hard work and pain necessary for salvation. There’s pain in letting go of an old belief. The amount of work it takes to build sales skills, adjust mindset, and admit you’re wrong, is immense and the reality is: most people won’t do it. They will simply hide behind the price excuse and whine that their situation is different. It isn’t. And the faster you accept that reality, the faster you’ll begin to turn things around.
Step 2: Realize that selling on price is the surest way to go out of business.
There can only be one low-price provider. If you are it today, you won’t be it tomorrow or when your customer is shopping the next time. There will always be someone willing to sell something cheaper and, in some cases, even give it away. Low price cheapens the marketplace and destroys loyalty, trust, credibility, and relationships. Competing on price will ensure both you and your business live a shorter, more painful life.
Solution: Get great at building relationships and value. This is going to take some work, but it will be worth it. Look, is price important? Yes. Is it the most important? In 93% of the cases no. It’s funny that any time the subject of relationships comes up and I ask how important they are in the overall sales and business process, I usually get the answer that they are the most important part. When I later ask the same person why they didn’t get the business, they say “price.”
At the end of the day, whatever you believe to be true, will be true. While I can show you over and over again study after study that show that only 7% of people buy primarily on price, you won’t believe what you see, you’ll see what you believe. As we all know, the first sale is to yourself. If you don’t believe in your product and the price you’re asking for it, you either need to find that belief or leave your company and go work for the low-cost provider. Either way, if you’re going to survive long-term, feel good about yourself, and ultimately thrive in the market place, you have to let go of the price excuse and learn to sell value and relationships.
John Chapin is a sales and motivational speaker and trainer. For his free newsletter, or if you would like him to speak at your next event, go to: www.completeselling.com John has over 27 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For permission to reprint, e-mail: johnchapin@completeselling.com.
