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Make Your Prices Stick…Without Getting Stuck
By Vince DiCecco, Business Development & Training Consultant, Your Personal Business Trainer
At no time during my 50-plus year lifetime do I remember prices decreasing this substantially. But in these tough economic times - and with only a mild forecast recovery - prices are definitely on the decline. Housing prices, for example, are down as much as 40 percent in some parts of the United States. With so many attractive deals on automobiles, electronics and nearly everything else, customers assume businesses are lowering prices as well. When a customer asks, "What is your best price for this?" - can you make your prices stick without getting stuck?
In the classic Scott Adams book, The Dilbert Principle, he notes that nine out of 10 new business ventures fail. "Apparently, 10 percent of the time you get lucky and that is enough to support a modern economy."
Unfortunately, although said in jest, Adams has a point. Businesses don't have a stellar track record when it comes to long-term success, profitability and longevity. In fact, the average age of a business in the United States is less than eight years. One way to drive this fact home is to say: "If your business is not eight years old yet, it may never be eight years old."
Immediately before a business fails, three things often precede the closing:
Moments of Truth
In the natural progression of a sale, customers will usually first raise the issue of price. What you do as a business owner or sales representative in response to the price question makes that a moment of truth.
Essentially, every buyer's question is two-fold. First, they are asking, literally, what is the selling price of a product or service? But, even more importantly, they want to know how negotiable it is.
Let's face it. When a prospective buyer strolls into your shop or showroom, he is not thinking: "Man, I've got to buy a wide-format sign today." The purchase of signage, decorated apparel or any such products sold in our industry are usually made with discretionary dollars earmarked for promotional or personal gratification purposes - unlike car or truck shopping where a person needs a vehicle to get around. Actually, prospective buyers of many specialty imaging items relish the experience of buying their first vehicle wrap, direct-to-garment digital printer or "trading up" to the newest kind of LCD display technology. Most buyers take great pride in their style of shopping and bargaining as they attempt to finagle "the deal of the century."
For that reason, rarely will you be asked for a price by someone standing behind you. Customers will want to look you squarely in the eyes. Why, because most people can sense fear in a person's voice or in their facial expression. If you appear less than confident about the price in your words, tonal inflection or body language, you may have well given up the opportunity to sell that product at a premium or profitable price before you get a chance to dazzle them with your sales acumen.
In Dr. Lawrence Steinmetz's book, How to Sell at Prices Higher than Your Competitors, he insists that you eliminate adverbs, adjectives and pronouns that modify the word price when you quote. This is how he suggests you can make the most out of your moment of truth.
When adjectives and adverbs are used in front of the word price, it clearly communicates that there is more than one price out there. For example, when you say, "The list price is..." your customer may inquire about the "off-list" price. If you say, "Our usual price is..." their retort will be, "Give me the unusual price." Even when you use the simplest of pronouns, such as, "Your price is...," they'll respond with, "I don't think I like my price. Give me the price you gave my old pal, Keith."
Steinmetz's suggestion is to get into the habit of simply saying, "The price is." When you use the word "the," you indicate that there is only one price. A customer may still ask: "Is that your best price?" Even if you answer the question with: "Yes, that's the best price," you would be indicating that there was actually more than one price out there for whatever combination of quality, quantity, service, delivery and convenience you were discussing.
Don't create problems for yourself. Remember: "The price is..." Practice it, remember it and use it. If you quote prices on the phone, have a mirror on the desk (I'm serious!) and watch your facial expression as you state the price. You be the judge if you are able to deliver the price confidently, credibly and comfortably.
Be proud of the prices you offer. Aren't you proud of the quality and service that's been engineered into your product? Why not be proud of the price? Is it not worth that price?
The second and third statements have obvious replies that they beg the customer to seize the opportunity to beat you up on the price. "Of course $4,000 is too high. Try again, partner."
Certainly, the customer wants to buy your goods at a steal. But recognize that: "How much did you want to pay?" at the end of a sale is significantly different than, "How much did you budget for or plan on spending?" at the beginning of the sales process. Only after getting a ballpark figure from the customer can you prescribe or suggest a particular combination of quantity, quality and service on a specific delivery date.
The last sales call quote hints at the fact that the sales rep works for a crook who forces him or her to go out and charge criminal prices. But the salesperson deflects price resistance by positioning himself or herself as the customer's buddy. It's the company that's the bad guy, right? (Wrong!)
Normally, I'm hesitant to use blanket statements, but I will make an exception here: Every buying decision is based on emotion. Some people buy on impulse, but most buy because the product or service satisfies their strongest personal need at the time. Things like heightened status, peace-of-mind, social-redemption or self-gratification. Logic, coupled with the features and specifications of the product, serve only as justification after the buying decision is made.
During trade show seminars that I've presented at, I have had unanimous agreement to three cardinal rules of selling:
The fourth cardinal rule of salesmanship: "The price for which anything is sold is directly related to the ability of the sales person to sell" - is not as enthusiastically accepted among the sales reps I've met. It really means that if you cannot sell a particular product or service at a premium price, when other salespeople have been able to, then do not go around touting that you are the best salesperson in the industry.
A UVP is more than just doing the usual things better than everyone else. Often, it is a proven idea, concept or approach born from outside of the industry. For example, the Home Depot, whose founders stated with the credo: "We take care of the customer," detected its customer service scores were weakening because store associates were harder to find, aisles were being blocked with ladders and fork lifts and shelves were being restocked during peak hours.
In 2003, then CEO Bob Nardelli, approved a company-wide initiative to restrict restocking the racks and accepting deliveries to overnight hours, which was a long-time practice of supermarkets. This in return freed-up store associates to attend to shoppers when the store was busy. Earlier this year, the world's largest home improvement specialty retailer adopted the long-standing, benchmark practice of the Ritz-Carlton luxury hotel chain by insisting store associates remain with each customer until their request has been satisfied or until the guest has been introduced to a fellow associate more able to assist them. After the two initiatives were implemented, customer satisfaction ratings rose dramatically.
The UVP of any business should include three critical components:
One might conclude - albeit, wrongly - that a multimillion dollar advertising campaign is required to get such a marketing message across to the masses. Your UVP can be discovered, developed and delivered on a modest budget. It's a matter of adopting and committing to a strict sequence of the right message directed at the right audience using the right delivery medium. Make the effort to discover your company's UVP and then discuss it with your best customers to confirm it.
If your UVP is quality, then you'd better know what your products are capable of, what your competitor's offering can do and what your customers are doing with your products. Understand that the more that is bought, the more customers appreciate the subtle differences between your stuff and the other guy's.
If you believe your competitive edge is service, then review your policies and procedures to determine if they are written for your customers' convenience or your own. If they are written for your own convenience, don't go touting you are a full service shop or that you are customer focused.
Finally, if you brag that you deliver on time, every time, then your dedication to that promise had better be impeccable and supported with a money-back guarantee.
Be a Winner
If you choose to compete on price, do so on high price, not as a discounter. No known discounter has remained in business longer than 50 years. Even Sam Walton, founder of the not yet 50-year-old Wal-Mart and Sam's Club, stated in his book that he thought his stores would not see their 30th anniversaries.
Discount business owners waste most of their time beating up their suppliers in a quest for lower prices. The rest of their day is consumed with interviewing and hiring new employees because their underpaid good people don't hang around.
In order to make your prices stick, you may want to acknowledge your prices are higher and turn that into the reason people should buy from you. You have taken the time to carefully understand and appreciate their situations and then proposed the perfect combination of quality, service and delivery to meet or exceed their needs.
Collect testimonials from your best customers - who are paying those premium prices - and use them to attract prospects with similar demographics and circumstances. Selling at prices higher than your competitors is as much a frame of mind as it is a selling skill-set to master.
I suggest borrowing the mantra of Saturday Night Live's Stuart Smalley. Before a sales call, tell yourself: "I'm good enough, I'm smart enough and doggone it, people like me. I deserve to have my prices stick."
Vince DiCecco is a dynamic and sought-after seminar speaker and author, with particular interest in business management/development and marketing subjects. DiCecco addresses a wide range of topics focused on nurturing customer loyalty while improving profitability. With more than 30 years experience in sales, marketing and training, he is currently the owner of the Acworth, Georgia-based consulting firm - Your Personal Business Trainer, Inc., which helps businesses sharpen their competitive edge. email@example.com.
This article appeared in the SGIA Journal, 4th Quarter 2009 Issue and is reprinted with permission. Copyright 2009 Specialty Graphic Imaging Association (www.sgia.org). All Rights Reserved.
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