Low-Cost Competition

Anybody who thinks that discounting is the future needs to take a moment, splash some cold water on their face and look at the reality in front of them. Discounting has been an issued faced by business people since the beginning of time. It is not new and is not going away.

It is very frustrating to have an established business, with established pricing and profit margins only to have some start-up, cowboy, one-man band, or big box chain mess up the marketplace. We feel that it is the recession and that our future will be one of scrapping together a meager living as we struggle against the competition.

Nothing is further from the truth.

In most cases facing a low-price, discounter is a sales issue. The problem is very few businesses train salespeople effectively and so the price issue becomes a brick wall.

It need not be!

There are cases when a competitor offers exactly the same product, delivered in the same way at a much lower cost but this is very rare. In most cases the lower prices means less of something and it the role of the salesperson to bring that to the forefront of the buyer’s mind.

Let’s look at some examples

A roofing company is bidding for a job to replace a residential roof. They prepare the bid allowing for a modest profit and the homeowner tells them that they are 40% more expensive than the ‘man with van’ alternative.

I have seen this happen many times. The salesperson scrambles looking for reasons to justify the higher price but does not remove the thought from the buyer’s mind that he can save a lot of money. In the end the salesperson feel dejected and diminished.

This is where sales training and sales preparation can make the difference.

It is essential that salespeople always take control of the sales conversation. Instead of hoping that the homeowner doesn’t find a cheaper bid the salesperson should deal with the issue right from the first meeting. Do your homework and research local court cases where homeowners have taken discount builders to court for poor workmanship. There a numerous such cases and with some effort a salesperson could create a portfolio of newspaper articles, court documents and photos of botched jobs.  Often discount builders skirt around health and safety and this can leave the homeowner open to law suits by workers injured on the job. A poorly done roof can cause tens of thousands in related repair costs, a worker earning minimum wage falling off the roof and receiving a life-altering injury could sue the homeowner as general contractor – the costs could exceed the value of the home.

A savvy salesperson deals with this in the first conversation by making the homeowner aware that the cost of the quotation you are providing means that he won’t lose his home. A prepared salesperson shows clearly that the discounted option will be the more expensive choice. Combined with a long-list of testimonials and recommendations from satisfied customers should bulletproof your quotation. Save and edit excerpts from the television series ‘Cowboy Builder’ and present them to your prospect on your iPad.

Here is a video of a homeowner who bought a discounted roof now facing thousands in water damage. The video doesn’t have any sound but it doesn’t need any!

People load videos about everything on Youtube and videos might downloaded and edited to create your own videos warning of the dangers of discount service providers!

An accountant dealing with a low-cost tax mill can use the same techniques. Is your customer aware that HMRC holds the taxpayer responsible for all errors? Again create a portfolio of tax nightmares cause by low-cost accountants. It is important not just to mention the risk, however, but to show the evidence and talk about actual examples. Here is a blog which could be very useful for an accountant working to establish the reasons for fees.

Every price objection must be dealt with but it is essential to prepare for objections so that your response is powerful and iron clad. If price objections could not be dealt with there would be no premium brands!

How does Starbucks sell a five quid cup of coffee?

Take control of the customer conversation

Know the buyer and know the possible objections and deal with them one by one during the sales process blowing a hole in the perceived value of the discounted service. If the salesperson leaves objections to follow-up conversations then they are on the defensive and look like they are making excuses.

It is essential that companies invest in sales training to provide salespeople with the tools to effectively deal with market conditions.  I have made over 25,000 pitches in my sales career and have documented each and every pitch – overtime I have learned what works. Make sales development key to your business and you will have the tools to deal with the changing market conditions and always win!

cold call