According to research by Tom Reilly Training, more than 60% of salespeople will cut their price if the customer asks. What’s even more surprising is that this happens even when the customer admits that they are buying a superior solution to their problems than in the past.
While cutting prices can help in the short term, it has a long-term downside. For one, you can erode your market position and bottom line. Also, if your business can’t absorb the cuts, you’ll face stiff resistance trying to resume full pricing. Plus, there’s always the chance that a competitor will drop prices to match yours.
Here are four tips from sales training programs that you can use to close deals without bleeding your bottom line.
Build trust before you sell
Building trust needs to be a top priority if you want to close full-price deals. A recent Dale Carnegie study found that 71% of respondents would rather buy from a salesperson they trust over one who gave them the lowest price.
To establish trust with potential customers, show more interest in solving their problems than getting a sale. Also, treat your customers with respect and honesty. Another great way to build trust is to prove your credibility. You can do this by sharing testimonials from other customers that you’ve helped.
Sell benefits, not features
If you want to win more sales, you need to understand why people buy. According to Theodore Levitt, a Harvard Business School marketing professor, people buy expectations. In addition, the best-selling author of How to Win Customers and Keep Them for Life, Michael LeBoeuf, said people buy good feelings and solutions to problems.
In short, people buy results, not products or services. Selling benefits, not features, is the best way to communicate those results, say top business trainers. Leading with benefits rather than features increases the value of what you are selling in the customer’s eye. You’ll close more sales – and deals of higher value – when customers think what you are selling is extremely valuable.
To sell benefits effectively, you need to understand a prospect’s pain points. In-depth knowledge about your products or services is also crucial as it will allow you to match your product or service benefits to the customer’s challenges.
Use price anchoring
Price anchoring plays on people’s cognitive bias to perceive pricing relatively. In other words, a product or service is viewed as cheap or expensive in comparison to the price they knew about first. This strategy is effective as customers feel like they have scored a bargain. So, in their mind, there’s no need to ask for a discount. Often this is the result of you starting with a higher price or offering less value, in order that you can offer a discount or add value at no cost.
One example of price anchoring is strike-through pricing. This is when you cross out a higher price and display a lower one. Steve Jobs used this strategy at the first presentation for the iPad.
There, at the town hall, Jobs said the iPad should be sold for $999 because of its exceptional features. Sure enough, that was the number that popped up on the screen. Shortly, however, $499, the discounted price, flashed up on the screen and flattened the first number. Apple is known for its premium pricing, so the implied savings was enthusiastically received.
Learn how to negotiate
Salespeople face objections and pushback regularly. Unfortunately, some sellers want the deal so much they simply cave when pressed for concessions. Then there are others who value harmony so much that they give in to preserve peace. Developing your negotiation skills can help you handle objections more effectively.
For example, to overcome objections you need to know what’s driving their concern. Sales negotiation training shows you how to probe for information so you can uncover the real reason for the objection.
You also learn how to anticipate what a customer may object to. Anticipating customer concerns helps you be responsive, rather than reactive. For example, you can identify concessions ahead of time that won’t thin the value of the deal. Also, when you know how to negotiate you can stand firm against customers without damaging your relationship.