Hardwood Floors June/July 2019

SALES SAVVY BUSINESS BEST PRACTICES 7 REASONS SALESPEOPLE CUT THEIR PRICE

According to our research, more than 70 percent of salespeople will cut their price if the buyer asks for a discount. It’s no wonder that buyers will ask for discounts. Experience has conditioned them to do so. Here are seven reasons salespeople cut price and some ideas on what to do about it. 1. Because they can

Buyers will try to commoditize your solution and steer the conversation toward price. It’s difficult to sell value if you're only talking price. Salespeople must preemptively take control of the sales conversation and guide it down a path of value. When the buyer focuses too heavily on price, acknowledge price, but change the conversation to total cost or value. 4. Lack of conviction If salespeople do not believe that their product is better than the competition, they will not present a compelling argument. If salespeople do not understand the value in their proposition, they will fail to convince the customer of its worth. Our latest research shows that only 36 percent of salespeople believe their solution offers the customer a compelling reason to change. Furthermore, only 44 percent of salespeople clearly understand their company’s value proposition. When presenting your value-added solution, focus on the impact of your solution, not the utility. Utility is what your product does. Impact is how your solution affects the buyer. Impact is more compelling than utility. To clearly identify your value proposition, ask yourself, “What do buyers stand to gain when they experience our complete value-added solution?” 5. Fear Those who fear losing the sale and succumb to this fear will cut the price. Fear is the most powerful pressure point. Buyers know that salespeople fear losing the business. Buyers make salespeople feel this pressure by saying, “I can get this cheaper

This is one of the strongest arguments against salespeople having pricing authority – because most will cut price when pressed by the customer. In a recent seminar, a group of managers was discussing their discounting levels. One manager explained that their salespeople could discount up to 50 percent off list price without management approval. I then asked the manager, “What is the most common discount percentage your salespeople give?” He shrugged and said, “50 percent.” Salespeople should not have pricing authority. Pricing directly impacts profitability. Therefore, pricing is strategic, and Whenmanagement tells the salesperson to get the order at any price – not to lose it – they are giving the salesperson permission to discount as heavily as needed. Whenmanagement stresses volume over profitability, they are giving tacit permission to cut the price. To be a value-added organization, management must have the courage to hold the line on price. Salespeople are guided by the management team's action more than their words. 3. Lack of skills When salespeople lack the training or the skills to hold the line on prices, they will be out-negotiated by customers. Whoever is better prepared for the negotiation will emerge victorious. management alone should have authority. 2. Mixedmanagement signals

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