Dealing with Pricing Objections: Podcast with Charles H. Green on TotalPicture.com
When I talk about trust-based selling, the question closest to the surface for most listeners is:
"What do I do when my client says to me, ‘your price is too high’?"
I sat down with Peter Clayton, of TotalPicture Radio to talk about just that. If you want to settle back and listen, you can hear that conversation in the totalpicture.com podcast interview that resulted.
If you prefer your experience visual rather than aural, you can click below the "Listen to the Podcast" box to read the transcript.
Here’s a taste, beginning with Peter’s intro:
"If you’re like most professionals, you’re not comfortable with selling. It’s not easy fighting the feeling that hyping yourself is somehow inappropriate. And it’s worse when you have to deal with objections, doing presentations, and getting rejections — or waiting for the phone to ring." — Charles H. Green
Welcome to a Success Strategies podcast on TotalPicture Radio, with Peter Clayton reporting. When I came across Charles H. Green’s article in RainToday (a fabulous sales and marketing resource), I immediately contacted Charlie and asked him share his insights with us. He is founder and CEO of Trusted Advisor Associates based in West Orange, NJ.
Charlie is the author of Trust-based Selling and co-author of The Trusted Advisor. Centering on the theme of trust in business relationships, Charles works with complex organizations to improve trust in sales, internal trust between organizations, and trusted advisor relationships with external clients and customers. He is a speaker and executive educator on trust-based relationships and trust-based selling in complex businesses.
We’re all in sales today. And for sales adverse people such as myself, learning how to present yourself, and your expertise using positive, "deal winning" sales skills has become a matter of survival.
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What to Do When a Client or Employer Claims Your Price is Too High Charles Green
Charles H. Green is Founder and CEO of Trusted Advisor Associates based in West Orange, New Jersey. He is the author of Trust-Based Selling and co-author of The Trusted Advisor.
Centering on the theme of trust and business relationships, Charles works with complex organizations to improve trust in sales, internal trust between organizations, and trusted advisor relationships with external clients and customers. He is a speaker and executive educator on trust based relationships and trust based selling.
Charlie, it’s good to have you back on Total Picture Radio.
A favorite quote of mine from Kathy Simmons who’s the CEO and President of NETSHARE is whatever job you were in before, you’re in sales now, and I really think that is a very true statement no matter what job you are in, you have to be in sales.
Charles: So you’re right, we’re always in sales no matter what we’re doing.
Peter: I want to talk to you today about a topic that I think anyone in a service industry or in sales can really identify with, certainly the recruiters I talk with and based on a recent article you wrote for RainToday, what to do when clients pressure you for lower fees and we’ve all had that happen.
Charles: Absolutely. Actually just to be precise, the actual title of that is What to Do When a Client Claims Your Price is Too High.
I think that we all tend to read that as pressuring but once you picture it as pressure, you’re already into a competitive dynamic with your potential client. Part of the trick is to be curious and not get into a fight about it.
Let’s go ahead; that’s certainly an interesting topic and probably the scariest topic for all of us who have to sell anything – what do you do with price?
Peter: And it’s really interesting the way I reinterpreted it because I reinterpreted it instantly from a standpoint of being pressured and putting up a barrier.
Charles: That’s natural; I think if you’re sort of being transparent and honest about that, I think we all immediately interpret any kind of pushback or question or reaction as pushing back at us, as pressuring us, as threatening us, and it’s part of a natural fight-or-flight response. The trick is to sort of appeal to our higher powers when things get stressful like you’re being said, “What’s with your price?” That’s very stressful and we can hear it as an attack on our integrity. We can hear it as pressure but we need to hear it first and foremost as hmm, something’s not clicking for this person. I wonder what that is. Let me try and find out and approach it from that perspective.
Peter: Let’s just take a scenario. I give a presentation to a potential client. I’ve gone through my whole spiel. I feel like I’ve really done a great job of explaining to this potential client what the value proposition is and at the end of the presentation, the potential clients says, “Well, that’s really great but your price is too high.”
Charles: It’s a scenario everybody listening to this can relate to. Let me take that from kind of a big picture. If you go through a spiel about your value proposition and I’m intuiting that to mean anywhere between 10 and 60 minutes or so, and the first thing that you allow a client to talk, whether they say, “Great, your price is too high,” you just shot yourself in the foot; you deserve it. If you’re not letting the client interact with you well before that, you’ve made a mistake in the way you interact with your client in the presentation.
If you’re doing presentations longer than 5 minutes that don’t involve considerable client interaction, you’re shooting yourself in the foot, you’re asking for that kind of response. And even more broadly, I would say the notion that what clients are buying is well articulated value proposition is just absolutely false. That is not what they’re buying.
If you ask satisfied customers in the B2B world, why did you buy something? Why did you go with so and so? Hardly ever do you hear because they made a compelling value proposition. The truth is you’ll hear things like, “Well, I think that guy’s got my back” or “He gets it,” or “I don’t know, there’s just something about him,” or “Because I can sleep at night because that person understands where I’m coming from.” Those are the reasons people actually buy, and the truth is we go through this sort of social fiction of talking about constructed value propositions and I get it; that’s what clients ask you to do but the truth is it’s not where the decision making really happens. I think we need to rid ourselves of that notion. The recruiters, and the HR business are not unique in that. I find that in consultants, accountants, actuaries, lawyers, most large industrial products manufacturers; they think that selling consists of explaining rationally the positive attributes of you’re service offering and the fact is, people listening to that are sitting back nodding their head absentmindedly, playing with their Blackberry and their eyes glaze over. It’s not what drives purchase behavior.
Peter: What does drive purchase behavior?
Charles: Well, it’s much more emotional. Most complicated buying process these go through two levels. One of them is somewhat rational. It’s like well, what do I need and where should I look for it? If I’m going to talk to recruiters, who are the 5 or 10 that I should talk to?
After having done that first screen, what you’re sitting in front of people and talking to them, doing the spiel, whatever, at that point their decisions are much more based on emotional feelings – do I trust person? Do they seem to look me in the eye? Do they seem to understand my business or are they blowing smoke at me? Do I think I can trust this person to have my interest at heart or am I suspicious they’re just feeding me a line?
So the question becomes how you deal with that kind of conversation and the pricing comments that do come up, no question, are actually a good window into that, because people will use pricing objections as a socially acceptable cover for much more complicated concerns. It’s very difficult to say to somebody “Are you selfish? Are you in it for me? How do I know I can trust you?” So we don’t say those things. We say, “Gosh, your price seems a little high.”
We need to construct conversations that allow for interaction and people to recognize the creation of trust that can happen in a dialogue.
Peter: That really gets back to what you were talking about earlier, the sort of the help me understand statement that you made if somebody comes out with something like your prices are too high, you can come back with something, “Well, can you help me understand what you mean by that?”
Charles: Yeah, that’s my trigger phrase for it. It’s when somebody says your price is too high, there are several things that they can mean by that and let’s just list a few of them.
Number one, they might be saying, “Oh, my gosh, I had no clue it’s going to cost this much. I’m really embarrassed and how do I get out of this meeting fast enough because I don’t… that’s really different than I thought.”
Another meaning can be “shoot, you know, that’s 20% more than I had budget for and I really want to do this but I’ve got a budget problem.” So they’re not going to let you in to say that right away, but that’s one they could mean.
A third one they could mean is some people just love – they work well in Middle Eastern bazaars – they love the bargaining, the haggling, it’s just something that’s fun for them. They get off on it, they enjoy it and there are people like that.
Then there are other people who yet another meaning, people who are deeply suspicious and who simply are not going to buy unless they extract a pound of flesh. It’s built into their DNA.
There’s another set of reasons around people who say, “Gosh, you know, that seems higher than what I’ve been hearing and I’m not saying no, but I don’t get it. So, help me understand how come you guys are worth more?” Now, that usually comes out phrased in a very challenging way. Your prices are way higher than everybody else. Well, maybe so, maybe not, but at least those are several different meanings of what is actually behind that statement of your prices are too high.
As you said at the beginning, we tend to experience that right off the bat as a personal attack upon our integrity, upon our economic model, and the trick is to say, “Oh gosh, well, that’s interesting reaction. Help me understand what’s behind that. What do you mean when you say they’re too high? Do you mean A for example; do you mean B…” and rattle off that list I just said. That then potentially lets you have a real dialogue. Some of those you can end up selling business into.
If it’s a budget problem for example, the truth is people can around budgets if there’s a compelling reason. So then maybe you can explore how valuable this service is to them. Maybe they haven’t understood that. If they’re hagglers, if you’re dealing with somebody who just built-in loves to haggle, get ready because you’re going to have to do that if you want the sale. There are some people who you’re built to deliver Cadillacs and oops, my gosh, they were looking for a used Ford. You know what, you’re better off walking away from that one, rather than violating your entire pricing structure and your marketing and value proposition. Don’t compromise. Some of these you walk away from and you can serve the client better by saying, “You know what, I think you should be talking to so and so.
Peter: Picking up from the article that you wrote, this is all sort of the basis of this what you talked about the intent behind the conversation that you’re having. If you ask these questions of is it sticker shock, is it your budget, then at least you can get to the intent where it doesn’t become a personal attack against you.
Charles: Well, that’s right and really deep level big picture, is what’s my objective in this meeting? If your personal objective as the seller is to close this deal, then frankly, it’s going to bleed through. The person on the other side and we’ve all been there, says I know what this guy’s trying to do, he’s trying to sell me a car before I walk out the door. He’s trying to save time figuring out, am I buyer or am I a liar and which one I am, so he can quickly close the deal and get onto a new pigeon and we really need to get rid of that way of thinking. I’m phrasing in kind of used car terms because that’s a paradigm we can all sort of …
Peter: Well, yeah and even new cars terms because I think we’ve all been in car dealerships where the sales manager has said, “What is it going to take for us to put this deal together today?”
Charles: Exactly right and that tells you, they’re in it strictly for a deal today. They could give a damn about you.
Now, In fairness to car dealers, they’re getting better. They know social media too. They understand the value of loyalty programs, blah, blah, blah, but we still have that stereotype, so let’s play with it for a second. If that’s your motive simply to extract money from the person’s wallet as soon as possible, that will come through but if you’re in a professional services business that likes to think it’s involved in relationships and likes to believe in client focus and client service, then you better get rid of that metaphor. You better instead, have an idea in your head that says, I’m here to help this person. Period. End of sentence. If after awhile, it appears that I’m not able to help them as well as somebody else, then the best I can do for them is to give them a referral to someone else.
On the other hand, if I am the one that’s right for them, then I’m going to fight like heck for them to recognize it. I don’t mind hard sell, if you’re getting the truth across to these people. If they should buy from me, then do your best to help them to recognize that, but your motive is not make the sale, your motive is to help the client and if you do that, day in and day out with all the clients and leads and prospects you run across, your reputation gets pretty fast out there and people end up saying, “Gosh, you should talk to so and so. I didn’t even buy from him; he referred me to somebody else but boy do I respect him for doing that.” That kind of word gets out.
Peter: One of the challenges my friends in the recruiting industry are facing today is they get this constant pushback from perspective clients – you know, wow with people out of work, it seems it would really easy for you to fill this req, why should I pay you 30%, which is pretty much the standard commission.
Charles: Right. You know that market better than I do, I imagine that is a very common and difficult proposition. I think although it’s generically not different than what other industries are facing too, there is a recession out there, the prevailing rates are down. You know, we know you need the business, give us a break here.
You need to look at yourself not just as being in recessionary times, but in the bottom half of a two phase cycle. There’s an up market and there is a down market and they’re not disconnected, and the way you behave in one market affects how you get treated in the other. So you need to say what’s my ongoing economic model? Have I changed it, is 30% still what’s the right model to be in this business, well then you may need to discount a little bit for being in a recession or you may simply accept the fact that you’re not going to get some business.
In my business, for example, I just turned down a job yesterday because I wouldn’t discount it. I’m doing less business than I used to, but I’m doing it at pretty much at the same rates. Other people might find that they are doing less business, because they’re discounting all their rates. I can’t tell you a particular guideline but you need to look at it in a bigger perspective rather than simply what do I need to do to win this one.
If you seriously have an economic model in your mind that you believe is valid and you can understand it, you can explain it, then explain it and stick to it and live with the consequences.
Peter: I think when you start doing – the psychology of a recession, you start doing these deep discount deals, all of a sudden, you’re finding that you’re losing money on every one of these deals.
Charles: Well, it’s very easy. I know for example in the accounting industry, you will often hear we got a 50% price lower quote than that from your competitor. Well guaranteed and I know recruiting is not that much different either, if somebody’s discounting you by 50%, they have not reinvented the business model. They’re still paying Bill Gates, the same license for Microsoft, they’re still paying pretty much the same rent, and they’re still pretty much paying the same salaries for recruiters, that 50% of the come on to buy new piece of business and guaranteed they will raise their rates to get back to making money instead of losing it within… the only question is how long? Six months, whatever. So the only question for the client is, do you want to continue switching service offering providers every six months, or do you want to go with a longer relationship? And my general advice is find the ones who want to go with a longer relationship and leave the others to your competitor. Let them deal with the switch suppliers every quarter kinds of client.
Peter: Charlie, what are the current repeat offenders in your client base? By that, I mean what issues keep coming up over and over with your clients that you’re dealing with?
Charles: Call it new technology or social media, I think that is – all that stuff is very much for real and businesses are saying, “Well, we can no longer afford to do two day off sites for all the gang.” Hey, 10 years ago they were doing one week long off sites and then it went to two days, and now they’re saying we can’t do that.
On the other hand, doing webinars, we’ve been webinared to death. One issue people are struggling with is what do we do with this technology and still remain human and connected because there’s a downside to never seeing everybody either. I find clients are struggling with that balance; how do we integrate all these new dispersed non-personal connected attention deficit disorder technology? How do we leverage all the economic benefits and still not blow up the company because nobody knows anybody. That’s a big issue.
Peter: You know, to me at some point, you got to show up. If you want to build a lasting relationship with someone, at some point you have to have a face to face discussion with that person.
Charles: I think so too. I was talking the other day with a partner at one of the big four and he said, “You know, we’ve had our interim travel budgets frozen of a year, and you can do that for about a year, maybe you can do it for two, after that,” he said, “you destroy any sense of fraternity in what is essentially a fraternal partnership kind of a business,” and he’s got a point. They either need to change the nature of the business or they need to get back to talking to each other.
Peter: Charlie, it’s really been great to have an opportunity to talk with you today.
Charles: Likewise. Thank you.
Peter: Anything I didn’t ask you, or any part of this equation that we didn’t discuss that you think is important for the listeners to be aware of?
Charles: I will just take that opportunity for a quick one sentence setup. Increasingly, we’re finding something that was always true, which is business is about people, it is personal. The old line in The Godfather, “It’s not personal, it’s business,” was wrong. It is personal, it is business and a lot of these enabling technologies are simply helping us to rediscover that very proposition.
It is personal, don’t pretend it isn’t.
Peter: Again, thank you so much for your taking time to speak with us today.
Charles: Thank you.
We’ve been speaking with Charles H. Green, CEO of Trusted Advisor Associates. We’d love to hear your thoughts and opinions on this topic, visit Charlie’s feature page in the Success Strategies Channel of Total Picture Radio. That’s TotalPicture.com to voice your opinion. Remember, you can also subscribe to Total Picture Radio on iTunes.
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This is Peter Clayton reporting. Thanks for dialing up your career by tuning in to Total Picture Radio, the voice of career and…
Nice to hear your voice Charles. Great content. Do you have any other content I can listen to rather than read?
Charlie, It is interesting how you went back way before a potential client gets to the point of asking about price. You laid out all of the factors that lead up to that point. Very thought-provoking!
However, the comment that really struck a cord with me was the statement, "it’s not personal, it’s business." Many people really believe that it is all business. I was in a meeting once and a VP referred to a project as "his baby." The CEO said, "this is business, you shouldn’t have any personal attachment to the project." It was almost as if that one sentence summed up much of what was wrong with the company I worked for. No one cared enough and people were not atached to their work.
Keep changing our perspective!
Great interview Charlie and you are so right … it IS personal. Buying is an emotional decision. There are no commodities any longer in our competitive business climate because there are many ways we can differentiate our offering. It’s about getting to the emotional agenda of the decision maker.
The biggest mistake I see sales people make is they ask a single question that uncovers a potential need from a prospect and they immediately begin "pitching" their value proposition. The best sales professionals will ask more probing questions to understand the challenges of why they have the need and an understanding of their "personal" wants. Once you get to their "personal agenda" of the purchase decision you can position yourself as a solution provider or "trusted advisor" which vitually eliminates price pressure.
Great information and love following your blogs.