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Discounting, Price, Value and Psychology
Back in 2008, RainToday.com published Fees and Pricing Benchmark Report: Consulting Industry in which they analyzed a ton of data from 645 consultants. There were six price-related topics. One in particular has stuck with me over the years: the analysis on discounting.
As the authors point out, discounting is Ground Zero for hypocrisy in pricing. Everyone decries it – yet everyone (actually, 65%) does it. It reminds me of dieting – “I know I shouldn’t, but this one little brownie won’t hurt. And I’ll get back on the wagon again tomorrow.”
Couched this way, the problem of discounting is one of willpower – we all know we should stick to standards and principles, yet we are morally weak at the moment of truth.
I don’t think that discounting is a moral problem, however. Instead, it is one of bad thinking. And it centers around two false beliefs:
- the belief that certain customers are inherently “price buyers”
- the belief that feeding the price beast will make it go away.
The truth is that price is a proxy for several different fundamental buyer concerns. It has no meaning inherently. Price per se is a clearing factor, the point at which money exchanged balances with the various benefits received. And this balancing point is not just “value” as most firms mean that term; it is very much tied up with the psychology of the buyer.
What Clients Mean By Price Objections
It seems obvious. A client expresses an objection to a price. They say they want a lower price. Clearly – they are concerned about money, value and price. Right? So the only question is, shall we discount, and by how much. Right?
No, and no. Here are four distinct things that buyers are saying when they say they want a lower price. And not one is really about price.
- Mismatch with competitors. Frequently clients faced with competitive bid situations will say, “Company X is cheaper than you by 25%—you need to discount to stay in the game.” Let’s assume the claim is true on the face of it. There are two reasons for one firm pricing 20% below another; one is intentionally buying the business, with the intent to raise price later. The other—and most common—is that the client is comparing apples to oranges.
- The solution to the first is easy: explain to the client why your competitor’s cost structure is virtually identical to yours, and why a 25% discount is inherently unsustainable—therefore the client is facing a relationship vs. transaction issue. If they choose transaction, then be glad your competitor just trashed their bottom line to buy a price-shopping client. They’ll eventually be back.
- The solution to the second is to have the client carefully compare features of your bid with features of competitor’s bid. You know where costs get built up and where they don’t; have the courage to give your client the data to do the comparison.Competitive mismatches aren’t really price objections; they are fundamentally rooted in a misunderstanding of either industry economics or project design economics. The answer is not discounting, but education.
- Mismatch with budget. Sometimes buyers just have a limited budget. They feel trapped, and often a little embarrassed that they have asked you to quote into a situation in which they under-budgeted—or over which they have no real control. Their natural reaction is to push back, in hopes that you can solve their problem without their having to confess their embarrassing ignorance, or go back to their boss for more money.This too is best not seen as an “objection;” it is a simple constraint of the world—budget vs. cost. Again, discounting just confuses the matter, and reinforces the idea that the client can afford to not be open and transparent with you.
- Mismatch with expectations. Only experienced buyers do a good job of guesstimating price quotes from professional services firms. They tend to focus on a basic mental model of time vs. rate, and naturally under-estimate each. (Recall your own shock at first finding out your billing rate as a newcomer; and the shock of industry hires when they first see time estimates for what they thought was just a request for a data-dump from an expert).This “objection” isn’t an objection at all—it’s just the natural human expression of surprise and dismay when we find out our expectations didn’t match reality. Discounting just confuses them more, and rewards their delusions for the future.
- Mismatch with motivation. Professional services firms suffer disproportionately from the delusion that clients make decisions on purely rational, monetary, statistical criteria. Clients, like everyone (including ourselves) make our decisions with the heart, and justify (rationalize) them with the brain.A basic human need is to make sure we didn’t get a “bad deal.” You can give all the “value” data you want, but unless a client feels you are being straight with them and/or they’re getting the best possible “deal,” they will remain suspicious.
- When suspicious, our innate tendency is to bargain, to determine some subtle psychological resistance point, just as we would at a bazaar or yard sale.This behavior has nothing to do with price per se, and everything to do with transparency of your economics and the prices others have gotten from you.Not paying attention to motivations leads to discounting, which has the perverse effect of convincing buyers that—aha!—you really were holding out on them! Which leads them not only to haggle again the next time, but to fundamentally mistrust you because you quoted them a price that was an attempt to “get by.”
What to Do About Price Objections
So what’s to be done? We all know the answer – don’t discount – but we think it’s a moral weakness, a failure of principles. It’s not– it’s a failure of understanding the reason for price objections.
Armed with the truth—that it’s not about price, and it never is about price – we can do the right thing; be curious, probe and sensitively get one level deeper when presented with price objections.
Back to RainToday’s survey. Why do 65% of consulting firms discount, even when, as the authors point out, the average 11% reductions could go straight to the bottom line?
It is simple fear – fear of losing the deal, particularly—which drives us inward rather than outward. Rather than asking curiously, “Please, help me know what’s behind that?” we fearfully back off in the face of the aggression in the client’s tone – and start discounting.
The only two good reasons to discount are:
a. to reflect real cost differences due to volume purchases (which is great – you pass on some lower cost of sales, everyone’s happy), or
b. to buy your way into a strategically new piece of business. But be careful when you do so, because only certain clients buy that way.
The most tragic result of inappropriate discounting is not even the lost profit; it is that we confirm the client’s suspicion that we are untrustworthy. It leaves the client thinking, like Sir Winston Churchill’s apocryphal line, “we have now established what you are, we are merely haggling about the price.”
When to Offer a Low Price
Last week, we talked a bit about pricing low to get the sale – and how that is not always the best option. But when is it okay to offer a low or lower price? There’s always an exception (or two) to every rule out there. So, if you want to know a bit more on when you should offer a discount – read on.
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Few things in business have such dramatic impact on customer perception as how you handle your pricing, particularly when and how you offer discounts.
People may evaluate your products or your service by averaging out multiple experiences. But drop your price just once, and you’ll see how hard it is to recover. For a current example of how powerful your pricing image is, consider Bill Ackman’s painful failure to revamp the image of JC Penney—away from frequent discounts to everyday low prices as a strategy.
Yet in professional services and complex businesses, we play with offering discounts all the time. Shouldn’t we have a strategy behind it?
Don’t Just Stand There: Stand for Something
There is no one “right” approach to offering discounts. Your approach will vary with your business, your objectives, and your markets. But there are some things every approach should do:
- You should have a rule for when to discount.
- That rule should be easily explainable to clients.
- You have to be willing to live by the rule.
That may sound obvious. But how often have you heard things like, “Don’t tell Bill that Joe got that price. It’ll only encourage him to want it,” or “Those guys’ll do anything to get the business.” Those statements indicate a lack of policy, and that’s death on your reputation.
What to Stand For
Again, your business will vary. Here’s what I decided for mine. I run a high-end professional services business, offering speaking, training, coaching, and related services. I want to be known for high quality, professionalism, and subject matter expertise. And in my case, because the subject matter is trust, I need to be seen as completely above suspicion.
It’s clear, then, that I need to articulate and live by some rules about when to discount. Here’s what I came up with over the years.
1. Frequency. I want to be at the opposite end of the spectrum from a JC Penney strategy of frequent discounting. I don’t want clients looking for bargains. If they’re looking to price shop, I want to send a subtle message that they’re in the wrong place.
2. Exceptions. To help that message, I need to be very clear about where discounts are appropriate. In my business, I can clearly state three such situations:
Volume. In my business, perhaps the biggest cost is cost of sales (the time, expense, and investment it takes to generate professional fees). It stands to reason that if someone can reduce my cost of sales, I have room to pass some of those savings along in lower prices.
The biggest example of that is a simply volume discount. The economics of selling one training session to 10 clients vs. selling 10 training sessions to one client are pretty clear. I am happy to receive multiple orders, and I’m happy to offer volume discounts to reflect it.
For me, volume discounts are easy to explain and easy to justify.
Special Situations—For Me. Sometimes I want to work in a new industry or with a novel offering. Those situations are as important for me as they are for the client. In those cases, I will offer a significant discount. I don’t want to shave nickels; I want to send a message about what is important and what isn’t. And in those cases, it’s about the learning. Those kinds of discounts rarely happen.
Special Situations—For the Client. Non-profits never have the kind of money that corporations do; most associations are limited as well. I don’t say yes to all those requests, but when I do, it’s only reasonable to price “off-label.” (Government is a special case, and one I won’t go into here.)
3. Non-Exceptions. That’s about it. That leaves a lot of other situations where I choose not to discount. It’s worth pointing them out:
Pleas for budget. Sorry, I have a list of charities, and corporations with a squeezed budget this year are not on the list. And make that never if you’re in the pharmaceutical or financial services industries, or if you have office space in midtown Manhattan. I have convinced myself that I need your money more than you do.
Bargaining. I have a simple way of declaring that this is not a bazaar: transparency. I explain my business model, explain when and how I give discounts, and—that’s it. I recall one client who, after our initial phone call, said, “I assume that if we go ahead, you’ll grant us our customary 20% discount.” He assumed wrongly.
The Positive Alternative. “Just say no” may (or may not) be a good strategy for drug usage, but it’s not a satisfactory answer to a client on the receiving end. None of us like to be told no, even with a great explanation.
Over the years, I developed another business practice that turned out to have a great side benefit: making people appreciate my saying “no” to discount requests. That practice is to simply take a few minutes extra to talk with them about their situation and refer them to someone else who can help them.
I am a very small player in all the markets I play in. I am far from the only one providing great service. If someone doesn’t happen to fit my business model, they may be caviar and champagne for someone else’s model.
It costs nothing to spend a little time thinking about alternatives for clients who don’t quite fit with my needs, and it generates huge amounts of goodwill. It’s a small investment with a big marketing return: they may come back when they have a need that is a fit with me, and they may speak well of me to others. And—they’re no longer complaining about how I don’t discount.
Again, my model is not the only one. You have to decide what’s right for you. But whatever it is, it should be clear, it has to be explainable, and you have to be willing to live by it.
This post originally appeared in RainToday.com
Lowering Your Price: When to Drop It, and How
Few things in business so dramatically affect customer perception as how you handle pricing – particularly when and how you offer discounts.
People may evaluate your products or your service by averaging out multiple experiences. But drop your price just once – and see how hard it is to recover. For one large-scale example, recall Bill Ackman’s painful failure to revamp the image of JC Penney – away from frequent discounts to everyday low prices as a strategy.
And yet, in professional services and complex businesses, we play with offering discounts all the time. Shouldn’t we have a strategy behind it?
Don’t Just Stand There: Stand for Something!
There is no one “right” approach to offering discounts – I’m convinced that your approach will vary with your business, your objectives, and your markets. But there are some things every approach should do:
- You should have a rule for when to discount
- That rule should be easily explainable to clients
- You have to be willing to live by the rule.
That may sound obvious. But how often have you heard things like, “Don’t tell Bill that Joe got that price – it’ll only encourage him to want it,” or “Those guys’ll do anything to get the business.” Those statements indicate a lack of policy, and a lack of policy is a reputation-killer.
What to Stand For
Your business will vary. Here’s what I decided for mine. I run a high-end professional services business, offering speaking, training, coaching and related services. I want to be known for high quality, professionalism and subject matter expertise. In my own special case, because the subject matter is trust, I need to be seen as completely above suspicion.
It’s clear, then, that I need to articulate and live by some rules about when to discount. Here’s what I came up with over the years.
- Frequency. I want to be at the opposite end of the spectrum from a JC Penney strategy of frequent discounting. I don’t want clients looking to find bargains; if they’re looking to price-shop, I want to send a not-subtle-at-all message that they’re in the wrong place.
- Exceptions. To help that message, I need to be very clear about where discounts are appropriate. In my business, I can clearly state three such situations.
Volume. For most consultative organizations, the biggest cost of all is cost of sales (the time, expense and investment it takes to generate professional fees). It stands to reason that if someone can reduce my cost of sales, I have room to pass some of those savings along in lower prices.
The biggest example of that is simply volume discounts. The economics of selling one training session to ten clients vs. selling ten training sessions to one client are pretty clear. I am happy to receive multiple orders, and happy to offer volume discounts to reflect it.
For me, volume discounts are easy to explain, and easy to justify. Are they for you as well?
Special Situations – For Me. Sometimes I want to work in a new industry, or with a novel offering. Those are as important for me as for the client. In those cases, I will offer a significant discount. I don’t want to shave nickels, I want to send a message about what is important to me and what isn’t, and in those cases it’s about the learning. Those kinds of discounts are very infrequent.
Special Situations – For the Client. Non-profits never have the kind of money that corporations do; most associations are limited as well. I don’t say yes to all those requests, but when I do, it’s only reasonable to price “off-label.” (Government is a special case, one I won’t go into here).
- Non-Exceptions. That’s about it. That leaves a lot of other situations where I choose not to discount. It’s worth pointing them out.
Pleas for budget. Sorry – I’ve already got a list of charities, and corporations with a squeezed budget this year are not on the list. Make that “never” if you’re in the pharmaceutical or financial services industries, or if you have office space in midtown Manhattan; I have convinced myself that I need your money more than you do.
(An exception: if you insist on driving my price down, then I am convinced that you need my business worse than I need yours – because what’s at stake for me is my integrity of pricing with all my other clients – present and future! I can’t afford to say yes to such situations.)
Bargaining. I have a simple way of declaring that this is not a bazaar – it’s transparency. I explain my business model, explain when and how I give discounts, and – that’s it. I recall one client who, after our initial phone call, suggested, “I assume that if we go ahead, you’ll grant us our customary 20% discount.” He assumed wrongly.
The Positive Alternative. ‘Just say no’ may (or may not) be a good strategy for drug usage, but it’s not a very satisfactory answer to a client on the receiving end. None of us like to be told ‘no,’ even with a great explanation.
Over the years, I developed another business practice which turned out to have a great side benefit – making people appreciate my saying ‘no’ to discount requests. Yes, that’s right. That practice is to simply take a few minutes extra to talk with them about their situation, and refer them to someone else who can help them.
I am a very small player in all the markets I play in. I am far from the only one providing great service. If someone doesn’t happen to fit my business model, they may be caviar and champagne for someone else’s model.
It costs nothing to spend a little time thinking about alternatives for clients who don’t quite fit with my needs, and it generates huge amounts of goodwill. It’s a small investment with a big marketing return – they may come back when they have a need that is a fit with me, and they may speak well of me to others. And – they’re no longer complaining about me not discounting.
Again, my model is not the only one. You have to decide what’s right for you. But whatever it is, it should be clear, explainable, and you have to be willing to live by it.
An earlier version of this blogpost appeared in RainToday.com
When Customers Demand to Know the Price Up Front
Q. What should you say when the potential customer says, “Before we start discussions, I need you to tell me your price.”
A. Tell them your price.
What a concept.
I know, I know. Most of you reading this disagree with me, and you’re in good company. Many respected sales writers suggest just the opposite. But on balance – with all respect – on this point, I think they’re wrong. Here’s why.
Offering Price Up Front – Pro and Con
The case against answering an upfront question about price boils down to two arguments.
- You haven’t had a chance to anchor price to value.
- By answering an up-front price question, you encourage price-based buying.
By both of those arguments, you have lost control of the conversation. And that, most writers say, is a bad thing.
But that’s precisely the problem. If you approach sales by trying to be in control from the very outset, you’re already in trouble. Customers have never liked being controlled, and in this day and age they like it even less. And increasingly they don’t have to put up with it.
Aretha Franklin Selling
There’s basically one argument in favor of answering the question, and it’s simple: R-E-S-P-E-C-T.
If you respect someone at first meeting, they are positively inclined toward you. They tend to then trust you, and in turn treat you with respect.
If you refuse to answer the question, you are disrespecting the buyer, in at least one of several ways.
- You are trying to control them – and nobody likes being controlled
- They expect you to try and evade the answer, and you just confirmed their suspicions
- They think you have something to hide
Any way you cut it, a refusal to answer a direct question, whether it is a direct refusal or an ‘artful’ (read ‘obfuscatory’) refusal, is a statement that you either know more than the buyer, or do not grant the buyer the privilege of asking their own question, or both.
And buyers resent it.
The Positive Effect of Respect
Most buyers approach most sellers with a certain degree of caution – they expect the seller to try and control them. And, most sellers oblige them by trying to do exactly that. Which means the initial conversations are about dancing around questions, jockeying for advantage, each challenging the other.
But what if, right at the start, you opted out of that game? What if you could immediately convey to the buyer that you are not trying to control them, that you’ll answer any question they have, that you’re actually there to help them, rather than manipulate them to your ends? What if you could do that convincingly?
Then they’d be more likely to trust you. If they trust you, then they’ll listen to you. And if they’ll actually listen to you, your odds of making a sale go up.
Establishing Respect by Answering the Price Question
Buyer: I want to know more about your XYZ offering, but first I need to know your prices.
Seller: OK, sure. It’s $8000 for the annual plan, or $1,000 per month for 12 months.
[Pause. And seller, do not fill in the pause]
Buyer: Um, OK; so, it’s a better deal for the annual?
Seller: It depends on what you want; 2/3 of our customers do choose the annual plan, but 1/3 choose monthly.
Buyer: Other than cash flow, why would I choose the monthly plan?
Seller: For half of them it’s just cash flow; but others are intending to switch CRM plans within the year, so they value the flexibility.
Buyer: How does the offering relate to our CRM?
Seller: [discussion continues about product features, value, etc.]
Note there is no scripted answer to this dialogue, other than the first response: “It’s $8000 for the annual plan, or $1,000 per month for 12 months.” After that, everything is a response driven by the customer’s questions.
This is not rocket science – but it is science nonetheless. Call it the science of human relationships. When someone does a favor for us – like showing us respect – we unfailingly return the favor, by showing respect in turn. In sales, the currency of respect is listening.
If you listen to your customer’s question, and answer it directly, you are paying the currency of respect. The customer quickly gets the message – ‘This person is not trying to control me, they are respecting me. I’ll ask a few more questions, and if I continue to get that respect, I’ll show them respect in turn, by listening to what they have to say.’
If your service is competitive, this form of sales interaction will get you over the finish line. You end up with better sales results than if you had tried to control the dialogue in the first place.
The paradox: you end up getting better results by resolving to give up control over the customer than if you had tried to control them in the first place.
Half of What You’ve Learned About Sales is Wrong
Maybe you’ve heard the old line, “Half of advertising dollars are wasted – you just don’t know which half.” Something like that is true in sales – except that you’ve got a much better chance of telling which part to keep.
(Many thanks to Chris Downing and Anthony Iannarino for helping develop this thought).
The Challenge
Take this quiz, based on your own business:
1. I think closing is:
- obviously critical to selling
- one of the more harmful concepts in sales
2. I think cold-calling is:
- a tough, but necessary, and improvable process
- to be avoided like the plague
3. I think the customer wants:
- a clear value proposition
- a relationship
- a fast, cheap transaction
4. The critical job of sales management is:
- motivation
- training
- supervision
5. Price should be:
- mentioned up front
- not mentioned until value is established
- not talked about between sophisticated people
Now total your scores: Give 1 point for each a), 2 points for b) and 3 points for c). Now add them up. What does it all mean?
Pretty much nothing, I’m afraid.
It. Simply. Depends.
One Size Doesn’t Fit All
We all know this, of course. B2B is not like B2C. Internal customers are not like external customers. Inside sales is not like external sales. High-ticket items are sold differently than low-price point items. Intangible services are not the same as tangible goods.
We know that. And yet – an enormous amount of sales advice out there doesn’t make the distinctions. Here are some examples from page 1 results of Google searches on some terms:
15 Ways to Improve your Closing Ratios. Probably great advice. For someone. Is it great advice for you? Darned if you can tell by reading the article, because it’s addressed universally.
How to Write a Value Proposition. An excellent article, by an excellent organization. But where does it rank in the scale of importance to your business?
When to Quote Price: Useful information in dealing with “be-backs” (i.e. “We’re just not sure, we’ll be back”). But how important are be-backs if you’re selling systems integration projects?
How to Turn a Relationship Into a Sale. Great advice for an industrial paper business; but do I want the counter guy at Dunkin’ Donuts establishing a relationship with me?
And I could go on; and so could you. I didn’t pick bad articles – those are pretty good ones, some of them excellent. But – they don’t explicitly deal with the relevance of the advice to you.
Fitting Your Size
How, then, to figure out what advice to take? You might start by characterizing your business across several continuums (continua, if you prefer):
For example, draw five lines (one for each characteristic), connecting the two endpoints:
a. from frequent to infrequent purchases
b. from high to low price point
c. from tangible to intangible goods
d. from high margins to low margins
e. from transactional to continuing revenue relationships
Then mark the midpoint for each continuum.
Now – for each issue – on which side of the middle does your business fall?
Now ask yourself – what’s the right answer for the other side of the spectrum? And what’s the right answer for my side? How and why do they differ?
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A little reflection can go a long way. If you’re a law firm, and you’ve figured out you need sales training (which you probably do), don’t go hiring sales experts from retail B2C businesses. If you’re selling web-hosting services, you may not need the world’s best advice on building deep relationships.
Another way to put this might be: if something doesn’t feel right to you – your gut may be telling you something valid. Have enough courage to at least ask questions about it.
Don’t just do what someone who wrote about selling tells you. Their advice might be in the “other half” of sales advice – the wrong half for you.
It depends. On you.
Free Medium Coffee and Warm Fuzzies
What did the new Dunkin Donuts store owner do right? The sign says it all…”Free Medium Coffee”.
Do you think he drove traffic to his new store? Lots. I had to look twice at the second line; “No Purchase Necessary."
That’s different.
Free just feels different.
New businesses offer discounts, coupons and rebates all the time. They imply, “We’ll give you a good deal if you come check us out.” Free, on the other hand, says, “We’re willing to invest in a relationship with you and know we’ll need to earn your business.”
Now flip it. How obliged do you feel after hunting for the coupon, clipping it out, sorting it by category and then remembering to use it before it expires? You feel like they owe you the coffee, don’t you? At best coupons and other promotions offer a balanced exchange; at worst, buyers feel distrust about the process. How much pain have you felt due to coupon or rebate issues? One study suggested that 50% of all rebates never get turned in.
Now let’s look since the savvy store manager erected the sign:
Day #1 – On your first visit, you look around as you approach the counter with caution. Suspicious of a catch, you place your order, “I saw your sign and I’d like a free medium coffee.” When the person on the other side of the counter smiles and promptly pours your Dunkin Decaf, you wonder if the other shoe will drop. When you realize there’s no string attached, they just went from stranger to friend.
Day #2 – You know you’re getting a donut with the coffee. Why? Because you feel a strange sense of gratitude for a second cup of free coffee. I bet you never felt a sense of appreciation after using coupons? (By the way, after day #1, you told at least three friends about the free medium coffee because you like to give away free stuff too, even if it’s someone else’s).
Day #3 – “Dunkin Decaf, cream, no sugar Mr. Slatin?” says the lady in a pink and orange uniform. “Thanks for remembering Janice, let me also get a half dozen glazed and a half dozen with sprinkles, an egg, bacon and cheese croissant and a box of munchkins.”
What just happened?
The seller created value by giving you something without expecting anything in return. Did he have a previous relationship with you? No. But now he does. He changed the feeling you had about his product or service from neutral to positive. Warm fuzzies. Why are warm fuzzies important? Well despite popular belief – all decisions are based on emotion and justified by logic. Dunkin Donuts went through your mouth to get to your heart.
What’s your “free medium coffee”?
Meeting Price Objections from Trust
When the customer says, “I don’t know, that sounds kind of high to me…” what do you do? How does Trust-based Selling™ handle customers’ concerns regarding price?
First, note the sales jargon for this situation—it gets called “objection handling.” The wording is revealing. It suggests we have a conflict with our customer, an oppositional situation—their side is objecting to our side. And our job is to “handle” it. Kind of like a counter-move in wrestling.
But what if you’re trying to create a trust-based relationship with a customer? In that case, this isn’t about “objections,” much less “handling” them. Instead, it’s about a mutual inquiry as to whether joint value can be created—or not. Price is—at bare minimum—a simple and necessary part of the discussion.
But much more importantly, when we hear price comments as “objections,” we immediately jump to a place of high self-orientation—the trust-destroying denominator in the trust equation. Omigosh, they’re pushing back against me—I’ve got to counter-attack.
Thought one in responding from trust—it’s not about you. In fact, it’s never about you. It’s always about the customer. What looks like a threatening price objection is actually a great opportunity to learn something important about a customer, and a chance to add value right in the sales process itself. Here’s why.
Most price “objections” are simply expressions of dismay or concern—feelings—on the part of the customer. Most fall into five categories. Helping the customer identify these feelings and these categories is a positive help in and of itself. The actual words spoken can be identical: “— that sounds kind of high to me.” But they mask very different meanings:
The categories are:
1. Naïve. Uh oh, that’s way bigger than I thought. Subtext: "I feel ashamed; I didn’t understand what was involved in buying this product/service before talking to this person."
2. Out of Date. That’s more than we can afford. Subtext: "I feel embarrassed—I invited this person in thinking we could do it in this year’s budget. Now I see that won’t work."
3. Engineer. Wait a minute, I don’t see why it should be that much. Subtext: "That doesn’t make sense—they must be quoting me the fully-loaded version, let’s reverse engineer it."
4. Comparison Shopper. Hey wait—how do I know you’re not screwing me? Subtext: "I want to get a good deal, maybe not the best, but in the top half, so I need to know the real prices."
5. Bazaar Lover. Aha, the game is on! Subtext: "I don’t care what you quote me, I’m going to get 20% off! I love this part of the buying process!"
Each of these subtexts requires a very different response. The good news is—the responses are obvious. All we have to do as the seller is to ask! Ask the buyer what’s behind their words; what kind of concern are they expressing when they say, “I don’t know, sounds a little high to me.” What are they feeling?
Our job is simply to explain that all reasons are valid, and that we simply need to know which is operative here. Simply by stating them for what they are, buyers one and two feel relieved of their shame and embarrassment. And while this transaction won’t happen, you just vastly increased the odds of them buying from you in the future.
Number three becomes a simple job of itemizing features and costs—as long as we are not attached to the margin on every little feature. An easy sale.
Number four is solved by the willingness to be transparent, within the bounds of what’s legal. Another easy sale—as long as your price is fair.
Number five just wants to have fun. So build in a little upside, and be prepared to give a little more up; and enjoy yourself along with the buyer.
This is not about “handling objections.” It is about using curiosity and customer focus to build relationships. The profits follow—as long as we remember we’re supposed to be on the same side of the table as our customer, and in a relationship that is the sum of multiple transactions.