Responding to 'It Costs Too Much'
There's a point in nearly every sales situation where the customer says something like "it costs too much" or "the price is too high." The dumbest thing you can do at this point is to trot out the kind of canned answers they teach in sales training courses.
1. Uncover the Real Objection
When you encounter a price objection, find out whether it's a smokescreen for objections to your product or service. To do this, ask the following question:
"If we set price aside for a moment, do we have the products that you want to buy and the support organization that you want to buy from?"
That's powerful stuff, because it smokes out reality. Here's how.
If the customer's response is "no" or "maybe," price is not your only problem and may not even be the problem. In this case, you'll need to ask further questions to determine what concerns the buyer has with your product and/or support. Handle those objections first–because negotiating price is meaningless if the customer does not want to buy what you are selling.
For example, if a customer has a global operation and you don't have service centers outside the United States, that prospect might question whether your firm can adequately provide service after your product has been purchased. Your challenge now is to describe why remote service from the U.S. is a viable option.
On the other hand, if the customer's answer is "yes," it's entirely appropriate to focus on price.
Your job is now to figure out how the customer is assessing your price. Is it "too high" compared to a competitor? Is it "too high" to fit into a budget? Is it "too high" relative to the perceived economic benefit of having the product?
These are all quite different situations and demand a different response. For example, if a competitor's product is cheaper, you need to explain why your product is still the better value. Contrariwise, if the price doesn't fit into the budget, you may need to introduce payment terms.
2. Find Out: Objection or Condition?
Once you understand what's going on, you need to determine whether you're dealing with it's whether the objection is actually a condition. This is absolutely critical: Objections are negotiable, but conditions are non-negotiable.
To discover whether an objection is actually a condition, ask the following question:
Is this a big enough concern that it will keep you from getting what you want to buy?
You will get one of three answers: no, maybe, or yes. If the answer to the question is "maybe" or "no," you're dealing with an objection.
If the answer is "yes," you're dealing with a condition.
For example, if a "price is too high" objection is based upon a comparison with a competitive product, it is possible to negotiate the objection away by differentiating your product so that it seems to be the better value.
However, if the "price is too high" because the prospect literally does not have any money (say, it just filed bankruptcy), that's a condition. It's pointless to attempt to negotiate it away, because the money just isn't there to spend.
Similarly, if a "you don't have feature X" objection is based upon a preconceived notion of how to solve a particular problem, you can negotiate the objection away by changing the prospect's notion of how to solve that problem.
If, on the other hand, the "you don't have feature X" objection is based upon a statutory requirement to have feature X, that's a condition. You're out of the running, so you might as well withdraw from the opportunity.
3. Show Empathy to the Customer
Once you've confirmed that the objection is an objection–rather than a condition–you can begin to position the discussion so that you and customer become partners in the process of coming up with a solution.
Start by stating that you understand and empathize with the customer's concerns. For example, if the objection is price relative to a competitive product, you would say something like:
"I completely understand. Price is extremely important to you, and you are looking to choose the vendor that will provide the best value for your company."
This kind of statement puts you and the customer on the same side of the issue, and helps prevents the customer from assuming that you think the objection is foolish.
4. Identify the Problem to Be Solved
Negotiations become difficult when one or both parties view an objection as a conflict between two positions, where the person who abandons his position is the "loser" and the person who sticks to his position is the "winner."
To avoid this kind of impasse, say something like:
"Let's put that objection on the table and see if, between the two of us, we can't figure out a creative way to get you what you want to buy."
The idea is to strip the objection from any emotional attachments that both the buyer and seller may have associated with it.
5. Brainstorm Possible Solutions
Ask the customer to participate, then try to come up with every possible combination of ideas and events that would allow the objection to become overcome. Even ideas that might seem ridiculous can be entertained at this point, because the determination about what approach makes sense will be made after all the ideas have surfaced.
Between virtually any buyer and seller, there is always some series of events that can take a buying decision from "no" to "yes." Once those avenues have been laid out, you can then guide the discussion to the ones that are practical.
For example, an objection about the lack of global service might be overcome by a guarantee of Internet support from a central location. Similarly, a budget objection might be overcome by scaling down the purchase or coming up with payment terms over time.
Note: Bob Nicols is a true genius when it comes to sales strategy and tactics. I doubt whether I've done more than scratch the surface of his ideas, so if you're interested in this kind of advanced sales training, go ahead and contact him directly.
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GEOFFREY JAMES | Columnist
Geoffrey James, a contributing editor for Inc.com, is an author, speaker, and award-winning blogger. Originally a system architect, brand manager, and industry analyst inside two Fortune 100 companies, he's interviewed more than a thousand successful executives, managers, entrepreneurs, and gurus to discover how business really works. His most recent book is Business Without the Bullsh*t: 49 Secrets and Shortcuts You Need to Know. If you enjoyed this post, sign up for the free weekly Sales Source newsletter.