Hello my friend!
One of the most common objections salespeople hear is "Your price is too high."
How do we manage this objection?
First, we need to understand the context of the price objection.
But very often, it's not about the price but something else.
Understanding Price Objections
Price objections can mean:
Lack of budget
Perceived lack of value
Comparison with competitors
Behind these objections lie psychological factors such as fear of making a wrong decision, the desire for a bargain, or even ego.
Anticipating and understanding these objections requires deep knowledge of your client's business challenges and results.
You must quantify the impact through deep client conversations, collaboration, market research, and an acute awareness of the competitive landscape.
You and your businesses can get ahead of the game by anticipating and having a solid sales strategy and process in place.
First, confirm if it's a logistic issue or a value issue.
If it's a logistic issue, that's great news!
It means your client understands and appreciates the value and impact of your product and services but needs your help and support, and this is something that you can work on with your client.
What are examples of logistic issues?
The budget is set for the financial year; your proposal is 2M. They can only spend 1.2M.
Your lead contact person's decision-making revenue approval is below 1M. He needs his boss to approve the 1.1M project, and he doesn't like asking for approval.
Your client understands the importance of the solution. But he is very busy managing other projects and considering pushing back another 8 months.
Now if it's a value issue, you need to slow down, go back to the ORD framework, and qualify the opportunity.
How to manage price objections
1. Acknowledge, Understand, Resolve
Here is a highly effective framework you can use to resolve price objections.
Acknowledge: Verbally and visually show that you are taking time to understand the issues.
Understand: Ask questions to truly grasp the objection and understand what is really happening.
Resolve: Collaborate to reach a mutual resolution for the actual issues.
Acknowledge
Slow down and pause. When faced with a price objection, it's important to take a moment and slow down rather than rushing into a response. This lets you fully comprehend the customer's concern and formulate a compelling answer.
Appreciate the feedback. Show appreciation for your clients sharing their concern feedback, as it offers valuable insight into their perspective and can help improve your approach.
Empathise. Express empathy to show understanding and build trust with the customer.
Do not necessarily agree. Maintaining a balanced perspective and addressing the objection based on its merits is key. It may involve providing additional information or context to help the customer better understand the value proposition.
Understand
Understand the REAL Issues
The true nature of a client's concern often needs to be clarified. If we assume or guess the concern, we might address the wrong issue, respond poorly, or introduce complexity. It's crucial to guide the communication with the client to truly understand their concerns, allowing us to provide a more accurate and effective response.
For example, how big is your company? I'm afraid you won't be able to provide the scope of work we require.
Is the question size or capability?
Response: We are a ____ staff company. I sense you are asking for a reason. Could you help me understand and expand?
Understand the client's criteria for resolving issues.
Clients tend to be more efficiently and confidently convinced if we resolve their objections using their criteria rather than our own.
For example, I'm concerned that you don't have enough experience in our industry.
What does not having enough experience mean? What precisely are the concerns? In what area?
Response: Thank you for your feedback. I wouldn't want to proceed without your confidence. What would have to happen from your perspective before you would be confident that our experience is appropriate for your project?
Resolve
When the client has real doubts and questions, no matter how difficult they may be, we want to bring them to the surface while we are present with our client.
Once we are confident that we understand what we are trying to resolve, we can address it.
Provide Facts and Data: Support your value proposition with solid facts and data. This could be data about the effectiveness of your product, results from customer case studies, or industry research that supports your claims. This factual evidence will help to validate your price and reassure the customer of the value they are getting.
Examine and Improve Logic: Examine the logic behind the customer's objection. Is it based on a misconception? If so, clarify the issue and present your argument logically and understandably. Ensure your pricing model and the value you offer are clear and make sense to the customer.
Reframe Perceptions: The customer's perception of your price relative to the value they believe they're receiving can significantly impact their objection. If they see your price as too high, work on reframing their perception. Highlight your product or service's unique benefits and value, and help the customer understand the long-term cost or time savings they could gain.
Unfortunately, some clients are not mature enough to say no, we don't need it, we don't have the budget, or, worse, they may use you to leverage pricing on another provider.
Give your client a graceful exit when you arrive at a NO go.
It will also help you in your sales forecasting by enabling you to assess whether a potential sale is likely to close or should be removed from your present pipeline.
If they need a business case study, you can offer your support. If they don't believe in the value of the positive impact on their business, discovering this earlier is better.
2. Build a strong value proposition.
At the heart of overcoming price objections is your value proposition.
A value proposition articulates why your product or service is worth the investment based on your clients' unique needs and criteria. It's key to tailor this proposition to meet your specific customer needs and concerns, making your offering irresistible.
We covered how to create your Unique Value Proposition in the past newsletter. You can access here.
3. Discuss and validate the pricing with your client before presenting a proposal.
Ensure there are no surprises when you present your proposal.
After developing the solution, meet with your client to validate whether it aligns with their needs and requirements. Once they confirm the solution, ask them about the investment they have in mind. If they can't provide a number, ask them:
"Other companies in similar situations, successfully achieving the results we've been discussing, tend to invest between X and Y. Can you see yourself falling within this range?"
4. Present in person.
Proposals don't sell, and salespeople do.
Do not email or submit a proposal in writing. You've made all the effort to talk to every stakeholder and deeply understand their business; now is the time to enable your client to make decisions by presenting in person.
Conclusion
Managing price objections is a multidimensional challenge. It requires a deep understanding of customer needs, a compelling value proposition, effective listening, and the ability to ask the right questions.
The sales profession is one of the most challenging, yet it is also deeply rewarding and exhilarating.
The thrill of closing a deal, the satisfaction of meeting a client's needs (sometimes the sadness of losing a client), and the fulfilment of contributing to the success of your company, all while navigating through the intricate dynamics of human relationships and market trends, make it a truly unique and emotional journey.
I would like to leave you with this quote:
I will persist until I succeed. I was not delivered into this world into defeat, nor does failure course in my veins. I am not a sheep waiting to be prodded by my shepherd. I am a lion and I refuse to talk, to walk, to sleep with the sheep. The slaughterhouse of failure is not my destiny. I will persist until I succeed. From The Greatest Salesman in the World -Og Mandino
Thank you for being here!š
See you next week,
Ren
PS.
If you want to assess your sales team's ability to handle complex opportunities and enable your clients to make decisions, the B2B Sales Maturity Assessment can provide valuable insights. Here's the link.
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