I'm sure we can all agree that price resistance can be one of the biggest momentum killers during the sales process. Whether it's during the research/discovery stage, proposal stage or even close stage, it has the capacity to instantly smash all of the rapport the sales rep took so much time to build up...
...but it doesn't have to be this way.
In fact, price can be just as comfortable to discuss as the weather or the news--the caveat being that it does take a bit of work and conditioning. However, I'm confident you'll find that once that work is done, you'll experience higher close ratios, happier customers, more time in the day and even better sleep at night.
Here's how it's done.
I'm sure there's a more eloquent way to say this, but...handling price resistance correctly takes balls. Many of the steps listed below are useless to you unless you have rock solid confidence in three key areas:
Confidence in your product/service
Confidence in the price
Confidence in the value of you
Let's say two identical sales professionals used the same sales script and spoke to the same buyer, only one of them was extremely confident while the other was quite timid and unsure. Which one is most likely to win the deal? The one with confidence! This is because confidence (or lack thereof) can be felt via your body language (aka kinesics). We're genetically programmed to pick up on these tiny non-verbal queues, which explains why anxious people make us anxious or happy people make us happy. These signals are present and contagious, for better or worse.
All this to say, you've got to have confidence in these areas or you will consistently sabotage yourself when discussing price.
So if you've got all that and a bag of chips, then read on my friend...
Create a Strong Value Proposition
Sales would not exist without perceived value. I say 'perceived value' because value, in itself, is not inherent or ubiquitous. This explains why "one man's trash is another man's treasure."
Perceived value is the single most important factor in managing or avoiding price resistance. If the buyer perceives the value to be high enough, they will find the budget or resources to make things happen. Thus, perceived value maintains an inextricable connection to price resistance -- the higher the value, the lower the price resistance.
Creating a great value proposition starts with intimate knowledge of your buyers.
Who they are, what they like, where they live, etc. Using buyer persona data as the foundation of value proposition refinement greatly improves the likelihood you'll acheive a high value perception. This is an over-simplified explanation of this process of course, as this topic could cover several articles in itself, but you get the gist.
Ensure Price Clarity
Covering the topic of packaging and pricing is much too big a task for a single blog section. However, there's one component of pricing I'll touch on here that's important to managing resistance.
Clarity should focus on what your buyer perceives to be clear, not necessarily your sales team. Buyers should be able to quickly and easily associate the price to the deliverables. This doesn't mean you have to itemize and price every little facet of what you do, as sometimes this can negatively impact your product or service packaging. You're simply looking to avoid price ambiguity by helping the buyer find what they're looking for (an important aspect of inbound sales).
Otherwise, you risk buyer confusion which can quickly lead to buyer frustration, which exponentially increases your odds of encountering price resistance. Here's that concept again:
Ambiguity = Confusion = Frustration = Price Resistance
When it comes to pricing: Keep it clear, keep it simple and you'll keep it moving.
Talk About Price Openly and Often
Sales professionals will sometimes avoid talking about price, especially in the early stages of the sales cycle. This tactic is often used by sales reps when they want to dig up more pain from the buyer and perhaps establish more rapport prior to discussing price. The thought process is, if they can uncover enough pain and/or gain enough trust, they increase the buyer's perceived value of their product or service and thus, less price resistance.
This tactic may still work on some buyers, but it angers most others because they feel manipulated. Especially when the competition makes the answers readily available.
Industry insight, general pricing and peer reviews are now a staple part of the buyer's tool set, which makes talking about price openly and often the best way to manage price resistance. It also shows confidence on part of the sales rep, reinforces clarity/transparency and tackles the value proposition on a consistent basis. Perhaps most importantly, it gives buyers the freedom to voice concerns openly and freely.
This builds trust faster than any other strategy imaginable (and prevents price concerns from festering and developing into a deal killing sore).
Engage in Active Listening, Not Reactive Talking
Being defensive can sometimes be instinctual. However, when buyers express price resistance, one of the worst things you can do is push back. A defensive buyer is a lost buyer. Remember this:
Price resistance is not an attack on your product or service, but an opportunity to build trust through reassurance.
We sometimes say things we don't mean. More specifically, we don't always communicate what we feel very clearly, intentional or not. Communication with buyers is no different, which is why active listening is such a critical facet to problem resolution. Empathetic active listening is even more effective since it adds a more emotional, "put yourself in their shoes" perspective.
By listening more and talking less, we hear what the buyer is really saying to determine if there is an actual price issue or other problem slowing the sales process.
Manage the Post Sale!
You've effectively addressed price resistance and closed the sale! Congrats! Price resistance would no longer be an issue at this stage, right? Wrong.
Price resistance can still come back to haunt you after the sale. It's just disguised as something different--buyer's remorse.
Managing the post post sale is one of the most critical (and overlooked) aspects of the sales cycle. This is true for all types of companies, but can have even greater impact on companies using subscription based or recurring revenue models, as client lifetime values tend to be much higher. Regardless of what is being sold, everyone wants their buyers to come back for more. So how do you mitigate loss due to post sales buyer's remorse?
Validation...fast, rock solid validation.
After the sale, buyers still want to know that they've made a smart decision. They want validation that their choice was the best one and that they have not been fooled by the sales process.
Well timed content, testimonials and post-sale engagement can greatly reduce the likelihood buyers remorse will become an issue. Take a look at your sales funnel and ensure you have a clear system in place for managing the post sale. You're long term growth depends on it!
3 Final Notes About Managing Price Resistance
- Never forget the correlation between price and perceived value, including the impact the buyer's emotions and ego have on determining that value.
- Confidence and empathy will help guide you through these steps much more effectively than reliance on any "systems" or scripts. Listen, learn and solve.
- The steps above are WORTHLESS if there's poor product/market fit. Buyers are smart and have access to several options...make sure your options are viable.