I’ve been getting emails recently from salesreps and managers asking me to provide advice on how to overcome competitors who slash prices to win. Although I’m certainly capable of providing guidance, it occurred to me that I had a section in my 2004 book How Winners Sell addressing that. So, after a bit of editing, here is the adaptation:
How do you compete against a competitor that drastically discounts at the last minute to win business?
Early in evaluation cycles prospects may say that price is a consideration, but not first on their list. Later on, once they have ignored or devalued any unique capabilities that your product or service can provide—to the point where they “can see no measurable difference between your offering and your competitor’s” — price gets elevated to the number one consideration. We’ve all seen it happen. By that point it’s generally too late to remedy the situation. You’re trapped. So recognizing potential situations early on where a buyer will buy on price is critical.
Here are some recommendations that will point you in the right direction. Of course each of these recommendations should be integrated into your team’s selling methodology.
Qualify. In any competitive sales situation you have to monitor the prospect’s decision criteria like a pilot checks her instruments—vigilantly. During the course of an evaluation decision criteria often change. In fact, aren’t we often the ones who attempt to effect that change to gain competitive advantage?
Among the most critical of all decision criteria these days is price. What are the key evaluators’, buyers’, recommenders’ and decision makers’ requirements and expectations with regard to price, today? If you are just getting engaged with a prospect and their number one decision criteria is price, you (or your manager) will have to decide whether it’s even worth competing. Clearly, knowledge of your competitor’s historic actual selling price will be critical in this decision. So will an understanding of your prospect’s recent buying patterns with regard to price.
Buyers focused on price de-emphasize or entirely ignore factors such as:
Address the issue head on and early. “Is your company going to make a decision based entirely or substantially on price?” And please, make sure you are asking these questions of, and selling to, decision makers. All this matters very little to the people at lower levels in organizations.
Educate yourself. Here are just some of the questions for which you need answers to outsell a competitor that dramatically discounts to win business. (Ideally we’d like your Sales Enablement team to provide you with these answers as well as what’s needed to overcome the challenge.)
Discover and Quantify Your Value. Whether or not you suspect that a low-price competitor will be included in the bidding process, you (or other resources within your organization) will need to quantify the value of your offering—in terms of financial return. When you are competing against someone who drastically discounts, it’s especially important to get close to the prospect and really understand their requirements. Not only will that enable you to better position your solution, but, more importantly, you’ll be able to uncover areas of potential additional value for the customer that can be derived from the differentiators that you are selling. If these differentiators are linked to financial impact for the prospect, they are not likely to become expendable nice-to-haves, eliminated from consideration in what might turn out to be a commodity buy. Even if the prospect doesn’t want to or can’t invest in that added value now, you’ve expanded their vision past what your competitor has done and have set yourself up for add-on business later.
Educate and Position. Winners who are really good at competitive selling subtly but definitively alter their prospect’s perception that buying at the lowest price is the prudent thing to do. You can really only do this effectively when you are selling at the appropriate executive levels.
Get creative. If you haven’t tried risk-sharing, phased deliveries, guarantees, extended warranties, or other creative approaches that will enable you to win the business without discounting, you need to do some brainstorming with your team. Very often a cash-strapped competitor who has been discounting to win business falls flat on their face when asked to match such creative selling.
Few of us can afford to sit back and wait for the competition to slash their price and walk away with the business. Understand your customer, your competitor, and your unique value.
Adapted from How Winners Sell: 21 Proven Strategies to Outsell Your Competition and Win the Big Sale (c) 2004 — Dave Stein. All Rights Reserved.
Note: I need to make it clear that it is not the responsibility of the individual salesrep to figure all this out. Nor is it her job to build the approach, tools, messages, and everything else required to compete against price slashers and consistently win. That’s what a strategic approach to sales effectiveness provides.
Graphic source: SocialHype.com