Have you ever wanted to win business so bad you felt compelled to drop your sales price? Was there a customer that seemed so good to be true that you needed to decrease the price to secure this new business? How about a large organization that would be the largest sales volume for you and your organization that you wanted to win it no matter what.
These are some of the stories I hear all the time and then when the win misses the volumes that were guaranteed the sales team is accused of missing the revenue. Then the sales team is informed they need to get a price increase not tool long after the business is secured.
I have had to do this a few times in my history in sales. One occasion was when business was won prior to me coming aboard and it was done so at such low profit that when we looked at the financials we were actually losing money every time we shipped something to the customer.
Guess who got tasked with a 20 percent increase. Before you think 20 percent is not that much, it was on items that cost over $3000 per item. That impact would affect the customer my millions each year. Especially since they had orders already secured by their customers.
Typically, there are increases of a few percentage points, less in double digits, and very little that have a two in front of them. The customer relationship was stressed and that will likely lead them to find ways to sell product for less money. That is usually done by resourcing product.
I say this to highlight when we are selling to customers, we need to make sure that we stand behind our value and not just try to sell a product / service. If we stand behind the value then we can have a conversation up front with the customer to let them know that we can offer a product / service for this investment. We can stand firm in the value we offer and not have uncomfortable discussions in the future.
We may lose some opportunities, but we will be known to the marketplace as the higher value option and we will still have customers that want to invest. This also helps us really find who our ideal customer is. Do we want someone that will try to decrease our price at every turn in the future and treat us like a commodity, or do we want someone that will want to partner with us and invest in the higher value product / service.
Sales teams sometimes forget that we offer value and we should know that we are not willing to lower our value for a new customer unless we have calls to action in the agreement that if the customer does not hit volumes, then we are able to come back for discussions. We need to stand by our value we offer.
Without setting value for ourselves, the customer won’t either. We need to make sure that the relationship is a mutual one and not just a one-way commodity purchased. When we can achieve these kind of customers that view us as true partners that are not just trying to cut out pricing at every turn, we will be more profitable and have less of these price increase discussions in the future. Both parties will function well and make profits.
Have a great week!
“Businesses wonder why it is still hard to be thought of as the brand of choice with customers. How can our business make more profitable transactions and stay out of the commodity battle with low profits? I equip your sales team to walk with the customer through the five buying decisions, and in the correct order to generate explosive revenues with greater profits!”
https://drive.google.com/file/d/1lWIVasmkFsoYL4h0AqIZgH6LC3qaw_gI/view?usp=sharing – client profile sheet
https://www.amazon.com/Sales-Process-Uncovered-Success-Influence/dp/0578421518 - Book
https://kevinsidebottom.kartra.com/page/5AF12 - Sales Process Uncovered Online Training
https://kevinsidebottom.kartra.com/page/68N10 - Trustworthy Online Training