I can beat any price by 10% - That should guarantee the sale

How often have you heard this conversation between sales and marketing "we are not price competitive that's why sales are down"- " but we offer so many more features than our competition, we add greater value, that's why we are slightly more expensive".

There is a constant battle between sales and marketing over price and the desire to sell value. So let's make one thing clear, it is marketing's role (product marketing in particular) to define the "go-to market price", it is the role of sales to sell the value and negotiate where required.

Marketing and Pricing

Pricing is clearly driven by market conditions, it's a reflection of the perceived value of your offering. Marketing must constantly review this and test the competitiveness of the offer. Depending on the market you operate in reviews should be monthly, bi-monthly or quarterly.

Price and value are linked in the mind of the customer. Buy cheap, buy twice is an oft heard saying but cheap may be just right in certain circumstances. That said, if your products are not the cheapest then you have to show how they add value. If you want sales to position the value of the offering then there has to be some real value in your customer's view (not just features) that justifies the price differentiation. It is usually marketing's role to identify these sometimes hidden values generically, but the job of sales to clearly articulate their value to the individual customer. Areas to focus on include:

• Service levels
• Ease of support / use
• Brand "Emotional value"
• Eco friendly
• Quality (build, design, reliability)
• Cost reduction for your customer by adopting your solutions
• Increased productivity by using your solutions

Sales and Negotiation
So how do we go about ensuring we sell at the right price once we have demonstrated value and we have an interested customer who wants to negotiate? Well, the first thing to say is that selling is selling and negotiating is negotiating. What I mean is that price negotiation is something to do at the end of the sales process, to win the business after we have demonstrated value, gained real interest from the customer and believe that a final piece of strong negotiation, leading to a win/win, will seal the deal.

If you make price concessions early in the sales process you may end up having to negotiate a lower price later. Use your selling skills first to sell the value then negotiate as late as you can. Remember that your customer is likely to buy if your price (i.e. the cost to them) is lower than the cost of not solving their problem.

Finally some tips on price and Terms and Conditions negotiation:-

1. Knowledge is power - know your customer, do your research, ask questions, listen and understand the problem they want to solve.
2. Decide on a "walk away price" and "walk away terms and conditions" such as service guarantees
3. Plan your negotiation stance and evaluate your position and your customer's.
4. Understand each others bargaining areas - If you both understand each other's win/win position then you can negotiate
5. Set expectations and never agree to first offers (unless they achieve a win/win for both parties)
6. Never give concessions away - trade them. You will always have "tradables" that you can offer in exchange for price discount or additional after sales service. This win/win element is key as it demonstrates that both parties gain from the deal.

Finally, throughout the negotiation stage ensure that you always communicate clearly, avoiding ambiguity and enabling you and your customer to always understand what is and what is not on offer.

Commission plan drives negotiation focus
It is worth remembering that a key contributor to what a sales person is prepared to "give away" is their commission plan. Whilst recently assessing a sales team, we found a pattern in the areas they would aggressively discount, and those that they held their ground over. Upon further research we discovered that they were not paid on the area they heavily discounted, so they had know emotional interest in maintaining margin here. This resulted in a behaviour that instead of driving value, they were prepared to reduce price.

Want to know more? Visit our website www.sales-accredit.com or contact me directly mark.savinson@sales-accredit.com

Next week we will start to look at how we drive sales in the last month of the quarter.