This is from a Question & Answer call our team recently did in our program called The Accidental Salesperson. As we were transcribing this, we thought we’d give you a peak inside our thinking when we answer client questions. (This is a transcription of spoken audio so forgive some of the clunkiness).
Q: “We are in a service industry and our biggest sales problem is overcoming cost objections.”
A: All objections are not created equal. The essence of an objection is that the prospect doesn’t believe that there’s any pain to not changing, or, there’s any pain to not choosing you.
So if I hear cost / price objections, you must conclude you’ve done a lousy job in two places in the sales cycle.
Sales Problem 1. Identifying The Problem
I’ve done a lousy job identifying the problem and attaching a cost to the problem they have. Or number two, I’ve done a lousy job of distinguishing myself against the other possible solutions that they have.
For example, we get asked to work with a company where we’re not the only option. They could go outside and work with other trainers and coaches like us, or, they can try to do it themselves.
There’s nothing that says they have to go out and hire trainers. The fact is that some companies can do it themselves. At least they could be marginally effective at it.
One Competitor Is Them Doing It Themselves
So my competitor is not necessarily the guy down the street who does similar things to what we do. My competitor also is them doing it themselves. Well, there is a perspective that people have that if I do it myself, it’s cheaper. Some of you are in business. I know a little bit about some of your business. You have that in your business, too.
I can either hire a realtor to go out looking for more commercial space or I can do it myself. But for certain solutions, doing it yourself is not a good idea.
First, it takes a lot of time. And often, people don’t put high enough value on their time like they should. If they only added up the time they spent doing things they weren’t good at, where it takes them five times longer to do it, they would realize quickly that hiring a professional is a much cheaper alternative.
So when I hear you say you can’t overcome cost objections, I would suggest that it’s probably because you haven’t done a good job upfront of nailing down the cost of the problem.
What’s The Cost of the Problem?
Once you have that, then the question is, “What kind of dollars are you willing to throw at the problem?” and if you can’t have a good, lively, honest discussion about that, then you’re probably going to get the objection that your prices are too high.
This goes for technical people who are doing add-on sales at a project. We work with a lot of CPAs, few of whom are natural salespeople. They’ve been trained to be a CPA and they’re very good at it. They were not trained to learn how to sell and market and manage the relationship.
Often, our CPA clients who charge a lot of $/hour, will go in, and they will deliver a proposal and the customers say, “Well, geez, I’m getting this now for half that,” or “I’m doing it myself and not paying nearly that.”
You Have To Get Away From the Comparative Pricing to Other Competitors.
You have to take it to the realm of “What’s the problem costing?” not “What is the other vendor charging?” See the difference?
We tend to get wrapped in that straw-man argument a lot. “You’re 30 percent higher than your competition.”
Well, OK. Then if my competition is doing the job, what the heck am I doing here then? Why am I even in front of you? If you love what they’re doing, how did I even get here?
Of course, the reason you got there in the first place is because they weren’t happy with it. There were problems and these problems typically have cost to them. It’s your job to find out what that cost is.