I don’t lose any sale on price. Price is the very last differentiator, after all of the other possible competitive differentiators between our solution and our competitors’ solutions have been discounted by our customer. It is much better to compete by creating another differentiator. This is a lesson that I learned very early in my British Telecom sales career, because BT was never cheaper on anything than the competition. This meant that going head-to-head on a sale with exactly the same technology and service proposition was a waste of time – either something had to be found to justify the price premium, some other solution had to be offered or the sale was qualified out.
Lots of different things can be used to justify a higher price. A good one with BT was the risk factor – my customers enjoyed telling me that “BT was big enough to sue” (meaning that BT had to correct problems with products to avoid the damage to its reputation of ending up in court). This could sometimes justify a 5% price premium on its own. Risk, and its other side, trust, is an often-forgotten but extremely important part of the sales process in solution selling. Once a prospect has determined that our solution meets their needs and is affordable, their thoughts turn to risk, both internal and external – do I trust this company to deliver, is my job at risk if this fails to deliver the promised benefits, do I believe what this salesman is telling me, how can I reduce the risks? Reducing perceived risk is a big competitive advantage.
Other sources of competitive advantage – for the salesman, rather than the company – include the support provided to help the customer make their decision, changing the commercial structure of the sale to better fit the prospects’ finances, customer service, or adding things into the solution that are of value to the customer but of little cost to us. A previous manager of mine closed a very big deal by offering a number of days specialist support for free for each year of the contract – having worked out the proportion of time that his specialist teams should be spending in the account anyway, given its contribution to revenues! And of course those specialists would be looking for more new opportunities – a win-win.
The most frequent reason salespeople give for losing a sale is price. The real answer is that they were out-competed by another salesperson.