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Quality versus price

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Getting The Edge In Professional Selling — Terence A. Hockenhull

AS I HAVE mentioned many times before, salespeople tend to think that the only determining factor used by a customer to make a buying decision is price. It always seems that deals are lost to competitors offering slightly lower prices. Whether the excuse is smuggled goods from China; cheap, nasty, and unreliable products; or a competitor engaging in a price war, price would seem to be the most common reason for losing a sale.

Yet those selling goods at a premium (and winning sales) must surely see that this is a specious argument. Clients undoubtedly use many other factors to help them make their decisions.

All of us have bought luxury goods at one time or another, paying a premium for items that might be purchased for less. Why? Better quality, a brand name we can trust, a long-standing relationship with the salesperson? Indeed, all of these are perfectly valid reasons for making our choice.

Every situation is different. Consider, for a moment, a very cost-conscious customer who normally holds out for the lowest prices and will not pay a premium because of brand name or quality. Suppose he needs to buy a replacement piece of equipment or a spare part that is only available (in stock) from the most expensive vendor. The urgency of the requirement may make cost considerations evaporate.

Nonetheless, one has to be realistic. There are many situations and occasions where cost really is a factor, and a client will only buy if they know they are getting a low price.

Some months back, I was talking to a Chinese businessman in the showroom and dealership where I bought my car. My budget allowed me to buy a pick-up truck; he was looking at the largest SUV on sale in the showroom, costing at last three times the amount I would pay for my car. Clearly, a man willing to pay a premium. Yet, he informed me that he had already been to four other showrooms selling the same brand and model of car and was negotiating with each for the best deal. This makes perfect sense to me, providing he is comparing apples with apples!

In this scenario, one has to be very careful about the idea of “apples with apples.” Sure, the brand, model, and grade were all the same. But what ‘freebies’ were being offered? Would the inclusion of insurance, car tint, floor mats, three-year registration, etc. all be offered by each dealership? How about service levels or a personal relationship with a salesperson or someone in the servicing department?

At the end of the day, how the customer views competing products and which criteria he sets for the purchase will most likely determine his choice. The company I work for sells a wide range of steel products. We face lots of competition, and some vendors are willing to cut their prices to rock-bottom to secure an order. We pride ourselves on the quality of our raw materials and finished goods. However, since the materials are often used by contractors, they really don’t care about quality. Cheaper materials increase their profits, and whether the structure lasts five years or 20 years is of little consequence, as long as they can pass inspections during and on completion of construction.

Salespeople shouldn’t despair; there will, of course, be occasions where a sale is lost because of price. However, more often than not, it is a case of the salesperson failing to establish what is really important to the customer and promoting this aspect of his product.

A recent situation comes to mind here. One of our clients asked for a quotation for our materials, and this was supplied in a timely fashion. My sales engineer called the client a few days later to discuss the proposal and was immediately told that our prices were too high. She established that the materials would be used in a highly caustic and corrosive environment and discussed the likelihood of failure if the protective anti-rust coating was compromised. The client then agreed that quality was important; indeed, after discussing some options, he opted to buy our most expensive material, which offers an exceptional anti-rust coating.

Consider this: had my sales engineer not raised this issue with the client, we would undoubtedly have lost the sale to a cheaper competitor. Furthermore, the client’s needs would have been ill-met, and the likelihood of remedial purchases down the line would be very high. The right approach established what the client really needed. As long as they see this, they will be willing to pay extra.

Just don’t expect clients to pay for things they don’t need. And don’t expect them to pay more for something than they can buy from another source. If you sell your products at a premium, there is a good reason for this. Justify the premium to the client by showing him that he needs it, and price issues will not be so difficult to overcome.

Terence A. Hockenhull is a long-term resident of the Philippines. He is an accomplished sales consultant who currently holds an executive sales position with an Italian geotechnical company.

terry@charteris-inc.com





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