The Price Is Right? Many entrepreneurs are consumed with putting price tags on their products or services. But at what cost to their businesses?
By Bill Kelley
Opinions expressed by Entrepreneur contributors are their own.
Whenever a prospective client asks Curt Nelson for the cost ofhis product, he always replies with the same answer: "I'mnot sure." Exactly why does he do this? Nelson says hehonestly doesn't know the cost until he talks to the customer,and, equally important, he doesn't want to get into a pricewar.
"Price isn't [the only thing] that drives a customer,even though everyone thinks it is," contends Nelson, 47,president of Crystal Group Inc., a Hiawatha, Iowa, computermanufacturer. "The real issue is always value. Think of itthis way: Would you eat the cheapest hamburger simply because itcost next to nothing, regardless of how it tastes?"
Despite this argument, many entrepreneurs and their salespeoplecontinue to focus on price alone. In some industries, price tagsdrive deals because customers often use them as their primarymeasuring stick. Unfortunately, salespeople go along with thesecustomers all too often. That doesn't mean you have to succumbto a price war, however. In fact, the most successful entrepreneursrarely do.
To avoid focusing entirely on price, a company has to come upwith ways to differentiate itself from its competitors. The bestway to do this is to make sure your salespeople ask prospectivebuyers a lot of questions--and actually listen to the answers.
Bill Kelley is an Arcadia, California, business writer andformer editor of Sales and Marketing Managementmagazine.
Finding A Solution
"[Our] customers have a problem and are looking for asolution," says Nelson. "That's what they want tohear from [us]." For example, when a client asks Crystal Groupfor a price quote on a specific computer system, the salespersondoesn't start rattling off numbers. Instead, the individualbegins a series of questions about the customer's needs. Thesame can be done at most any company.
To find out this information, you can, for instance, askcustomers such things as: What is the application? Are thereproblems with the product or service you're currently using?How often does the product need to be replaced? What does that costyour company? What types of things does your current warrantycover? How are you being serviced and have you been generallysatisfied with the service? By asking these types of questions, thecompany is able to distinguish itself from its competitors and takethe focus off price. Your customers will begin thinking aboutgetting the best value, not getting the cheapest product orservice.
To find out what's most important to each customer, yoursales staff should treat each client individually. In many cases, acrucial factor to one is minor to another. This requiressalespeople to focus on the needs of the prospect in front of them,not what another customer thinks is most important or, worse, whatthe salesperson thinks is paramount.
Too often (and usually due to bad sales training), salespeoplespend most of a call spouting off the benefits of their product orservice, regardless of whether those benefits mean anything to thecustomer. A salesperson will tell a prospect about delivery times,promotions or other benefits that may have no relevance to theclient; the result is that the salesperson leaves his or herprospects feeling like they're dealing with someone whohasn't bothered to learn about their company's needs orinterests.
The approach of treating each client individually works for allkinds of businesses, even those selling commodity items. A 3-centfastener readily available at a number of distributors can, inessence, become a different product depending on the companythat's selling it. If customer service is better, if one hassuperior technical support or if its salespeople are moreknowledgeable and friendly, then buyers won't be entirelyconcerned with price. Instead, they'll see a real differencebetween companies because the focus has shifted to value. Figurethis out with each customer, and you may never sell on priceagain.
Contact Source
Crystal Group Inc., (800) 378-1636, curtis.nelson@crystalpc.com
