Business Strategy How to Outsell Your Cheaper Competition… the Right Way!
“Sorry, your price was higher than your competition, so we purchased from them instead!” This statement is heard by salespeople all over the world every day. They often don’t understand why they lost the order because their product is superior to the competition’s. Good salespeople have been taught to sell on the strengths of their products, instead of the price. Even when they do a good job of explaining their product’s virtues, they still lose orders to an inferior product because of price. The question is, “Why?!”
I have looked at it from many angles, but I think we need to examine it from a buyer’s perspective. Buyers want to do a good job for their company. Their company rates their performance mainly on how effective they are at saving the company money (in the short term anyway, but that’s another topic entirely). This expectation can put a purchasing agent in a bit of a bind when it comes to selecting a product for their company. If they do not save the company money by purchasing the best priced product – the cheapest – they are taking a risk. What if the more expensive product doesn’t work? How would they justify spending more money on something that doesn’t work? That’s the risk. At least if a product is cheap, they can say, “I was just trying to do my job and save money.”
Let’s say you go to the purchasing agent and ask them why they bought a particular product that is not working out for the company. If they bought the product because it was the best price, the purchasing agent can say they purchased it because it was the cheapest, therefore saving the company money. It’s a frustrating answer since the product they picked didn’t work, but you accept it because the person was doing their job, which is to save money.
Now let’s consider the second scenario. You go to the purchasing agent with a product that is not working. You find out from the purchasing agent that in addition to the product not working, they actually paid more for it because they listened to the salesperson who convinced them that the product they were buying was better than the cheap options out there. The risk that the purchasing agent took now blows up in their face. The purchasing agent will have a much tougher time defending their decision because they spent more money and the product still doesn’t work.
If you were a purchasing agent, which scenario do you think you would take? If you take too many risks and they fail, you may find yourself without a job.
The problem here is not the purchasing agent, it’s your competition. They have caused the purchaser to avoid risks because of previous failures. It’s the same as how people act after a messy divorce. After it’s over, the next person to come along bears the brunt of that previous negative experience. If the competition has made the purchasing agent risk-adverse, then the only thing that matters is price. This can be very frustrating. You have a superior product and yet your competition, who sells an inferior product which is much cheaper to manufacture, has a cost advantage. And purchasing agents buy it, even though your product would serve them much better in the long run.
I think the best solution when making your sales pitch is to find out from the purchaser about their previous product experiences and what happened. You need to show that you understand the risk they are taking by buying your higher-priced product and assure them that your product will deliver on its promises, unlike their past risky purchases. With this approach, you have a good chance of earning their business.
It’s very important for business to be earned, not just expected based on your price alone. Just remember that the purchasing agent has most likely been burnt by your competition before, so you need to take away the risk of them looking bad if they go with you instead of the lowest price. They want to do a good job for their company, and your task as a salesperson is to show them how doing business with you will make them look like a star.