The Price is Right?

“That’s highway robbery!!”

I know that you’ve heard this complaint (or something like it) before.  Everyone who makes a living in sales confronts clients and prospects who are outraged by the prices that we are charging – for whatever product or service we have on offer.

Shockingly, when I ask even the most sophisticated sales people why they charge what they do, most of them say, “Ummm…because that’s what it costs?”

This is not a good answer. 

Do you know why you put on your clothes this morning?  Why you gassed up your car?  Why your face got red when the great looking barista smiled at you?  Of course you do.  So why in the world would you ask someone to buy something—and have no idea how the price for that product was arrived at?

To explain why this is important, let me take you back to our stage and acting metaphor.  Everything about your sales presentation has to be part of a larger narrative.  It has to be a fully fleshed-out story with all the color, highlights, and nuance of a well-crafted tale.

Method Actors know this – and it’s why they develop an intricate “back story” to every character they play.  Even if Robert DeNiro is only going to be on camera for a 90-second role, he knows where his character was born.  He knows where he went to school, when (and with whom) he experienced his first kiss, and how he got fired from his last job.  He even knows what that character plans on having for dinner tonight.  And that’s all for a 90-second role!

The value of this acting narrative is that it produces an incredibly interesting, realistic, and compelling character—even if we only get to see him for a minute-and-a-half.

As an accomplished sales person, you need to do the same thing.  If you leave gaps in your own understanding of the sales narrative, your story and your presentation become far less interesting to watch.  It also becomes harder to reach a principled agreement with your client or prospect.

So how did your company come up with a pricing structure for its products and services??

It’s actually pretty easy to figure out.  Profit margins are reasonably consistent between and across industries – and people mostly agree upon what is a “reasonable” margin.  For the average consumer business, a healthy return is considered to be in range of 10% to 15%.

Successful software companies often have higher margins.  They demand such high returns because of the enormous expense of remaining current in a savagely competitive environment, and the need to pour money back into R&D, support, and acquisitions.

So what sort of return is your company making?

If the company is public, all this information is freely available in their annual report.  If the firm is privately held, company managers and executives have a solid grasp of these numbers as well.  Let those people know you need some rough figures – and what you intend to do with them.

Armed with this information, you can now explain to Mr. or Ms. “Highway Robbery” that your firm is well within industry norms for profitability – which, by the way, is extremely important to them as customers.

Sure, some companies will charge less, and make less.  But what happens to companies that consistently underperform the market?  They get sold and busted up.  They go out of business.  They limp along for years cutting corners.  None of these outcomes serves their customers’ interests.

Of course there are other reasons that your company may charge a bit more than the competition.  These might be:

1.  You hire the very best support/development/customer service/management teams – all of which costs money.  You don’t do this out of a sense of charity for highly compensated workers.  You do it to support and service your customers at the highest possible level.

2.  You plan to grow, add more and better products, and insure ongoing stability.  Your long-term success is intimately tied to the success of your customers.

3.  You have a really cool product!  It’s perfectly OK to charge more for something that is truly better.  Apple products have traditionally carried a premium over comparable products from other vendors.  Lots of people think they are buying better (and cooler) merchandise – and they are willing to pay that premium.

Armed with this information, I want you to promise that you are going to learn why your company charges what it does – and that you are never again going to be ashamed or embattled because of it.

Your sales performance will be vastly improved, your customers will be better informed and everyone will feel more secure that a fair deal has been reached!

MP3s stink - But Not If You Like Them

How many people reading this post have never heard a vinyl record album? How about a vacuum tube radio, amp, or receiver?

Heck, if my demographic skews young enough, there will be plenty of readers who’ve never even listened to a CD.

So did you know that you can now spend $65,000 on a new, state-of-the-art turntable?? And that an insanely tricked-out, two-channel home stereo systems can cost...a million dollars? Crazy, right?

Well there’s a reason that such extravagance seems particularly insane to most music consumers in 2018. That’s because today, convenience trumps high fidelity—so like it or not, the world of music goes ‘round on high compression digital downloads and streaming.

Of course it’s not only convenience that drove the analog-to-digital revolution—it’s also a fundamental shift in the reasons that people listen to music, and the benefits they expect to derive from it.

For me,  listening to music and absorbing the sound is a primary activity—and one from which I derive great pleasure.

For younger folks, however (who’ve grown up on highly compressed digital downloads), music is typically relegated to background noise - or it drives some other activity.  For them, spending $1,000 on a sound system, much less a million bucks would be completely senseless.

Which brings me to my point.

The market knows what it wants, and the market knows what it needs—however much you may protest.

What I mean by that is, you’ve gotta give your customers what they want, not what you want to sell them. As obvious as this sounds, I can’t tell you how many sales people I know who spin their wheels trying to cram a square notion into a round need. They have hammers, so by God, their clients are going to pound nails.

When clients tell them that they neither want nor need a particular product, add-on, or service, sales people will say things like, “But it’s part of the suite!” or “You may need this in the future!” or even, “Maybe the next person in your position will want to have it!”

What you  the sales person needs to be doing however, is either getting creative or cutting the prospect loose. Getting creative could mean breaking apart your offering and selling only the product or part of your system that is germane to the prospect’s needs. It could mean finding new and different uses for the item that did not initially stimulate his interest.

You also need to be willing to take the prospect at his word. If he genuinely doesn’t care about the fidelity of his music, every calorie you expend trying to sell him a $65,000 turntable is wasted—for both you and him.

Whether you're just scoping out your product, or actively selling it, ask yourself these questions:

1. What problem does my product solve?
2. Do the people I’m talking to want it solved?
3. If they do not, is there a clear path to describing the improved life/work experience that my product will offer them?

If the answer to question 2 is, “Yes!” then you are off and running. They have a problem and you have a clear solution. If the answer is “No”, then you'd better very carefully analyze and assess question 3.

Coffee. It's Not Just For Closers Anymore

Let’s talk about this word “Closing”. And then let’s forget it. 

What picture comes to mind when you think of the word “closing”? Perhaps you think of someone closing the window on his opportunities, closing a door on his finger, or closing down a failing business.  Personally, I think of a malevolent Alec Baldwin in the movie Glengarry Glen Ross.  “Put that coffee down!”  “Coffee is for closers!” 

Not very pretty is it?  And yet this same word is the Holy Grail of most sales systems, most sales managers, and yes, most salespeople.  We’re all about “Closing the deal”, and “Closing that prospect!”  Sales managers are happy to tell you that if you can’t close, you’re dead in this business.

So how do you think your prospects feel about “being closed?” Let me be as clear as I possibly can; they HATE it.  They hate it when you ask stupid questions that are designed to have only one answer (e.g. “You don’t want your wife and kids to die of starvation, do you?”  “Good, then put your name on the dotted line!”) 

They hate it when you tell them that, “This price is only good through Noon today!”  They hate it when you tell them that they will look foolish for not buying your product or service, they hate it when you try to box them in through trickery and lies, and they hate it when you try to bribe them with flattery. 

Got it?  They hate it!

So let me propose an alternative to the entire process of “closing.”  You need to keep in mind that the successful conclusion of a deal is an inseparable part of the entire process of the sale—not a separate and discreet moment of “closing.”  Coming to agreement with your prospect is like eating the terrific meal that you’ve prepared together.  It’s like starting a fantastic ski run after the chair lift drops you off.  It’s like sitting by a roaring fire after you’ve chopped the wood.  In short, it’s something that is both pleasurable and represents the logical conclusion of all the activities you’ve performed together.

So let’s think of another word for “Close” once and for all.  How about “Partner?”   Doesn’t it sound better to say, “I want to partner with six new clients this month?” 

Our minds create both our words and our actions.  If we can begin to think and speak in ways that appeal to our customers and clients, just maybe they will begin to treat us with the same respect.

Stop Staring - Don't Die

Every serious motorcycle rider knows the truth.  If you stare hard at the thing that you’re about to hit—then you will certainly crash directly into it.  In order to survive, you have to tear your eyes away from the looming oak tree, the guardrail, or the oncoming car that threatens to squash you like a bug.  Instead, you yank your head and your eyes in the direction that you want to go!  You look through the dangerous curve, to the side of the parked car, and toward whatever escape route is available. 

Lots of salespeople spend their careers acting the same way as the inexperienced motorcycle rider.  They focus their attention on their commissions, or their signed contracts, or seeing their names at the top of the “Leader Board.”  And just like the poor rider, they continually crack up on the very thing on which they are focusing. 

Like an actor on stage…or a guilty spouse, the true motivation of every salesperson will be clear to his audience.  Your prospect might not know exactly what it is that you’re focusing on—but he can almost always tell that you’re focused on something other than helping him to achieve his goals. 

Motivation is everything in life.  If an actor is motivated by finishing the scene he’s playing so that he can go out drinking with his friends, he’s BORING to watch.  If the salesman cares only about getting your signature on the bottom line, he’s not too interesting either.  He may be boorish, annoying, or even a little bit creepy.  But interesting?  Not so much. 

Successful sales requires a readjustment of one’s underlying motivations, and then a clear focus on where you want to go.  And in every case, your motivation must be the same; to help your prospect achieve his goals (whatever they may be). Set an unwavering course in that direction, and you will win both friends and business.