What can I do if the customer judges me purely on the basis of price?

by Alice Alessandri & Alberto Aleo

In the sales courses we have been holding on selling in many companies and over many years, we often come across the following situation: at a certain point one of the participants will raise her hand and proudly say:

All that’s fine … but our sector is different; all our customers are interested in is getting a lower price, so there is no way I can apply what you are saying.

The rest of the class then make it quite clear that they agree.

Anyone teaching negotiation techniques in a sales setting is used to this kind of objection, and rather than finding it annoying, considers it an extremely important comment as it triggers useful reflections. Let’s consider some of these together …

First, we need to “break” the objection into two parts:

• there are areas where competition is based exclusively on price;
• the price is the only element assessed by the customer.

We can assure you that whatever the type of company and wherever the participants in our classes come from, someone will always raise the first point.

In almost all sectors, therefore, salespeople believe they are working in a market where only the price guides customers’ choices (this is actually very rare), and this is technically impossible!

We should ask then why so many salespeople believe they have to compete on price alone. There are several reasons, but we wish to highlight the two we consider most important:

• the price is an excellent alibi that sellers, perhaps unconsciously, may use to opt out of responsibility for the outcome of a negotiation;
• we Italians have become accustomed over time to competing on price, because for years sales of our products have been leveraged on economic advantage.

Italy has long relied for the success of its products on favorable rates of exchange and low production costs, as we have wages that our cousins across the Alps (France and Germany in particular) could not maintain, while also offering good quality. Nowadays, even though the rules of the game have changed with globalization and the advent of the Euro, we continue to use the negotiation technique in which we were trained: price bargaining!

If we go back to the objection “the price is the only element assessed by the customer,” we must admit this is often the case! But watch out:

if the customer assesses our product based on price alone, in our opinion the responsibility for this lies on the shoulders of the seller.

Any exchange involves forces referred in economic theory to as information asymmetries. These information asymmetries are generated when one of the actors (the customer in this case) has less information on which to assess the purchase than that of the seller. In many cases the information gap can be used by salespeople to their advantage, but very often they will fall victim to this asymmetry! When customers do not have all the required information on the product to make a reasoned evaluation and comparison with rivals, they will rely on the only tangible and quantifiable element, i.e. the price.

If salespeople are unable to provide adequate information on the characteristics of the product and its benefits, they must accept that customers will focus on price.

Once we have provided the explanation on information asymmetries, the student/protester will usually reply, “But the products we sell products are very similar to those of our rivals, but ours are more expensive.” This second objection triggers a new and interesting reflection: what do companies really sell? If we have two companies selling exactly the same products can we really say their have the same offer system?

If we think of our offer as a system that includes image, services, products, communication, people and relationship style, it’s really hard to find two companies that offer exactly the same things to the market.

For example, even if companies A and B both sell product X of Brand Y, it will be unlikely that they have the same image, equally efficient customer services and an identical way of managing relationships and communicating with their customers. There will always be one component of the offer system that sets your company apart and which can be used to leverage an advantage for the customer and to argue the correctness of your price.

At this point, our seller (if she has decided not to concede the argument) will say, “If we put it like that, then actually our rivals are better than us, so there can be no justification for our higher price.” So, let’s return to the responsibility of the salesperson:

if there are no real differences could we sway the customers’ decision according to the way we interact with them? Can we as sellers be the added component that makes the difference in the offer system?

The answer to this question is not at all easy and leads us to reflect on the opinion we have of ourselves, of our motivation, and the relationship we have with our job: considerations that must be faced with courage and awareness.

| partem claram semper aspice |