Score: Buyers 15 vs. Sellers 1
It’s estimated that purchasing departments in the U.S. spend about $3 Billion every year on technology to help them better manage the prices that they pay for goods and services.
It’s also estimated that selling organizations spend $200 million each year on technology to help them better manage the prices that they charge for their goods and service.
Buyers are outspending sellers by a factor of 15 to 1. Ouch!
This tells me that buyers are a lot more serious about managing their costs than sellers are about managing their prices. You might think that buyers and sellers are well aligned, at least by their titles. But, in fact, not only are they not aligned, they are not even playing the same game.
Sellers are in the business of selling more. Their job is to generate revenue for their company and they are rewarded for increasing sales. And so, they spend their time trying to increase volume.
Buyers, on the other hand, despite their title, are really in the business of reducing costs. Buying is relatively easy. They are typically rewarded for reducing costs. And, one way to reduce costs is to reduce the price paid for goods and services.
How can you level the playing field for your sales people?
One approach is to have sellers focus price negotiations on economic value using value based selling techniques. That is, when a buyer pushes down on price, sellers should respond with an economic argument. Identify the ways that your product or service helps the buyer generate more revenue, reduce costs or reduce risk. These are all values the product or service brings to potential buyer.
The key is to quantify these economic values and present your business case in a value based selling process . How often are your sales reps presenting an economic model to your customers? Are you aligning the sales process with your value based pricing strategy? Is your value based pricing strategy falling short from lack of value-based selling skills?
Make sure your sales reps aren’t giving into the pressure buyers impose to discount price in fear of losing the deal. Bottom line? You’re losing valuable profits. Discover the power of value-based training and empower your salespeople to start value-based selling with Price Point Partners’ Selling for Profit™ b2b sales training or contact sales training speaker Ralph Zuponcic to explore how value selling training can revitalize your sales efforts. Fill out the contact form on the Selling for Profit™ page, or call 330-342-0923 to start Selling for Profit™ today!