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Exterior/Replacement: Maybe it's not the price

There’s always a lower price out there, so remodelers need to show value

May 16, 2012

You or your salesperson just lost a contract to competition. Both you and he believe “the people were price buyers” or “they have a price 20 percent less than yours.”

The fact is, there is always someone who has a lower price. Your explanation of a failure to convince customers to buy is all too common. You and your salesperson may believe that your work is worth the price asked, however what hasn’t been established is its worth in the eyes of your customer/prospect.

What is value?

It is all too convenient to blame the prospect for not having the ability to see that your services, your products, your customer service protocols are so much better than the competition.

In truth, the “price buyer” label is all too convenient for contractors or salespeople who haven’t lived up to their obligation. When the components of a product are presented to meet needs in comparison to similar products (without actually naming the competition), you are justifying the quality and price to be quoted in relation to the needs of the customer.  

Once you have walked the prospects through your presentation, asked questions such as “Which would you prefer?” or “Can you see the value of utilizing a product manufactured/installed in this manner?” and given them visual pictures — sometimes verbally, sometimes with photos, sometimes with CAD drawings — and you’ve received plenty of nods and maybe some “uh-huhs,” you feel confident in quoting your price.

Critical judgment errors

Frequently your good feelings are dashed when the prospect says something like, “That’s considerably more than we anticipated.”

The contractor or salesperson may see this as the price being a barrier to getting the contract,  and often at this point will make a series of critical judgment errors:

  1. Defending the price, the company’s quality position, years in the business or its reputation for customer satisfaction
  2. Assuming that something must be done with the price to make it more affordable
  3. Assuming that this is a strong price objection, then catalogue the prospects as “price buyers” and minimize the energy that is necessary at this point

When judgment error No. 3 occurs, the contractor or salesperson frequently reverts to a quick discount to make the price appear more affordable. When the reluctance to buy is restated, the contractor or salesperson may give another “discount” which simply repeats the earlier process and leads to a reduction in credibility.  

Why does the prospect state these issues which seem like price objections? We’ve researched this for years, speaking to thousands of prospects and customers, and have catalogued 21 different reasons that prospects make statements as indicated above.  

Two things are apparent. First, the majority of the 21 reasons are not price objections. They are more often stalls, tactics, conditions of the prospect’s buying methods, or misunderstandings of all the components that went into structuring the quote. Secondly, the contractor/salesperson presenting the project will usually take a path or course of action that is not in their own best interest.

Is it price resistance?

Let’s give these statements their proper name — price resistance. This resistance can become legitimate if the prospect feels they can obtain the same product and quality of service or achieve the same results from someone else for less money.

You can separate yourself from price comparison by performing a thorough needs assessment, then offering recommendations that are different from and more personalized than your competition. In this case, your prospects are more likely to compare products or services based on your advice, not your price.  

In order to help the other party see a return on investment, it’s crucial to know their alternatives and the costs of each, especially the cost of “doing nothing.” Although it costs money to buy, in most cases it also costs money to do nothing. They need to know that price in order to make better decisions.

People rarely buy when they don’t understand, and worse, they usually won’t tell you when they don’t understand.

Frequently all they need is reassurance. If your project is a “big ticket,” remember that most people are inept at applying

mathematics and rarely examine all the financial aspects of the proposition.  If the difference in your product is $10,000 more than your competitor and they are going to be in their property another 10 years, that difference may seem like a small investment for quality when divided over 10 years. Remember, most people bought their home determining its affordability by monthly payments.

Total Offer Concept

Frequently a prospect will say “we’ve received a better price” and this may not be true. Sometimes, a buyer will force you into price justification as a way to gain control of the relationship.

We teach our clients a system called “Total Offer Concept.” This methodology was developed many years ago by our company and it is a tactic which responds to price resistance tactics. The Total Offer Concept breaks down the various portions of the project and again asks the prospects to identify the quality desired and how it meets their needs. This is inclusive of evaluating workers compensation, public liability insurance, warranty services and similar, which a competitor may not mention (or provide). It may seem like a lengthy task, but it can be accomplished on any project in 10 minutes. Is it worth the time? Consider the options: Deal or No Deal.

I started this article by suggesting that you or your salesperson may refer to the customer as a “price buyer.” When a project is presented poorly and without being applied to the customer’s values via a needs assessment, the customer may be assessing you, your company and your project as overpriced. The customer is the key ingredient in any sales or marketing plan. How that customer feels and thinks is important to understand. The difference between getting a contract or not after price resistance lies mostly in your skills and ability.

David Alan Yoho is a senior account executive with Dave Yoho Associates, the oldest, largest and most successful consulting group serving the home improvement industry.  He is featured on the best-selling recorded series “Leads, Leads, Leads.” For more information on his live seminars or consulting services call (703) 591-2490 or visit www.DaveYoho.com.

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