What to do when a potential client tells you she has been talking to your “competitor” who is offering a better deal?
Are you willing to enter this “price war” to get a client at the expense of long-term success, or would you mumble “cheapskate” under your breath and swear never to have anything to do with this prospect again?
Unless you are the Walmart of your industry – having “low price” as your unique positioning – entering a price war is usually detrimental to a business’ long-term success.
If you lower your pricing for one client who nickel-and-dimes you, you are not only hurting the finances of your business, but you are also setting a precedent. (Do you think there is only one prospect like that out there?)
• Not being fair to your other clients or customers who are compensating you fairly for your work.
• Likely to be compromising your quality to meet the budget, and risk damaging your reputation.
• Likely to be pressuring your team to deliver an unreasonable amount within a compressed timeframe, which is not a sustainable way to run a business.
• Likely to be subjecting your team and yourself to a “client from hell”. Clients who bargain-hunt are usually high-maintenance and like to ask the vendor to “throw things in.”
So, how do you win a price war when you are asked to “do something about your price?”
By GETTING OUT OF IT.
Unless you are Walmart, you are not going to win. But you can get out of it without burning bridges.
1. Get To the Core of the Issue
Before you start negotiating the numbers, why not find out if it’s indeed the “number” that is the core of the issue?
Ask your prospect – if the price is not an issue, whose products or services would better meet their needs? Which one can deliver more value to them?
Make this conversation about your prospect, and not whether you or your competition is “better.”
You want to guide your prospect to recognize the VALUE they get out of working with you, and the relevance of your products and services to their needs.
This is a win-win situation because they would either realize the value you deliver is higher than your competitor, hence well worth the price and buy from you; or you screen out a client who is not a good match for your products or services.
2. Be Gracious To the Price-Shopper
If the only differentiator is price from the prospect’s perspective, send them off on a high note (maybe you can offer a few pointers on how to get the most out of working with your competition) – you never know when you will cross path again.
You don’t want to devalue your products or services because it would be unfair to your other customers and partners.
If you want to position your products as premium solution, you don’t want to get bargain hunters in the door. You don’t want to be doing business with those who just want to save a few bucks, because typically you get little respect and loyalty in return.
3. Stick To Your Guns
Usually when you are able to articulate how the value you deliver is relevant to your prospect, you have a good chance to turn the conversation around. (see #1)
Even if you lose the deal, not jumping into a price war is often the best way to go.
Good business builds on delivering VALUE – the way you differentiate yourself from competition is by creating unique value, not by being the cheapest gal on the block.
Give your clients the best solution by developing trust, partnership and long-term relationship – which don’t come out of some nickel-and-diming negotiation or “drive-by” working relationship that doesn’t breed loyalty.
When you say “no” to price wars, you are doing what’s best for your business in the long run – you maintain the quality of your work, you get to service great clients who value your solution and send you referrals, and you have a happy team who feel that their efforts are valued.
Your turn – have you been asked to “match the price” and what did you do? What worked for you, and what didn’t? What would you do next time you get a nickel-and-dimer?
Find Ling and grab her free, How to Find YOUR Winning Formula” Training Series, here.
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