Your price is too high and other untruths

The September 29, 2008 issue of Fortune Magazine published the results of a Miller Heiman/Fortune survey of sales people. One of the questions they published the results for was the classic: “When I lose the deals the primary reason is:”

42% of the respondents stated price. This would suggest that the low price leader wins 42% of the business in the market place … at a minimum. This is patently not true. Yet, sales people continue to use price as their primary excuse for losing business. (The #2 reason is “relationship,” which I interpret to mean that the customer likes the other sales person better, but maybe it means the customer is happy with their current supplier).

Why is it that sales people continue to believe that “price” is the reason they lose business? Probably for two reasons:

  • The customer tells them that because it is the easiest answer to give and gets sales people to move on … or it gets the customer a lower price.
  • The sales person does not know the real reason they lost the business, and assumes it must be on price, or “relationship” because, what else could it be?
  • I suggest that the real issue is simple. As I discuss extensively in my book The Secret to Selling More: It’s Not Where You’ve Been Looking–If It Were, You’d Have Found It Already, the customer is unable to tell the difference between one product/service and the competition so the only thing left to do is buy on price.

    This is not a lost order based on price, it is a lost order based on a failure by the company to provide a compelling value proposition. That could be a failure of the sales person, or a failure by marketing to have created a value position to begin with.

    Mitch

    This entry was posted in Marketing, Pricing, sales and tagged , , , , , , , , , . Bookmark the permalink.

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