Buyers NEVER Buy Based on Price – Period!
Ok, let’s open and unpack this can of worms! I always get push back when I make this statement but after I explain my position, maybe you’ll see why I say this. I contend that, people always buy based on VALUE, never on price.
When your customer tells you that you lost the bid because you weren’t lowest price, nine times out of ten it’s an excuse and not the reason. Most people don’t want to tell you the real reason why they didn’t buy from you, so, you need to fashion your questions toward what they value and let everyone else sell the cheap number.
One of the questions you need to ask yourself is, what am I selling, value or price? To get away from competing with the cheapest number you’ve got to start selling value and stop selling price!
The trap sales people, managers and companies fall into is, buyers buy based on what you’re selling! If you’re sales pitch sounds like… “What number do I need to be at to win your business?” …Then, you’re selling based on the cheapest price. With talk like that, you give your customer no other choice but to do business with you based on the lowest price they can squeeze out of you. Why? Because that’s what you’re selling!
If you’ve already lost a sale because of price, let it go and start a new plan of attack. First, change the way you position yourself in the conversation. Here’s a suggestion of what you might say the next time you talk to your customer about a project. “No dough we’ll be competitive, but what’s the next most important issue?” Then, don’t say another word! Let them tell you what’s the next most important thing!
With that question, you’ve now addressed the cheap number, and taken it off the table. Enough said. Now they know you’re going to be competitive, so let’s move on to what buying criteria they are going to base their decision on. What you’re really asking is what do they value and how can you provide that value to your customer.
Think about it, go into a BMW, Lexus or Mercedes dealership and pay attention to how/what they are selling you. Then go into a Dodge, Hyundai or Mitsubishi dealership and pay attention to how/what they are selling. One of them will you ask you questions like, “What monthly payment are you trying to stay within?” or “What’s it going to take to win your business?” Both questions are price selling! The other dealership is selling value. All cars get you from point A to point B, the only question is, is your buying decision based on price or value?
Are you selling lowest price, or the best value?
John:
Beg to differ. The discussion sometimes never gets to the value of a given product. While we try and sell value, too many GC’s, and therefore the glazing subs don’t care for value, all they want to talk about is the $’s. If Company A provides a better performing product, it’s likely a bit higher in price. Company B gets the job because their product was cheaper, likely because it doesn’t perform the same as Co A’s product. The owner drives a lot of this, and that mentality pushes down to the bidding process. They don’t care for the value, either, as long as it meets their budget. And not many architects are in a position to educate the owners on the relative value of each product or convince the owner the cost is justified. Donald Trump made a fortune as a developer driving dollars, not value.
I beg to differ as well. You should join us in some of our bidding exercises. In fact, we just lost a job where we did a beautiful job on Phase I, it is the same custom system on Phase II so we have the expertise, the knowledge, the dies, etc. We were 1% higher than our less competent competitor who knows nothing about how this building goes together and we lost.
What I don’t think you understand as Chuck notes above is that the owners have become much more involved since the recession and constantly insist on getting three bids from every trade. The days of negotiated work are over despite the fact we are in a red hot market. The owners buy on price and shove the problems down the General Contractors throats.