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Need professional advice on our sales tactics

Hello everyone. This is my first post to this forum. Hopefully, there willbe some people that will be nice enough to assist me with a problem that I am having right now.

I work in the razor wire industry. The company I work for is one of the largest manufactuers of razor wire in the US. We are a very small company, but our production is that of a larger one. My main competitor is a division of the behemoth(Tyco), called Allied.

I was hired to bring some notariety to this company and to attempt to gain a larger portion of market share. All of the ingredients are here for that to happen.

We have the lowest prices, a similar or maybe even better product than the competition and we can manufacture the materials as fast as anyone.

In my recent attempts to introduce myself to many of our distributors and potential customers, I explain to everyone how we are better and why they should use us. One large point that I really sell is that we will beat any competitor price by at least 3%. For the most part people seem to like that and many have already taken advantage of this guarantee that we offer. However, one of our largest distributors recently had this to say to me about my 3% guarantee.

"Lastly, your guarantee to beat Allied by 3% is an approach that I don't favor. It is too easy to be the "me too" or "have all of the answers after the fact" guy. I would suggest diligence in your pricing to us and that you be competitive as possible if you truly want our business. I think sales pitches that are based on beating a given number are unprofessional. This is not a slam on you but rather a communication of my values."

Now what he is referring to is that both of us will submit quotes on potential orders. 9 times out of 10 my pricing is lower, but occasionally we will be a bit high. What I was trying to ensure was that regardless of what price they are getting from my competition, that we will beat it. The way I see it, in this economy, if you can save 3% on every order, why not take advantage of it. However, hemakes it seem like this is a sleazy sales tactic. I think it is crazy to see it that way considering every major retail outlet across the nation does the same, but maybe I am missing something.

Can someone please shed so light on this for me.

Thank you.
Steve - by SGarner
To be honest with you, price doesn't really sale your product. It's the service. I have consistantly sold a customer on the same vehicle at a higher price than the competition, because I have sold myself and the company.
"Sir, I'm not here to sell you a car today? I'm here to provide you with such a great experience before, during and after the sale, that anytime you are ready to buy a car I am the first one you come to see."

I can't remember the name of the movie but Nichloas Cage was in it and he was selling tires. They were a small company trying to land one of the biggest trucking company accounts. The owner asked him why he should do business with them and his response was golden. He told him he had no idea why he should do business with them. He told them they couldn't beat the prices of the larger competitors, and couldn't offer special discounts like the competition could. He told them that since they werent such a big company they wouldn't be able to do that, but because they were a smaller company, that they would be able to provide better service, because to them they weren't just another number. To their small business they were an individual with a name and they would provide alot better customer service, because they weren't streached like some of the larger companies. - by jrboyd
Jrboyd, I completely agree with you, but maybe I wasn't clear as to the advice I am really looking for. Let me give you an example. Myself and my competitor are asked to quote 200 rolls of razor wire. Now, neither myself or the competition knows what pricing the other has, so we both put in our competitive bids. Usually, we are lower on price and that gets us the order, however, if the other company is lower on the intial bid the same goes, they will get the order. In this industry price is all that matters as long as you can deliver it on time and you get quotes back to them quickly. Anyhow, if the bids come in and I am not the lowest bidder, I tell all of my customers that I will give them 3% below the lowest bid they receive. No one else inthe industry offers this. But for some reason this one guy, who is one of our largest distributors, doesn't like that. I am trying to find out if anyone can see the logic behind why he feels that way and how I respond to him.

Thanks,
Steve - by SGarner
I would typically agree, but in this industry sales go to the low bidder as long as you can deliver on time. Just the way it goes. I guess I wasn't very clear as to what I really wanted to say. Why would me saying I will beat anyone by 3% bother him? I understand it kind of ruins the bidding process, but if you are looking out for your company and always trying to save them the most money, why would you not want to save the money? - by SGarner
Dear SGarner

What I hear from your client is; don't throw me in the pile with everyone else because I am special and I need special attention. Here is my advice to you. Stop trying to sell him something long enough to hear what he is telling you he wants. LISTEN to his needs and then give him what is "BEST" for him and his business, not what is cheaper or discounted. This client will also have to be serviced. You will need to woo him. You will have to let him know that he is the most important person in the world to you. Now this may sound unreasonable but at that very moment, when you are in a business transaction, that client is the most important person in the world to you. Make him feel IMPORTANT! Ask QUESTIONS and LISTEN to find out what he wants and needs and then let him BUY! This is my opinion!

Warmest Regards - by MPrince
In my recent attempts to introduce myself to many of our distributors and potential customers, I explain to everyone how we are better and why they should use us. One large point that I really sell is that we will beat any competitor price by at least 3%. For the most part people seem to like that and many have already taken advantage of this guarantee that we offer. However, one of our largest distributors recently had this to say to me about my 3% guarantee.

"Lastly, your guarantee to beat Allied by 3% is an approach that I don't favor. It is too easy to be the "me too" or "have all of the answers after the fact" guy. I would suggest diligence in your pricing to us and that you be competitive as possible if you truly want our business. I think sales pitches that are based on beating a given number are unprofessional. This is not a slam on you but rather a communication of my values."

If price is the sale, what happens when they come in with a price lower than yours? Now you've set the standard that has nothing to do quality, ability to deliver, ease of installation or repair, etc. And then what do you do with that really big job where your competition deliberately low balls you, whether for cashflow purposes or by draining other assets to support the discount.

I keep trying to get my kids to understand that if price was the answer, there would be only one insurance company standing.

Aloha... Tom :cool:shds; - by rattus58
Jrboyd, I completely agree with you, but maybe I wasn't clear as to the advice I am really looking for. Let me give you an example. Myself and my competitor are asked to quote 200 rolls of razor wire. Now, neither myself or the competition knows what pricing the other has, so we both put in our competitive bids. Usually, we are lower on price and that gets us the order, however, if the other company is lower on the intial bid the same goes, they will get the order. In this industry price is all that matters as long as you can deliver it on time and you get quotes back to them quickly. Anyhow, if the bids come in and I am not the lowest bidder, I tell all of my customers that I will give them 3% below the lowest bid they receive. No one else inthe industry offers this. But for some reason this one guy, who is one of our largest distributors, doesn't like that. I am trying to find out if anyone can see the logic behind why he feels that way and how I respond to him.

Thanks,
Steve
Auto industry is the same. We get calls for bids on vehicles from companies all the time. I have found that I don't give them a bid, and I get 75% of the business from these calls. I get with the primary decision maker and explain to them the difference in service. I tell them I have never lost a customer over price, but what's most important is they get the product they need. Once we have the vehicle the need, then I give them such a wow experience, and explain that I not here to make them one sell I here to sell them from now to the future. That way they don't have to place bids next time they buy and etc.. Build up the relationship and they forget about the bids, and I can maintain better gross - by jrboyd
However, one of our largest distributors recently had this to say to me about my 3% guarantee.

"Lastly, your guarantee to beat Allied by 3% is an approach that I don't favor. It is too easy to be the "me too" or "have all of the answers after the fact" guy. I would suggest diligence in your pricing to us and that you be competitive as possible if you truly want our business. I think sales pitches that are based on beating a given number are unprofessional. This is not a slam on you but rather a communication of my values."
Let's put this on track. It starts with listening to the prospect. First, he never accused you of being "sleazy". Instead, he(she) appealed to your professionalism and TOLD YOU HOW TO SELL THEM, by telling you HOW NOT TO TRY AND SELL THEM.

You should be so lucky that all your prospects would go out of their way to advise you how to sell them. Your job is to LISTEN.

With regard to the tactic your company uses (beat any price), it is very low on the food chain among selling philosophies, in my opinion. Unfornately, there are companies that use that, BUT FORTUNATELY, many do not survive. - by Ace Coldiron
Wow, I am very surprised by many of the responses. But thank you to everyone.

This industry is very unique in that there are only 2 players in the arena. My company and one other. We used to manufacture good s for the other company, but out agreement with them expired and we decided to go out on our own. It is going very well so far.

We have a slightly better product, better production and delivery times, better service and a lower price. The only reason, in my opinion that we don't have a larger market share is because we are new in wholesaling. People do not know about us yet, but when they do they almost always use us exclusively.

I am not saying that this is my main sales tactic or even that it is a great one, I was just really surprised by his reaction. This tactic is used by many successful retail companies, so it is historically effective. Walmart, Best Buy, Costco all use a model of match or beat prices of their competitors. I know service is important and I know all about taking care of clients. I was an account executive in the mortgage industry for years and you will never meet more needy sales people that loan officers.

Bottom line is in this industry 2 things win you the deal. The lowest price and can you meet my requested delivery times. If you can do both, you get the job 9 times out of 10.

The competitor does low ball me all of the time and that is why I hedge my bets with beating their pricing by 3%. It would be different if these companies were loyal, but they are not. I can give this guy 10 to 15% savings on all of his orders for a year, but when the big one comes and the competition is better by 1 or 2 dollars per roll, guess who gets the order? The lowest bidder. I had never seen anything like it until I got here. - by SGarner
This tactic is used by many successful retail companies, so it is historically effective. Walmart, Best Buy, Costco all use a model of match or beat prices of their competitors.
No, it's not the same business model. What you are referring to with Walmart, Best Buy, and Costco is known as "multicomponent profitability" which is a construct to vary prices on the exact same product depending on circumstances, point of purchase, competitor pricing, and customer psychographics. It is a retail merchandising model, not a sales process.

In multicomponent profitability's most common and simplist form, beverages are sold that way with point of purchase and "market will bear" being the strategic factors.

However, if you want to rebut that distributor's objection, I think you will position yourself very badly with them.

In any event, I hope things work out for you. - by Ace Coldiron
Thank you S. People don't buy on price! Your testimony makes the point nicely. It's not completely true. According to our research in the business to business field, about 16% of people do buy exclusively on price, when they can discern no difference between products or suppliers. Now and then, people do buy the best or even the best and cheapest yet most of the time they buy from those who convey confidence in their products capacity to meet the their needs.

Your buyer seems to be extending a friendly hand. I suggest you take it by trying a large dose of listening (not the easiest thing to achieve) and when you are sure you understand all the needs, both personal and commercial, present your offering in terms that match or narrow any gaps. - by Clive Miller
You are not selling to a Wal-Mart customer. Some of your customers will be Wal-Mart (price) customers but I don't think this one is. You don't want to be a cookie cutter salesperson. You want to be able to talk with you clients, ask questions and, listen to what they have to say. If you listen long enough they will tell you everything you need to know about what it will take to make them happy. With one it may be price, with one it will be service, with one it could be the fact that you have a special product or service and another may want you to take them to lunch. It is up to you to find out what they want and sell it to them or allow them to buy it. You can do it! I can tell from your posts that you are high energy and a go getter. It is obivious you want to be successful for yourself and for your company. Take the advice you read on this forum and try not to get confused by it. You know yourself and your personality so always stay true to that because anything else will not be authenic. Listen to our advice and use what fits you! That is my opinion.

Warmest Regards - by MPrince
I agree with MaryMartha... ask questions and listen long enough, the sale will uncover itself.

Much Aloha.... Tom thmbp2; - by rattus58
Steve,

It appears that even though you asked for advice, you seem reluctant to accept it. Virtually everyone so far has suggested that price is not the only determining factor but you keep coming back to it.

I highly suggest that you take the advice that had been posted here: ask more questions, listen more carefully, follow your prospect's lead, and focus on what's important to HIM. You will close more sales.

Cheers!
Kelley - by Kelley Robertson
Thank you S. People don't buy on price! Your testimony makes the point nicely. It's not completely true. According to our research in the business to business field, about 16% of people do buy exclusively on price, when they can discern no difference between products or suppliers. Now and then, people do buy the best or even the best and cheapest yet most of the time they buy from those who convey confidence in their products capacity to meet the their needs.
Clive is a B2B Sales Expert and I concur with his statement. When I started my own company with an office and o v e r h e a d, there's a word with a dose of reality, I found myself sometimes choosing the inferior or indiscernibly similar products and services based on budget priorities.

Speaking generically about sales and marketing and not of your company's business model since I believe it to be one of many valid options, I would add a point on becoming a commodity. I've heard it referred to as a Confidence Gap which occurs when a customer is unable to determine if your products or services are better, worse or different than your competitors. When this happens they will default to price and that makes you a commodity like everyone else and starts turning prospects into price shoppers or turns off their interest in listening, thus making them loyal to your competitors. That's also why it's important to be first.

You must differentiate yourself. Maybe it could help if you don't say that your product is a "similar or maybe even better product than the competition" but rather differentiate to stand apart. I suspect that you probably already use this technique and there are many specific ways to accomplish this which is a topic for another thread.

To your success - by Tony_B
Thank you S. People don't buy on price! Your testimony makes the point nicely. It's not completely true. According to our research in the business to business field, about 16% of people do buy exclusively on price, when they can discern no difference between products or suppliers. Now and then, people do buy the best or even the best and cheapest yet most of the time they buy from those who convey confidence in their products capacity to meet the their needs.

Your buyer seems to be extending a friendly hand. I suggest you take it by trying a large dose of listening (not the easiest thing to achieve) and when you are sure you understand all the needs, both personal and commercial, present your offering in terms that match or narrow any gaps.
Clive, this is a great post...I love it! - by MPrince
"Lastly, your guarantee to beat Allied by 3% is an approach that I don't favor. It is too easy to be the "me too" or "have all of the answers after the fact" guy. I would suggest diligence in your pricing to us and that you be competitive as possible if you truly want our business. I think sales pitches that are based on beating a given number are unprofessional. This is not a slam on you but rather a communication of my values."
I think I can relate with what that customer. Now if you pulled me aside and told me how you used to manufacture goods for the other company, I'm thinking credibility, and how your company has gone to great lengths to provide better product, better production and delivery times, better service and that you were serious about earning my business and would give me a special price break to do so I wouldn't be put off. - by Seth
I believe the key here is many clients, many ways of handling a sale. That is why you ask questions, listen, get to know the one in front of you. Everyone one is different so every transaction will be different. It is up the the salesperson, in this case SGarner, to find out what the client's "hot buttons" are. It may be price and it may be that another don't care about the price he wants value and another cares about service, etc.

Ask Questions, Listen and get to know your client. That is my opinion. - by MPrince
We used to have sales reps come into my father’s place of business that made claims they would beat the competitions price. If not let them know what the competitions price was and they would beat it. The promise was made they would be the lowest and best possible price. If you can lower your price to beat the competition after the bid there was a lost promise of giving the best possible price. In plain simple terms you did not give the best possible price. A broken promise or a lie whatever you want to call it.

Stop making false promise especially when your claim is the lowest price. I am not a fan of any company that is proud to be the lowest price that alone speaks volumes of how they view their employees and company. Whether your company treats the employees well or not is not the question it is the perception. It is a matter of principle and values by this businessman. - by rich34232
Wow! Great stuff!

This thread is the exact reason that I joined this forum. This is actually my first post but after reading it I had to join and post.

I can empathize with Steve, as I sell a product line that is "commoditized" (if that is even a word) - food service disposables (paper plates, cups, bowls, toilet paper, etc...) and am having a challenge because everytime I cold call somebody it comes down to can I give them a lower price than my competition.

I have only been selling for a little over a year now and want to learn how to get out of the price selling business.

What questions do I need to ask?
What wants/needs to I need to identify?
How do I differentiate myself and/or my company from the half a dozen competitors that literally sell the same exact product/brand?

Any and all thoughts/comments/suggestions will be DEEPLY appreciated.

Sincerely,

Eric - by encsteph
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