For many retailers these days, opening the doors each morning is a replay of the classic 1969 two minute cartoon “Bambi meets Godzilla” as created Marv Newland. Bambi is the oblivious small business owner who is just trying to make a living and pay his bills. Godzilla is, at one and the same time, the giant retail store across town and the cold hearted customer who would rip all the flesh off Bambi’s bones.
Survival in this jungle depends upon acting smarter in the day to day running of your business. At the top of the list is staff training. I don’t mean the kind of staff training focused on smiley faces, using the cash register, being nice to customers, or even upon product training, although all have their place. Rather, retailers would benefit most by focusing staff training on How to Present Your Price.
“How much?” is every customer’s question. How the salesperson answers that question will determine whether the customer slaps down his visa card or walks around the corner to the competition.
We are, of course, speaking here about a particular kind of sales techniques. People with poor sales skills sell on price alone. The only response they have to the question, “Why should I buy from your company?” is, well, price. And if price is the sole criteria upon which to make a buying decision, then low prices and low margins will be the norm in your company.
The solution, of course, is good and well trained sales people who find a way to conjure up a short and vivid picture of value in their client’s brain before talking about price.
What should the sales training look like?
Step One: Train the staff to deal with sticker shock. Sticker shock can just be an act to get you to reduce the price. Remember that a shocked response to your price is sometimes merely a buyer’s strategy to get a discount.
Years ago, an employee of mine responded to customers asking “What’s MY discount?” by stating loudly that the $15.95 hat in his hand was (an exaggerated) $1500 dollars. However, today, and with his discount, it was a mere $15.95 – the original sticker price. The customer laughed and bought the hat.
Step Two: Frame your price. Sometimes sticker shock reflects ignorance of the market conditions. If your competitor is within a few pennies of your pricing, your customer will appreciate knowing that you are competitive. Tell him! “My competitor has a similar replacement part – but not from the manufacturer – that is $1.50 cheaper and is universal so it only requires a little bit of assembly.” The inborn analyst in us all weighs the cost of driving to an alternate location against the benefit of saving $1.50.
When price framing, remember your benefits. In a central BC village, I saw a store sign for pool noodles, the brightly coloured foam sticks that kids swim with – advertised as being $1.25 cheaper than Canadian Tire, 40 kilometers away. Better would be so offer that their pool noodles were only $1.50 MORE.
Step Three: Get value on the table before you talk about price. Build a detailed picture of the value that is offered by your product or service. Once the value side of the ledger is built up in the mind of the customer then the price on the other side of the ledger seems less important. Keeping the price to the end means keeping profit margins.
Step Four: paint a vivid picture. Many years ago I was present at a sales training session in Vancouver put on by a 300 pound Maytag sales trainer. He explained in great depth why the “heavy duty” machines were worth the extra money, how special the springs were and bored us with the technical details until all our eyes were beginning to roll back into our heads. As he continued the explanation, he quietly positioned a tiny stepladder to the side of the washing machine. This huge man casually went up the steps and into the machine through its open lid. “This is heavy duty”, he announced, while standing inside the washing machine with outspread arms and a gigantic smile on his face. That image has never left my memory.
Step Five: Get your customer to open first; telling you what price they thought they might pay. Most retailers and contractors will have a range of prices for similar goods that coincide with features and extras. No point in wasting time trying to sell a $30,000 boat to a man with a dinghy budget! Get him to the dingy aisle as soon as possible.
Step Six: Sandwich your price between the benefits you have already listed. This heavy duty washing machine with super thick springs will save you water and time by handling those really big loads. And at $799, it is a real bargain because of the 2 year warranty on parts and labour.
Step Seven: Try to create a pyramid of cost penalties for not buying. This is a one day sale. This is the last of our inventory until July. The next models from the manufacturer have a shorter warranty and are not available in this colour.
My final word on staff price training is to drive home the supreme idea that price is an indicator of value by itself. Low price signals a CHEAP product. Do you want to sell Cheap Products? Or would you rather be known for high quality products and service?
Would a diamond be THE symbol of undying love and commitment if it was priced at $4.95?
Begin that turnaround in your business fortune with a great pricing strategy