How to Win the Price Wars
By Mark Tewart
A common question I am asked when I conduct sales training programs is, "How do I handle the 'best price' question from the customer?" Dealerships have varying philosophies about whether to give price or not to give price, start high or low or how to handle the price issue once you have given the customer a price. The answer to the question is more complicated than a single, one size fits all, word track. Handling the 'best price' issue correctly combines the technical sales skills used in knowing word tracks, overcoming objections and handling questions with the human sales skills that deal more with people skills, identifying underlying emotions and the customer's psyche.
The first step to being ready to handle price issues is to increase your power. Power perceived is real power when negotiating or handling price. You must recognize that the customer wants to buy even more than you want to sell. You must deal from the position of wants, not needs. Needy salespeople push customers away by reacting from fear rather than positive power.
The second step is to realize that price questions are just normal questions for the customer to ask and stop looking at the questions as a win-lose, us-against-them mentality. When a customer asks for your price, it does not mean you have to give away all your profit, even if they have been shopping. React to price questions with clear, calm answers.
The third step is to realize that price is never the only issue when a customer makes a decision. No matter what the burned-out, low-producing, self-proclaimed sales expert in your dealership says, price is only one of many issues. Customers will judge your character and either trust or not trust you. If the customer does not like and trust you, the best price in the land will not matter. The customer must become emotional about the product, salesperson, dealership or all of these to influence the logical thinking that makes a decision in your favor. How you treat people, show enthusiasm and obligate people to you by adding more value than expected to the process will make tons of difference in the price vs. value equation.
The fourth step is to stop doing battle through apples-to-apples price wars. Every Saturday you can open the newspaper and see apples-to-apples price wars. If you compete the same way as everyone else, you will face their same problems; price-only shopping by many of your customers. The way to change the game is decide what your SDP is (Specific Defining Proposition, sometimes referred to as USP or Unique Selling Proposition). What specifically makes you different, unique and adds more value to your customer? Do you have 1 or 10 certified technicians? Do you have expanded service hours?
Do you have a large dollar amount of inventory? Do you have a long time in business? Do you offer free car washes? Do you offer loaner cars? Whatever your specific story is, tell that story in a manner that relates to your customer, tell it well and tell it often.
The fifth step is risk reversal. Lower the risk and barriers to do business with you. Make it easier, quicker, friendlier, simpler and less threatening to do business with you. Ask yourself, "What risk and barriers do my customers face?" and then remove them. Price guarantees, clear pricing explanations, added product guarantees, maintenance included, added service guarantees, other goods and services offered by you in a one-stop-shopping experience or through affiliations you have made, all are ideas that makes someone you vs. someone else and takes their eye off the price-only issue.
The sixth step is to know the technical aspects of handling price questions through word tracks, knowing how to segue back to your game plan and what questions to ask to regain momentum and direction. The longer I am in sales, the more I realize that this step, although important, is not nearly as important as I once thought it was. The other steps will have far greater impact than any 'perfect word track.'
I recently have been reassured that the above steps work because of the shopping experiences I encountered while shopping for items for a new home that my wife and I purchased. Everything my wife and I purchased, whether it was furniture, a tractor mower or a pool table, we purchased because of greater value added through one or more of the above steps. In most cases, we paid a higher price because of the product, business, or service added. I found that most businesses are reluctant to drop their price as quickly and as much as auto dealers are accustomed to. The best companies and salespeople we dealt with told a story and told it well. They added value better than their competition.
Mark Tewart is the president of Tewart Enterprises Inc., a sales, management and customer service training and consulting organization conducting seminars and in-house training programs internationally. mtewart@dealeronline.com
