Why do some customers see the added value in a particular product while other customers dont? Often this difference can be traced to the behavior of the salesperson. Lets examine a relatively common sales scenario.

The buyer for ISP Co. has indicated that he needs a proposal and that it should include the best price possible. Sally, the salesperson from Router & Switcher, asks the buyer a few questions, then returns to her office to put together her proposal. A few days later, Sally delivers the proposal. The buyer tells her hell get back to her shortly. She asks the buyer what he thinks of the proposal, and the buyer replies that Router & Switchers price seems relatively competitive. A few days later, Sally learns that a competitor has been awarded the order. And, sure enough, that competitor had a lower price.

The scenario in the preceding example is all too common. Some salespeople blame their employer in this situation because they dont feel their firms products are price-competitive. Other salespeople complain that their marketplace is now commodity-driven and that their companys products are not different enough to justify the higher price tag. Management thinks the problem is that many of their salespeople cant sell very well. They point to the fact that 20 percent of their salespeople win more of these competitive situations than the remaining 80 percent do. So whos right?

Consider another example.

Heather, an office products consultant, has just completed her third sales visit with Jason, the chief financial officer of Omnitech. During this visit, Heather learned that there was only one competitor that had a lower price, and that that competitors product didnt

stack up as well as hers. Heather was feeling relieved and excited-so excited, in fact, that she called her boss and told him that she felt the company would be receiving the $1 million contract by the end of the quarter. He also shared in Heathers excitement. Who wouldnt? You can do everything the customer wants. You have the lowest price. Its in the bag, right?

Wrong!

A few weeks later, Jason had to inform Heather that she didnt receive the business. Jason told her that it came right down to the wire. Although Heathers proposal was less expensive than that of the company Omnitech had selected, and although it seemed to Omnitech that there were no appreciable differences between Heathers proposal and her competitors, Omnitech felt that Heathers implementation process was not as detailed as that of her competitor. At the end of the day, Omnitech was concerned with the risk, effort, and hassle that it perceived might be associated with implementation issues. These issues ran the gamut from morale, equipment downtime during implementation, and the personal concerns of each of the members of the task force that it might reflect on them if the implementation did not go smoothly.

DISTINGUISHING PRICE AND COST

What went wrong? Heather did not distinguish between price and cost. Unfortunately for Heather, her customer did. Customers view price as a subset of cost, if not always consciously, then at least subconsciously. They perceive price as only one factor of cost. Other factors are:

A The hassle of changing suppliers, vendors, or partners because of the time it will take to get to know all the new people on the scene

A The effort it will take switch suppliers in terms of time demands on the customer

A The risks associated with making a change, such as contractual conditions or political issues within the account

If you think a large, complex sale is going to be too easy, it is more likely to be too hard, cautions Mike Navel, a training consultant who works with a large pharmaceutical company. And, sure enough, Heather lost the business to a competitor whose price was 7 percent higher than hers.

PROBING FOR RISKS

In order to avoid the situation Heather found herself in, salespeople should probe for other cost issues. Is the buyer concerned that your firm is a new manufacturer? (Risk relating to the reputation or performance of the seller.) Is the buyer bothered that the product looks so complicated that it will take too long to learn how to use it? (Risk relating to the buyer.) Is the buyer concerned that the buyers staff might never be able to learn how to use it? (Effort and hassle for the buyers staff and career risk for the buyer.) Other examples of risks are:

A Career risks to the client if the decision turns out poorly

A Product risks to the company if the product fails to live up to its claims

A Emotional risk associated with poor prior experiences with a company