All Things Being Equal, Price Wins

That famous sales maxim has been around about as long as people have been selling things. And it really has a lot of truth in it.

Consider two sales scenarios— in one, a customer is trying to decide between two purchases. In the customer’s eyes (and that is the operative phrase), both offers look alike. Both do the same things for the customer, both have the same basic features and benefit clusters. So which one will the customer probably choose? The one that costs less. After all, if both offers are identical (except for the price), the only differentiator IS the price.

In the second case, there are again two offers on the table, but one is clearly far and away much better than the other. Yes, it costs more, but it clearly does much more for the customer than the cheaper offer. How will the customer choose now? She will probably opt for the offer with the better benefit cluster, even though it costs more.

(I am not saying that price is never an issue in a sale. It is always an issue. But it is not always the issue. In the second scenario, if the better offer costs ten times as much as the cheaper one, the customer may not have selected it.)

So in sales, our mission is to create inequalities so that competing offers are viewed in a disadvantageous light. Then, if our price is higher (and maybe up to 30% higher), the customer will still select our offer over the cheaper offers.

So how do we differentiate ourselves in a meaningful way? I am not

suggesting you wear striped slacks, a plaid jacket, and a chartreuse Polo shirt, but I am suggesting that you come across in a different way so that your offer is not framed in the same old boring frame every other sales hack uses.

Think about it. Every HVAC sales professional I have ever seen in action does the same things. Opening banter, compliments about the house or trophies or pictures of the kids, a walk-through, needs analysis (at which some absolutely crash), a “proposal”, reaction to the sticker shock, arm wrestling to overcome the objections… yada yada yada.

Most never ask the most important question, and those who do rarely ask it early enough to do any good. Think about it. When you go into an automobile dealer’s showroom to buy a new car, what is one of the first things the salesman (“vampire”) asks you? “What kind of monthly payments are y’all looking at?” If he knows your payment comfort zone, he can put you in a car you can afford, yada yada yada. And what do most of us do? We tell them. “Oh, around $400 a month.” And we don’t even know this guy. In fact, we instinctively mistrust him because he is, after all, a vampire trying to sink his blood-sucking fangs into our wallets.

Or what is the first thing a realtor asks you as you begin searching for your dream house? “What sort of monthly payments are you comfortable with, and how much do you plan on putting down?” And we answer. We don’t even know them yet, but we answer.

Why do car salesmen and realtors ask this question very early in the dance? Because it is absolutely critical to their success! Any realtor can you that it is the peak of folly to show someone a home they absolutely love but cannot afford!

So why don’t HVAC sales people ask their customers up front how much they had in mind to spend? The typical response I get when I ask this question in workshops is, “Because that’s none of your business!” I usually cock an eyebrow and reply, “What? None of my business? What do you mean?”

The responses usually run along the lines that if I asked THEM that question up front, they’d throw me out of the house. Then I ask if they ever bought a car or house and did they answer the sales person’s first question? At that point, most debates shut down. They  are wrong and they realize it.

Problem is, if most of us asked for the customer’s fiscal comfort zone up front with the way we do our sales calls, we WOULD be tossed out on our butts, and rightfully so.

But I started this blog by talking about making things unequal, and if we do that well, the fiscal comfort zone question is a natural.

Consider this scene: I am on an HVAC sales call to people I have never met. We take a moment to get to know each other, then I get out of my brief case some wooden blocks of different sizes and colors. One block—a blue one—is a 1” cube and is labeled “13 SEER A/C”. Another blue block is 1” x 1” x 2” and is labeled “14 SEER”, while a 1” x 1” x 3” block is labeled “16 SEER”, and so on. I have some red blocks, the smallest one labeled “82% AFUE”, another larger block “90% AFUE” and so on. I also have some yellow blocks of various size, showing the different extended warranty options.  Get the idea? I’ll explain how I have thousands of ways I can stack these blocks to build a system for their needs, but each stack has a different price attached to it. (See here.) I’ll say, “I can design a number of solutions for any home. Some of those solutions are quite elaborate and detailed, but costly. And that could make you uncomfortable, and I don’t want to do that. So you can help us both zero in a on a perfect solution for your needs if you can tell me how much you are comfortable investing in this solution?”

I doubt if most folks would be offended by that and throw me out the door. We then establish a budget (see here) and I build a system that can afford and that will meet their needs.

As sales trainer and motivational speaker Zig Ziglar might say, in an ethical sales transaction, both parties win, because the customer gets the maximally best system at a price they can afford and the seller makes a fair profit for the solutions he provides. (And in my book, an ethical sales transaction is one where I bring the best solution the budget and conditions warrant to the customer, not necessarily the most expensive box on my wagon.)

I close with a wonderful saying by Zig on doing business together:

When we separate the word BUSINESS into its component letters,

B-U-S-I-N-E-S-S, we find that U and I are both in it.  In fact, if U and I were not in BUSINESS together, it would not be business!  Furthermore, we discover that U comes before I in BUSINESS, and the I is silent.  Also, the U in BUSINESS has the sound of I, which indicates it is an amalgamation of the interests of U and I.

When they are properly amalgamated, business becomes harmonious, profitable and pleasant.