There are four key factors to consider when responding to this basic question, no matter how it is phrased; when, what, who and why. When (in the buying cycle) is the question being asked, exactly what (price, cost or something else) is being asked, who (their role in the decision making process) is asking and why are they asking.
When – if you sell a simple product and the transaction is typically concluded in a single meeting or call then it is reasonable that the money question is raised and you need to address it then or commit to provide an answer soon after the meeting. However, if what you sell is more complex involving; a number of meetings with different people, requirements investigation, production of a specification, presentations and proposals then answering something like “how much” in one of the early meetings is not realistic and should be avoided.
Tip one – “How much?” is a classic tactic used by someone who is looking for an early opportunity to terminate a sales prospecting conversation – don’t rise to the bait; politely park the question to be dealt with later.
Tip two – Your sales process should include specific stages when it is appropriate to handle the money question and you should use this to manage the interaction with the prospect.
Tip three – don’t feel you have to wait to be asked about money; when the time is right you raise it.
What exactly is being asked? “How much” is a catch-all phrase that could include; what is the price, what is the cost, what is the monthly rental or lease fee, or something else. It is important that you know exactly what you are being asked before you answer otherwise you could create a misunderstanding that could in turn lead to you being eliminated as a potential supplier before you have the opportunity to fully explain what you have to offer.
Note to self. “How much …?” If the answer you give is your price, you’ve immediately transformed the conversation into a pricing discussion missing the opportunity to talk about cost and more importantly value and benefits. Price is only one component of the cost.
One other important factor to consider is whether the prospect is asking the right question. For example; if they are considering a purchase of low energy industrial lighting the price is one important factor but as it will be recouped several times over during the life of the installation, as a result of the savings in energy costs, knowing exactly what will be saved is even more important than knowing the price
Note to self. Decision making should consider the total cost of acquisition (all the elements required to become the owner), total cost of ownership (all the elements required to use what has been purchased e.g. fuel for a car) and risk; the risk of going with a new supplier, the risk of staying with the existing supplier and the risk of starting/continuing to do it themselves. A brave supplier will raise the risk arguments so they are debated in the open; if you do not you are leaving the prospect to give themselves sleepless nights on their own and unchallenged.
Tip one – use your own questions to ensure you know exactly what is being asked of you before attempting an answer.
Tip two – if you feel you are being asked the wrong or an incomplete question say so. Don’t be afraid to gently challenge with something like “Of course we can let you know the fully fitted price once we have done the lighting survey and we will provide a breakdown of how much you will save through lower energy usage as well”. You have achieved several things here; you have delayed answering the question until you are ready, you have brought in the topic of energy saving that they may not fully appreciate and you have planted a seed with “fully fitted price” which will leave them wondering whether your competitor may charge extra for fitting. Always nice to plant a small landmine for your competitors.
Who is asking? If you are sitting with the sole decision maker then they are the right person to be having the conversation about money. You still need to judge whether they are asking the right question at the right time but they are the appropriate person to be asking you the question so you need to deal with it.
If you are selling a complex proposition where the buying process will involve multiple steps, a decision making process consisting of several stages and a decision making unit (DMU) consisting of several people from different disciplines, then who is asking the question becomes very important. Within the DMU you may find; budget holders, decision makers, influencers, users and others and each could be seeking different information when they ask “how much?” Consider the low energy lighting example; the engineering director will be interested to know whether there will be an installation and on-going cost implication for his maintenance function while the FD will be more focused on the overall RoI so will look at energy savings as well as installation and maintenance costs. The FD will also be interested in funding options as he will have reasons to consider both capital and expense options.
Tip one – your sales approach should include a process to profile all members of the DMU to help your sales people identify what is most likely to interest and motivate each person in the DMU. Having the relevant information to present to each person will increase your credibility and their appreciation for the role you might play in solving their current business issue.
Tip two – if, for example, you are sitting with the FD you can explore what financial information they will want and in what format and also how they will finance the purchase. If you feel they have not considered something important such as maintenance costs, politely suggest they should consider this – “would it also be useful for us to provide a comparison between current and future maintenance costs?”
Tip three – although all members of the DMU are important there will typically be one or two who have the power and authority to sway the decision – make sure you know them and that you have done everything you can to satisfy their needs and wants.
Why are they asking? The obvious answer is that they want to know! But why do they want to know? There are many answers to the question and understanding this is a key aspect of competitive strategy and objection management. The important thing is to ensure you know exactly why they are asking before you provide the answer and combining this with the understanding gained from exploring when, what and who will put you in a powerful position to give the prospect exactly what they need and gain you an order for new business.
Tip one – during the early stages of your sales engagement process explore the prospect’s decision making approach to gain an understanding of how money will feature in the decision. This will enable you to pre-empt potential objections about price or cost by ensuring what you are offering delivers value and a demonstrable return not just a bill.
Tip two – whatever the question, always explore why (reasoning, hidden agenda, …) before answering it.
Ask yourself and the prospect if they have considered “The cost of doing nothing?”, as doing nothing is the most common outcome to a sales negotiation in some business sectors you should explore whether the prospect has given due consideration to the cost of doing nothing. Doing this at an early stage will help to avoid protracted negotiations that ultimately go nowhere and it can also provide you with the information on imperatives, timescales, etc., to help you guide the situation towards a successful conclusion.
“We help you save …” is a powerful conversation piece because it focuses on improvement (customer satisfaction, productivity, lower expenses, higher quality, etc.) and savings are forever not just at the point of purchase. The discussion changes from what they have to spend to what return they can get from the expenditure.
“We help you make more money” is even more powerful as most organisations are hungry to increase revenue and profits. If, for example, your solution reduces waste or speeds up production this will help your customer make more money.
Warning – if your answer to “How much …?” triggers the retort; “that’s more than XYZ company” it is a sure sign you have failed to establish the value argument. Take this opportunity to grasp the nettle and re-visit the value arguments for your solution. As you re-emphasise your value arguments ask the prospect how this compares to the competitor’s offering – make sure they are comparing like for like.
Previously published on LinkedIn Pulse