Customer says “your price is too high.” How do you respond?

Or who they internally achieve the price points you are not able to achieve internally. Let’s say a rep sells a widget for $10.00 for company X from their warehouse. Company X has total annual profit of $2,000,000 for widget X, all sold from the warehouse and some online sales. Gross margin is $3.00 (meaning company X buys them for $7.00).

Yet company Y also sells the same widget, but for $7.00. And yet they also have annual profit of $2,000,000 from the widget.

This happens...a.l.l...t.h.e...t.i.m.e.

So even if you know how company Y quotes, how on earth are you going to compete with that? It’s a MASSIVE problem for sales people.

This is where the context of my other comment in this thread comes in.

First, you as a “bridge sales person” between senior management and your customer need to look at the “why’s”. Why is this happening? So you then examine closer. Well, your company X, and the competition are already getting product from overseas. So your price purchasing price point should be the same. Therefore what the heck is going on?

Well, what happened is that company Y’s sales force decided to get creative. They knew they needed to innovate in ways nobody else way innovating in order to pull ahead of the pack and to beat you, the competition. They took it upon themselves to become the “bridging brains” between what the customer wants (greater and easier accessibility for your product, with just as good of customer service or better, but also with cheaper prices... much cheaper”. AND they wanted to preserve the $2,000,000 profit they (and you) already had, and not losing it when dropping prices.

The sales team dissected how this business was ran, and how they could reorganize it to drive more sales through innovation.

They knew that their product required several development steps internally to come to fruition. Let’s say the very first step is a customizable taking-stock / consultation / measuring step (hence this could be applied to software, custom home products, custom food making, etc). The remaining two steps are simply putting it together and delivery.

Previously, company X and company Y would find an inquisitive customer, get the sale, the consult with them to find out how to make it fit the customer’s needs to a tee, make / assemble the product, and then deliver it. But to make this work, the people who conducted step 1 had to be roughly in the same place or internal within the company to have step one come to fruition.

But here’s what company Y’s sales staff did innovate internally so as distinguish themselves from your company X, and ultimately beat you at your own game: They figures out if they could find a way to outsource step 1 to other companies who were already well-connected to the customers, they could leave step 1 to those other companies, allow them to make some money on it in return for helping to market the end product, and then company Y would just look after step 2 and 3.

In the case of customizable software (ERP systems, etc), maybe company Y partnered with Staples or something... sales staff looked after ensuring staples was well equipped to do advertising for the end product. The customers, now at an international level, saw the customizable product in staples advertising and told staples they wanted it. Staples then had a local consultation team (in the local city) meet with the customer and figure out how to customize the software. This info was sent back to company Y. Company Y then looked after making it in one central location, and delivering it. The customer paid for the service, Staples got their bit of profit, company Y got theirs, and the sales staff (who supported both staples, as well as the local step 1 consultation team, and the customer) got their commission.

A cabinetry company did the same thing. Before, the local cabinetry company would advertise online, would have their 4-strong measuring team go and measure the kitchen walls dimensions, would make the cabinets in their local shop, and then send a truck to deliver and install. But then they partnered with Home Depot. Millions of customers saw their display in Home Depot, would tell Home Depot they wanted to buy cabinets, Home Depot would arrange for company Y’s closest measuring team to measure, that would be sent back across the company to the central shop, it would be made, then shipped back cross company for final installation by a contracted installer.

Same with food services. A food company before would make what a customer wanted in their restaurant off a menu. But then they partnered with Safeway, customers would give their 7 day menu choice to Safeway, the food company would put all the dry ingredients in a box, ship it to the customer, the customer would then take the coupons included in that box and get all the remaining fresh ingredients from Safeway at a 10% discount using the coupons, thus bolstering Safeway’s sales.

In the end, company Y’s sales people, regardless of what the nature of their business was, boosted their sales from 10,000 units/year to 4,000,000 units/yr, all because the sales people did what the best sales people do; acted as a bridge between customer expectations and management, to get the customers a better product, easier, with the same quality or even better.

And here’s the best part. Because VOLUME was increased, production costs dropped... a LOT. Instead of costing $7.00 now to get (either from manufacturing abroad or made in house), it dropped to $5.50. But the increase in volume made it so their net profits stayed the same or grew, thus beating you, doing you out of a sales job because they did your company X out of business.

Add internet technology to this to increase info flow between the customer and company, and it becomes truly dangerous for competitors.

That’s what a sales person can do for their company. There are entire books and courses on innovative sales and sales management geared towards market disruption.

Sometimes knowing what the competition quotes, and a sales pitch on value creation and differentiation just doesn’t cut it.

/r/sales Thread Parent