A price objection is the most common objection surfaced in every sales call - 1 in 4 prospects raise objections regarding price. And the Pavlovian response is to offer a discount or monetary incentive. But is it really effective?
At Salesken.ai we have the benefit of assisting and analyzing almost 1 million minutes of sales conversations every month. Our customers include companies in Education, Software, and the Financial Services industries. And their buyers are both businesses and consumers.
Our data shows that top reps offer a price discount in only 5% of their successful calls. So how do they address price objections in the rest of the calls?
LAVA Technique to Objection Handling
The LAVA is an effective Objection Handling Technique. Once you have listened to and acknowledged the prospects' concerns, Verify. Probe further to verify the true concern of the prospect. Based on the prospects’ response, you can classify them into one of these 4 personas:
- “I don’t see what your product could do for me” - Prudent
- “This isn’t a priority right now” - Procrastinator
- “I don’t want to get stuck in a contract with you” - Phobic
- “I really don’t have the money” - Petty
You need to tailor your responses to each of the personas.
- Prudent - “ I don’t see what your product could do for me”
Ask yourself this question - Why does a customer purchase a product? Is it for the features or the value it offers? A Kindle is a library of thousands of books but does a frequent traveler need thousands of books. What Kindle does is, it gives one the option to read from a wide range of books without having to physically carry them. People purchase kindle not because it can store thousands of books (feature) but because it can save them luggage space (value).
So when a prospect questions how the product can help them, do not state the features, but the value - how it can save time, money, and resources. How being a part of a global community of users can add value to their business, their networks, and help in building their business brand. Sell the shade, not the branch.
Procrastinator - “This isn’t a priority at the moment”
A prospect may see the value in the offering but may be reluctant to spend the time and resources to solve it at present. This is more relevant in 2020 than ever before with almost everyone dealing with an economic downturn and a global health crisis.
Show them the high cost of doing nothing -missed $$$ in earnings or savings (both time and resources). Quantifying the cost of the status quo gets the prospect to prioritizing change.
Phobic - " I don’t want to get into a contract with you "
These prospects are wary of getting into a long term contract. It could be an external reason (uncertain economic prospects and others) or specific to you and your product (the prospect may not trust you enough to get into a contract).
In this scenario, look for workarounds - monthly or quarterly subscriptions, pay-as-you-go, and other options. This will allow them to try the solution on offer and see for themselves how your offering can add value to them.
- Petty - “ I really do not have the money”
It is quite possible that the prospect may actually not have the money. Before responding, confirm if they see the value in your offering - do they have a need for it, and is it a priority for them now?. Once you are sure they see value in your product - show them the money.
Show them how your product can help in saving money for them. If you have a basic version with limited features- sign them up for it. Offer structured discounts - half price for a limited time, a trial period for a limited number of users, and others.
Often, prospects are reluctant to convey their real concerns and use Price Objections as a smoke screen to end the engagement. And as sales reps, the onus is on you to unearth the actual concerns. So the next time you face a price objection, probe further, verify the real concern of the prospect and respond accordingly!