How To Handle A Client Who Wants A Lower Price

Have you ever heard a client say, “I was looking around (usually online) and I realized I could save a lot of money if I shopped around some.”

They follow it with, “Will you match the lowest price I find?” or “What kinds of discounts can you offer?”

If your blood pressure is rising just from reading those first few sentences, stick around for a minute.

Few things frustrate salespeople more than this interaction, especially when it’s a long time client that brings it up. What about the last 10 years, you say? How about all the times you helped them out of a jam, helped them find a new team member, or ways to become more profitable?

Then the frustration, slowly turns to anger and resentment. It’s possible (I’ve witnessed it) some of you even start stomping your feet. How dare they? This is ridiculous. You’ve bent over backwards for this client, been practically on call for years and now they are leaving to save a few percentage points.

(Quick Note: your past performance in no way guarantees future business. In sales, you have to earn it over and over again)

Full of all these unproductive emotions, you start to justify, defend, question their motives, their judgement, their decision making. Not exactly the most productive ways to move a relationship forward, especially at a critical time like this. In fact, by acting like this, you could be providing your client with the proverbial “last straw”, the very motivation they need to make a change.

So let’s rewrite how you’re going to react the next time this happens.

What’s Really Going On?

A few weeks ago I had the chance to meet with a procurement consultant. You know, someone who coaches and teaches purchasers (the customer) how to “achieve greater value from the supply chain.” One way they help clients increase value, is by buying things at a lower price.

So naturally, as a sales guy myself, I was curious. “How come there is such a focus on price in the market? One of the first questions from prospective clients is usually how much. How come they don’t ask about the potential increase in production, efficiency, or profitability first?”

“It’s simple,” he said. “You have to understand, that even in the best case scenarios, over 50% of what a business brings in in revenue, goes right out the door in expenses. And for most businesses, it’s substantially higher than that. When that’s the case, as a purchaser, you can’t help but think about costs and price up front.”

Cue the Light Bulb

This was definitely an aha moment for me. In my last sales role, my product line accounted for roughly 6-7% of a client’s total overhead. Compared to payroll and other major expenses, I was a small piece of the pie, making it nearly impossible for me to understand why so many wanted to talk about price so much. There wasn’t much to really save.

What I had failed to do was see myself in the scope of the bigger picture. Sure, my slice of the pie is small, but it’s a big pie, and now I am faulting my customer for trying to….effectively manage their business? Wait, isn’t that exactly what I’ve been telling them they should be doing?

Yes. Yes it is.

What They’re Really Saying

As is the case frequently in sales, it’s time to stop talking and start listening. It’s time to stop trying to convince and defend and start to begin to understand.

When your client asks for a lower price, they’re usually not saying they don’t like you, don’t want to do business, or don’t appreciate what you’ve done in the past.

They could be saying, “I’m trying to do a better job managing my business, and I’m wondering if you can be part of the solution?”

Or maybe it’s, “I know I pay a premium to do business with you, and while our relationship in the past has been good for my business, I’m not sure I’m seeing the same value anymore. I’d like to give you a chance to do better.”

Regardless of the words they use, what they are essentially saying is, “I’m not sure this business relationship still makes sense for me or my business.”

How You Should Act

So instead of getting frustrated or angry. And rather than justifying and defending. Just do what your client is asking you to do…. Listen! Try to understand what their motivation is.

And doing so only requires you to ask a few simple questions.

“Dave, we haven’t talked about price or expenses in a long time. What’s changed in your business that’s making this a priority?”

“Dave, is your focus at this time just on expenses in my category, or is this part of a bigger cost cutting initiative?”

“Dave, thanks for being candid. Usually when a client approaches me about this topic, it’s because we’ve built a good business relationship. It also tells me you would like to continue working together if we can find a solution. Am I hearing you correctly?”

“Dave, if this process was a success, what would the outcome be?

The last question is critical. If they say something like, “I’m going to buy from whomever is cheapest.” Me personally, I’m inclined to shake hands, thank them for the past business, and go on my way. I’m not interested in winning a race to the bottom.

If their answer is any version of, “I just want to make sure we are buying correctly and managing our expenses the best we can.” I’m rolling my sleeves up and getting to work.

Price issues, objections, and challenges are tricky. The only way to handle them effectively is to start by understanding what’s driving them. It is the one place where it is critical to peel back the layers of the onion.

8 Responses to “How To Handle A Client Who Wants A Lower Price”

  1. Rajeev Chauhan February 5, 2013 at 8:26 pm #

    We all come across these frustrating situations, where as I agree with Joe that we need to address this issue in an objective manner, I also look at perceived value and intangible value of the product or services and highlight it giving me little leverage.

    • Joe McGonigal February 6, 2013 at 4:22 pm #

      Rajeev,

      Without question you need to be able to highlight any product or service advantages you might have. But you also need to have a strategy for the times when what you sell is or is perceived as a commodity. Thanks for commenting!

      Joe

  2. Troy February 8, 2013 at 3:37 pm #

    Joe, I enjoy reading your posts. As a Rep at Patterson they apply particularly well to me. This is something we face at least on a monthly basis. In a perfect world, we would be more proactive and have the conversation before the question comes up, am I right? Sometimes we can feel it in our gut that “The Question” is looming, and it takes a lot of courage to bring up the issue before the client does, but it gives us much greater control of the situation. Either way, the surprises always come, so the reactive response coaching you give here will always be helpful. Great take.

    • Joe McGonigal February 8, 2013 at 3:41 pm #

      Troy,
      Absolutely a proactive approach is better. And while it does take a bit of courage, it’s not as tricky as some think. It’s as simple as saying, “Doctor, one of my key responsibilities is making sure I am doing everything I can to help you manage your supply expenses. I’d like to schedule some time to review how I’m doing in that category from your perspective. Maybe we can even find a few areas to be more efficient.”

      Thanks for reading!
      Joe

  3. Deb Gauld-Lash February 9, 2013 at 8:42 pm #

    Joe,
    I recently had a very close friend who has been a client for 17+ years surprise me by purchasing from a competitor. It took all I could muster up to walk out before I did the foot stomp!!!!I’ve had to take many deep breaths before opening my mouth in these situations. Thanks for your suggestions and insight. It will definitely help me in my quest to be proactive from now on…Deb

  4. SYoung February 20, 2013 at 6:04 pm #

    Great thoughts Joe and something EVERY salesperson has or will experience. I’m actually in the steel industry and have been for 25 years. As our industry has become more and more competitive, due to lack of North American manufacturing growth, I am finding a disturbing trend. Yes, we sell a commodity, BUT, our clients are now “commoditizing” our worth as a supplier. That is where the rubber is hitting the road. Your comments above will be food for thought as I try this year to “set myself apart” in an industry that is terribly price-centered. Thanks for the Blog post!

    • Joe McGonigal February 21, 2013 at 1:01 am #

      Stephen,

      Interesting comment about “commoditizing our worth as a supplier.” That seems to be happening more and more and I think it’s where the real opportunity is. The salespeople who see that trend and have the ability to respond are going to be in a position to capitalize. Thanks for stopping by.

      Joe

  5. Sharon Nash July 23, 2016 at 3:29 pm #

    As a former buyer, within the mfg. industry; now on the other side of the transaction, working in sales: Yes, I agree intangible value, and service, can win over price, when dealing with a buyer. If a buyer is just looking for a cheaper price, you can also try up-selling another product where your price is lower, to offset the difference. You would not believe the number of sales reps I’ve purchased from, for a year or more, before finding out they had other great offerings. For new reps, remember a buyer may not be the Only decision maker. As a buyer, I’ve seen many sales reps increase sales, by asking me to introduce them to engineering: OEM Engineers focus more on technology, solutions, and quality, than they do on price, and may have new projects the buyer is not yet aware of: By doing this, you’re not only getting in on the ground floor of project, and eliminating the middleman/buyer, but you’re also helping the buyer, by saving them time!

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