Whether we are involved in a conversion or a retention sales situation the question of price seems hard to avoid, doesn't it? After all, we are in the business of selling proposals for goods and services with the purpose of convincing customers to exchange money for our service products.
Why then are we are surprised, affronted, or perplexed when a customer expresses any concern about price? We have seen CSOs and CEOs become outraged when a sales rep inferred that she might lose a deal because the customer expressed concern that the price in the proposal was too high.
Senior management's reaction is often abrupt and quick directing the sales force to sell benefits, value, and solutions.
We agree with the sentiment of leadership's challenge; however, we also take the position that selling in a complex situation today absent an open discussion about price is unrealistic and likely not a best practice.
If a seller/marketer believes in customer centricity, service quality, and win-win then price must be a significant part of the sales strategy! So why do sellers openly avoid and dismiss as unethical a discussion about price? No doubt, price is a complex issue and is sure to be a major concern for any customer.
The subject of price is complex for several reasons.
First, price is more than rate and thus has many parts and pieces.
Second, we know that any one of these components or some combination of them can derail an otherwise effective sales strategy.
Third, price is visible when other service attributes are not.
In other words it is an easy target for dissatisfaction.
Fourth, price makes the seller and the buyer a bit crazy and of a singular perspective and often emotional.
If you are the seller you believe that your product is better than the competition and deserves a premium.
If you are the customer any price is represents a loss of money.
Finally, there is the matter of expectation.
Price can seem fair at the outset of a relationship and turn sour after the service is provided.
The idea that price is an essential attribute in the marketing mix is certainly not a new business concept.
However, the fact that customers consider several pricing practices as critical service incidents is important if not revolutionary.
We maintain that in order to handle the price question effectively you must first understand what defines price.
Price is about a good deal more than the rate charged isn't it? A complete description provides a foundation for understanding the customer's perspective, improving customer satisfaction (if you currently own the account), and enhancing conversion sales performance if you don't own the account yet and are attempting to replace the competition.
Billing is a component of price and billing incidents have a direct impact on trustworthiness.
Customers regularly describe a billing error as an attempt to play with price.
Service failures of this type include invoices with incorrect rates, late bills, bills sent to the wrong department, invoices with incorrect terms, and even bills that are just plain difficult to read.
Price changes are another component of price and it is understandable that a price increase represents a loss from the customer's perspective.
The impact on the customer's service approval rating is clear.
Surely no surprises here; however, consider the compounding effect of billing mistakes and price increases and we are just scratching the surface! Communication is often an overlooked component of price.
The Holiday Surprise letter is an example.
While the marketing department is thrilled with its ingenuity the customer is anything but happy when the facts come to light.
Typically this type of service problem appears when the competition announces a change in the service product during a holiday season.
The change letter often goes to the wrong department, is timed to arrive when most people are on vacation, and is often absent key details.
As if that is not enough the competition compounds the situation by not training its CSRs to answer customer questions or just doesn't staff the customer service center to handle the increase in queries.
Contract Management risk is especially important during challenging economic times.
The most common example of this service failure is PO Busting otherwise known as exceeding purchase order limits.
No matter the reasons, and believe me many will be offered, the bottom line is that the customer paid more for the service than was expected and this is never a good thing.
There is not time to present the details of usage limits that impact budgets and expense expectations nor can we offer a detailed discussion of the equity and fairness implications of price.
Of course the relationship between price and loyalty is of epic proportions.
With all this said wouldn't it be unethical not to discuss price in the sales process? Research tells us that customers consider price, in its broad definition, to be a critical determinant in the decision to renew a service contract.
In a study conducted by Dr.
Keaveney and her associates price was a causal factor in the decision to switch service providers about 34% of the time.
Finally, don't we have to ask ourselves that if by avoiding the price discussion we are investing in deals with no future or are we inadvertently creating customer defection that ultimately diminishes brand image, brand equity, and operational efficiency?