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It’s Only Common Sense: Prospecting for Price a Loser’s Game

If you prospect for price, you are going to get price-oriented customers. You are only going to “buy” your way into an account and yes, you are going to set the precedent for the life of that account. So says Mark Hunter in his great new book High-Profit Prospecting, published by Amacom.

And allow me to add this point: If you think the only weapon you have is price, then you are a lousy salesperson, or you work for a lousy company, or both.

Look, selling on price is suicide in the long run. It will kill you. But it’s not as simple as all that. First, you have to know exactly what your price should be. You have to do your research to make sure that your price is not only fair, but marketable. Your price has to make sense.

If you are selling on price, as Hunter says, you will get price-oriented customers. You will get customers who place no value on what you do and how well you do it. All they care about is price, and if that’s all you have been talking about, they will think that it’s all you care about as well. Not to mention the fact that you will give them the impression that price is all you have.

You always have to remember that any customer who gives you an order because of your low price will not be a loyal customer at all. In fact, he will jump to the next guy who comes in with a price that is even lower than yours. Since he sees no value in what you or the other guy do, he sees no difference in what each of you has to offer, thus he doesn’t care where his “cards” are built as long as he wins his company’s award for buying the cheapest stuff available on the market today. Is that who you want to work with? The minute you discover this about a prospect, get out fast before you waste another minute of your time and your company’s time.

This is where prospecting the right way comes in. You have to research the accounts you are going after to make sure that they are true prospects and not just suspects. I recommend creating an ideal customer profile based on careful contemplation of what you do best and what kind of customer best fits what you do.

Think about your current customers. Reflect on the best ones—the companies you have worked with the longest, the ones you like dealing with. Then examine those relationships and look for the root reasons why you like these customers and, most importantly, why they like you. Why do you all like working together? Make a list of all of their characteristics and how they fit so well with what you do and then use that list as a filter for finding new accounts.

This list should include: technology, service, quality, communications, understanding and appreciation of the value you bring to them, chemistry, ease of doing business together, loyalty, and last—but not least—their ability to pay. Then apply these parameters to the customers you are going after. If they match up as closely as possible to these long-term customers, then you will be on the right track. The chances of winning this new prospect’s business and establishing a long, productive and profitable relationship will be greatly increased.

I should mention that there are some instances when you do have to sell on price. You may find an account that is a perfect fit for you, but you are going to have to do some special pricing to gain entry into that account. Let’s be clear: I am not talking about the old bait-and-switch, but rather what we call strategic pricing.

This pricing is strategic because you will use it to gain entry into the type of business you want with the company you want as a customer. This type of pricing takes a great deal of research so that you know everything about this target account and enough to justify making a long- term investment in terms of time and money. You need a plan to value-engineer your process so that your price will be competitive, but also make you money in the long run.

In short, you have to do your homework in advance. Spending time before you even start to prospect a company will save a lot of time, effort, money and aggravation in the long run.

It’s only common sense.