The no.1 challenge most salespeople face in retaining their existing accounts is to keep them from switching to competitors. Due to this fear of losing customers, salespeople are always worried about communicating price increase to customers.
Recently a client of ours told, ” Many buyers threaten to switch to low priced competitors and hence our salespeople struggle to communicate price increase”
And when we speak to salespeople, they say, “Today’s buyers have a lot of choices compared to earlier times and it is not easy to hold on to them”
If this the situation in your company, how would you handle? What is that salesperson must do to overcome this constant threat of buyers of switching to low priced competitors?
This very fear of losing customer makes many sales person commit things which are not in favour of their company. Sales people forego price hikes, give unwarranted discounts and over promise the things to retain.
The buyer might feel good about getting the best things extracted, but we all know promising more than what can be delivered will be counterproductive and will relations as well as future sales
How to handle buyer threats?
There is no doubt today’s the buyer has a lot more choices. He can easily contact of 10’s of suppliers and get competing quotes. But as you might have noticed, getting quotes is one thing and doing business is another!
From quote to actual business, there are many things and buyers really don’t have time on an inclination to keep switching suppliers. So when you hear from the buyer that they are considering switching to another supplier, it is not necessary to take it seriously.
The purchase head who is interacting with salesperson may be just concerned about the price part but there are many other parts which a salesperson must consider.
Few things include as below,
- Identifying the right alternate source of the supplier,
- Adjusting the internal process and buy-in from stakeholders to approve new supplier,
- Getting real long term price discounts from new suppliers
- Matching Quality checks,
- Matching delivery & volume
Put together switching to new supplier is not just few % of price decrease on the product or service you offer, but it has to be considered as overall switching cost.
When switching cost is considered many a times buyer prefers with existing supplier than switching to new supplier.
So as a salesperson, one must first have a clear understanding of the switching cost your buyer incurs when changing to the new supplier. This you can arrive by asking the following questions, (source: saleshunter.com we suggest to ask and research on the following questions,
1. How do you know they have even started the process of finding an alternative source?
2. How much will it cost the customer to switch suppliers?
3. What is the status of the new supplier they say they will switch to?
4. How secure is the new price they say they can get?
4 ½. Will it be only a temporary savings?
5. What is the reason behind the customer saying they may quit buying from you?
5 ½. How do you know this?
6. How long would it take for them to make the switch to a new supplier?
7. How will others in the company respond if the decision is made to no longer buy from you?
8. What are you offering your customer that you know the “cheaper” competitor can’t offer?
8 ½. How has the customer responded to this?
As we described above, though today’s buyers have lot of options, considering the time factor involved in changing to new suppliers, many prefer to stay with existing suppliers. Consider yourself, do you like to change you milkman, grocery store, vegitable vendor?
Not necessarily as long as they serve what you need. Even at a cost of slight increase in price, you continue. If changing milkman is so tough, imagine changing a B2B supplier.
So as salesperson, if one is aware clear switching cost, he can confidently hold on to customer and still get the best price he wants.