Lost Sales: All About Price? Hmm…

Let’s spend a moment in the land of make believe.  Imagine this conversation:

Sales Manager: “What happened with the potential business with XYZ?”

Sales Person:  “They decided to go with a competitor.  I didn’t prove to them our company and me could provide them enough value versus what our competitor said he could provide.  I need to get better.”

Meanwhile, back on planet earth, here’s the real conversation:

Sales Manager: “What happened with the potential business with XYZ?”

Sales Person: “We got beat by a competitor.  Our prices are always high.  What are you going to do about that?  I need to sell more so I can pay for (a new car, my beach house, my kids’ college, insert want here).  We’re just not competitive and it’s not my fault.” (This situation never happens at I.D. Images!  In all seriousness, we’ve got a great sales team who uses price only occasionally as a reason for lost business.  They know better!)

Yes, we all deal with price competition and it’s not going away.  We’ve allowed price to become the canned answer to every piece of business we don’t win.  Sure, it happens but probably not as much as our sales people lead us to believe.  It’s easy for a customer/prospect to say price is the reason they went somewhere else and it’s even easier for a sales person to not follow up and blame price for not winning the order.  It’s even easier for a sales manager/owner to accept price as the reason for lost business.  Who likes confrontation?  A wise mentor of mine would tell me constantly, “In management, you get what you accept.”  If we accept price as the catch-all for lost business, that’s what we’ll be told.

We really become what we believe.  If our sales team thinks we’re not competitive, we become not competitive.  We start to play the price game.  Remember, you can only play the price game if you know you are the cost leader.  We all like to think we’re the low cost producers.  There’s only one.  It’s probably not you.  As I wrote a few weeks ago, if you can’t sell value, you’ll be automated.  If you’re losing business truly because of price, your company has no choice but to cut costs.  (Side note: watch what happens in California with their new minimum wage law and required family leave requirements.  The cost of labor went up.  Therefore, the cost of automation went down.  This is what happens when politics are controlled by lawyers.  Many lawyers have told me they went to law school because they hated math.  The talking points of a higher minimum wage sound great.  The math is a problem.)