Before you choose to answer your prospect’s “how much” question, consider if you are unintentionally helping your prospect lower your prices.
While a common trick of the amateur salesperson is offering increasing discounts to win business, I haven’t met a professional salesperson who uses this tactic.
Unfortunately, the professional salesperson can still be guilty of helping their prospect lower their prices by “anchoring” their prospect.
Anchoring is a quirk of the brain which causes us to latch on to a piece of information–the anchor–and base our decisions in relation to the anchor. In a selling situation, a salesperson “anchors” their prospect by revealing their price too early.
For example, a software salesperson quotes a prospect $25,000 to implement before any of the prospect’s problems are discussed. As the meeting progresses, the salesperson uncovers that fixing the prospect’s problems will actually require a $35,000 investment.
Not a huge stretch from $25,000 to $35,000, but because the prospect is “anchored” at $25,000, the salesperson has two choices. Either fight their prospect up to $35,000, which has a low chance of success, or sell a $35,000 project for $25,000, which costs them commission and probably gets them a (figurative) slap from their boss.
For a salesperson to make anchoring to work for them they need to understand not just what problems their prospect has, but the financial impact of those problems to their prospect’s business.
Let’s return to the software salesperson. This time, instead of anchoring their prospect with a number that may not be accurate, the salesperson acknowledges their prospect’s request and asks permission to ask questions about the prospect’s problems before suggesting a solution and price.
By focusing on their prospect’s problems, the salesperson learns that their prospect feels their problems are costing them $50,000 per year. Now the salesperson can confidently quote a $35,000 solution to their prospect’s problems without fighting their prospect or losing commission.
Anchoring isn’t a cure-all. Let’s pretend the prospect’s problems in the scene above only cost them $10,000 per year and the smallest package the software salesperson could offer was $15,000. At that point it’s best for the salesperson to tell their prospect that they aren’t a good fit and close their file.
Before you put out your next quote or answer “how much,” consider if you truly understand your prospect’s problems and the financial impact of those problems on their business. If not, chances are you’re helping your prospect lower your prices.