In our most recent webinar, Chris Martin from Advertiser Perceptions went through some interesting statistics around what factors are most important during the agency buying decision. You know what factor came up almost dead last? Cost.
Feels counter-intuitive to everything we are told from clients, right? We have all received that dreaded phone call or email from our prospect that our competitor just came in at a better rate, or that they aren’t moving forward because we are just too expensive. The truth is, the majority of the time, this is just the easy way out when having to give negative feedback. It makes the buyer feel better because they don’t have to come right out and say “we don’t like you or what you pitched.” Most people want to be liked or at least somewhat polite, so using cost as an excuse is absolutely an easy way to keep things from feeling personal. And, it’s just simple numbers.
Here’s the deal, though: The importance of cost changes depending on how good of a job your team has done showing value during the sales process. We all know there is a clear correlation between Perceived Value and Cost Tolerance. When the perceived value of something goes up, so does my willingness to pay more. Obvious, right?
If we have shown a tremendous amount of value in that they can see exactly how the strategy will be executed, how it will generate results, and how it will possibly decrease other costs, then why would a prospect not be willing to pay a little more for this extra value? We do it in our personal lives all the time. We pay a little extra for a Lexus, or a bigger house, or an Apple product that we think will bring more value than their counterparts.
The next time you leave a prospect meeting and they say “your price just came in a bit too high,” don’t start changing everything within your pricing model. Start asking yourself these questions:
- Did my proposal focus on their #1 problem?
- Did I show value beyond just solving their problem?
- Did I show real value at all? Did I have results (hard numbers) from previous campaigns and projections of what we can do for them?
- Was our value prop unique? Were they easily able to distinguish what we can do from the competition?
- Was there anything in my proposal or pitch that could have distracted from the value we bring?
Unfortunately, we lose sometimes because of our failings as a new business person, not our price. Having the ability to go back through your process and be honest with yourself around each stage of that process, will allow you to ensure that the next time you pitch, you’re showing value where it matters most to the client – results.
Tags: agency management