Saturday, August 21, 2010

Price based Buying, Vampires and The Undead

Vampires, according to the HBO TV sensation True Blood, are darned hard to kill. Seems like no matter how much sunlight, garlic juice or holy water you throw at them, the evil beasts keep coming at you. The same holds true for the price based buying myth.

I want a show of hands, how many times have you heard that pricing ranks somewhere at near the bottom of most buyers (not purchasing departments) top 10 purchasing criteria? A recent study of 1,200 companies making purchases in the technology segment conducted by McKinsey and Company revealed many of them claim price is a driving factor in their buying decision. But, their actions are not consistant with their behavior. Could it be that even customers believe the myth?

When McKinsey examined what actually determined how customers rated a vendor’s overall performance, the most important factors were product or service features and the overall sales experience.

Here are a couple of additional points to consider. Customers were turned off most by the following behaviors:
35% say --> Too many contacts by the sales person
20% say --> Lack of Product Knowledge by the sales person
9% say --> Lack of Application Knowledge by the sales person

Did you see anything about price in those comments? But unlike those nasty vampires these customers of ours are actually a pretty nice bunch of folks. Most would rather not hurt your feelings. I believe it's much easier to say, "Frank, your price is too high" than to come out with the truth. And at least 64% of the time, the message would be:

"Frank, you waste our time. You come around way to many times with poorly planned or unplanned sales calls. Sometimes you even show up without an appointment. And once you arrive you don't know enough about your product. You certainly don't have the slightest clue about how we work our business."

You know it is easier to say, "Your price is too high."

Now, put hand on the computer screen and vow to remember this day - forever. When your customer spews those kind words remember. There is a 64% chance they really meant to say... You got outsold!

Read the McKinsey and Company Study here


Dinesh Kumar said...

Thanks for sharing this Informative content. Well explained. Got to learn new things from your Blog on SAP SD

Sahana said...

Thanks for sharing this Informative content. Well explained. Got to learn new things from your Blog on SAP