“Low price, low price, low price.” It’s the mantra that sales people in every industry segment are hearing more these days than ever before. Customers, looking for ways to contain costs, naturally pressure their vendors for lower costs.
But, is low price the motivating factor in a customer’s decision to buy?
In every survey of buying motivations I’ve ever read, low price is never the primary motivation. Yes, it’s important. And, when everything else is equal, it will be the deciding factor. But very rarely is everything else equal. And very few people in this world buy only on the basis of low price. How many of you are wearing a suit you bought at a garage sale? Or watching a 12-inch black & white TV?
If low price were the only motivator, you would have gone with those lower priced options. But, you don’t always buy on the basis of low price, so why should you think that all your customers do?
The truth is, they don’t. And here’s a secret that almost nobody knows, including all those gurus telling you to sell value. They don’t always buy the best value. But, they can invariably be counted on to buy the lowest risk!
The biggest issue in the minds of your customers and prospects is not price, and it is not value – it is risk.
It is the potential cost to the individual customer if he or she makes a mistake. It’s not just the money, although that is part of it. It is also the social, psychological and emotional cost that your customer will pay if your choice isn’t the best one. The lower the risk of the decision, the more likely your customer will say yes to you – regardless of the price.
In order to really understand risk, you must first see this issue from your customers’ perspective. Try to put yourself in their shoes, and calculate the amount of risk that you expect your customers to take when you offer them an opportunity to say “yes” to you.
Here’s an illustration to help you understand this concept. Imagine that you are under orders by your spouse to pick up a package of disposable cups on the way home from work today because you’re having friends over for a casual evening of dessert and drinks tonight. You stop at the local grocery store, and make a selection between brand A and brand B. You pick brand A.
What happens to you in this instant in time? What is the consequence of your decision? I don’t know about you, but my spouse would be upset with me. That may be the most painful cost of your decision. But there are other costs.