We are back with the second edition of The Biggest B2B Software Sales Questions, Answered! This time around, we have 3 questions that focus on budgeting and closing. The answers have been sourced from slack communities, online forums, LinkedIn groups, and ofcourse, research. If you’d like to send in some questions, you can always fill out this form and we’ll try and include it in the next issue!
But first, let’s ordain you with some great advice about, umm, fishing (no, it’s not really about fishing).
Now that the fish are out of the way, let’s dive into the (sea of) questions we’ve lined up for you.
#1 Handling the “you’re too expensive” dilemma
This question is from the Sales Best Practices Group. How do you handle the question “your products are so great but too expensive, we don’t have enough budget for it, but we’d love to have it”?
The first thing you need to understand as a seller or a buyer is that the definition of “expensive” will change with the product and situation. Even though the question is about a tech product, let’s use some other B2C examples to illustrate the scenario.
Let’s draw a parallel here to a top-drawer product, say, a Mercedes car.
Buyer’s POV: A Mercedes is an expensive product, and as a buyer, you cannot go up to a company and give them a product valuation of say $10,000 and say you are going to buy that product at that price because you think it’s justified. The product is owned by Mercedes-Benz, and they are going to decide the price they want to sell, whether that is justified or not. You know their price point, and you have already made the decision whether you want to buy the product, and that is the buyer’s choice.
Seller’s POV: While all of the above is rosy talk, as a seller, it is also the responsibility of Mercedes-Benz to justify this cost and the value attached to it. For the expectation match to happen, you need to be sure to justify the cost of the product before pitching the price to the consumer. It is still the buyer’s choice, and if they still can’t afford the product, that is fine. They need to see a value add from a product, and not just a big name attached to it.
Now, imagine you have never even heard of a Mercedes car and haven’t seen any advertisements, pitches, promotions, or celebrity endorsements for it. You, as a buyer do not know about the value attached to it. You are happy with your sweet Honda Civic giving you the best mileage, and when Mercedes pitches their price, you are left utterly dumbfounded, with no intention of ever buying the product.
But since you have actually seen their product, the value attached to it, the ads, the celebrities, the sweet german engineering and all the parts and baubles, you know that it IS a justified, albeit pricey, product. And you are better informed than ever as a buyer.
I know this was a long story, but here’s the TL;DR:
ALWAYS demonstrate the value of your product before pitching the price. No matter how cheap or how expensive your product is. Try and dodge the question, but if that seems too ‘dodgy’ then do give them a range. What I am trying to say is, try not to disclose the actual price before you know the guy is definitely sold on the value of the product. It will be much easier to convince the person if they know the value your product offers.
At Slintel, we usually address the pricing questions at the end of the demo. If the prospect does want to know the pricing beforehand, we give them a price range to quench their curiosity in the beginning. And if they are not okay with the lowest range that we share, then they were never a customer for us anyway. They need to first see the value and the product to see what it can do for their business, then decide for themselves whether it could be a life-changing product for the company or a ‘meh’ one.
#2 Improving on Closing Rates
The above question is pretty vague as we don’t know what kind of product the person is selling, or the industry/ticket size. So, let us try to answer this question for you in the broadest sense possible.
Understanding the industry benchmark close rate
For a product like Slintel, a close rate of 10-15% is considered good in our industry because even though the product is out there, but not as well known as say, a product like LinkedIn Sales Navigator. If you are selling Sales Navigator and have a close rate of 20%, even that could be considered suboptimal since the product is well-known and established, and you are more likely to find buyers for it.
Try drawing relatable parallels for your industry from different companies, from factors like :
- Product maturity
- Company size
Once you’re done with this, you should be able to gauge how far away from the “ideal” scenario you actually are.
If you deduce that your close rate of say, 10% is good for the industry, but your sales folks are not able to achieve their number despite trying their best, then there might be other factors you need to look into to improve your closing rate:
- MQL, SQL criteria: Consider changing the criteria that you use for leads to be marketing qualified (MQL) or sales qualified (SQL).
- Quality of Leads: These can be improved upon by having a discussion with your Sales and Marketing teams to dive deep into an analysis on which channels are working and what other sources can be used to gather leads.
If all this has already been taken care of and the salesperson is still not able to meet their quota or get better closures, you can:
- Read sales books
- Try A/B testing different pitches
- Change the choice of words of messaging in the pitch
- Edit the outreach emails you use
The best advice we can give you here (and this is something we follow as well) is to record your pitches and get the recordings reviewed by your manager to understand where you went wrong and what you can do better. Ask for feedback, then record and re-record your script until you can convince yourself to buy the product. Reiterate the pitch as many times as needed until you are confident that if you were the customer, you would definitely end up buying this.
#3 How to pitch the price the right way
This question is from the Corporate Bro Savage Sales Group.
The question is about whether you should disclose the pricing over mail or schedule another meeting to discuss it. What we would suggest here is unless it is an enterprise deal, you should always give the pricing right after your demo. This will ensure you get the most out of the demo, and disclosing the pricing right after you show them your value proposition might just seal the deal.
Trying to hide the price after the demo could be construed in different ways by the prospect. They might start questioning the reason behind you hiding the price after a demo and they might even wonder if you are coming up with a new inflated price after noticing their heightened interest in your product/service (even though that might not be the case).
A lot of questions will pop up in their mind if the value is already demonstrated and the price is not disclosed. As much as you can, disclose the pricing right after the demo, on the same call, and then send them a detailed email about the conversation and the pricing you have just offered on the call. This will also ensure the buyer has a clear picture of how much of their budget they need to spare, and builds trust from down up.
This is all we have for questions for this week, and if we end up helping even one confused sales rep about their question here, it is a success for us.
Have any burning questions for us? Tag us on Twitter, LinkedIn, or simply fill out this form. We would be happy to help you with our expert sales knowledge, anytime.