Every industrial sales rep has experienced rejections attributed to the price of the product or service that they are selling. If a prospect believes it's too expensive or otherwise not worth the cost, he or she will probably reject your offer. However, some of these pricing-related rejections are more difficult to overcome than others, such as the total cost of ownership. When a prospect cites this as a reason for his or her objection, though, you should still pursue the sale. While difficult, there are ways to overcome sales rejections attributed to the total cost of ownership, some of which we're going to explore in this blog post.
The total cost of ownership (TCO) refers to all costs, both direct and indirect, associated with owning a product during its expected life cycle. Customers often incur costs other than the product's initial sale price. Companies that purchase heavy machinery, for example, may also have to pay for maintenance, repairs and insurance, further adding to the product's total cost.
Nearly all products have a TCO that's higher than the initial cost. Not all prospects consider the TCO when determining whether or not to buy an industrial product. However, the financially savvy prospects who do consider TCO are more difficult to convert into customers than their counterparts. After all, you must convince the prospect that the value provided by your product is more than its TCO. Only then can you expect to convert the prospect into a customer.
Consider offering a warranty with your products to overcome TCO-related sales rejections. With B2B industrial construction equipment, one of the greatest costs of ownership is maintenance. Industrial equipment needs to be services at regular intervals to continue functioning properly. Otherwise, it will break down and require expensive repairs. Offering a warranty with your product, however, allows customers to avoid this cost. Basic maintenance and even repairs may be covered by warranty, eliminating this cost from the product's TCO.
If you offer a warranty, do you stress it early on in the sales cycle? It’s a great idea to let the customer know that after the sales is done, you continue to provide on-going service, repair, maintenance and a high value customer service and satisfaction.
You can also overcome sales rejections attributed to TCO by explaining your product's total value of ownership (TVO). This is the estimated monetary value that a product offers a user over the course of its expected life cycle. Maybe the prospect is currently renting forklifts or aerials for an industrial construction project, for instance. By purchasing forklifts or aerials from your company, this could save the prospect tens of thousands of dollars over the course of several years. Think about how your product will benefit the sales lead or prospect and his or her company financially, and explain this benefit when talking to the prospect. If the TVO of your product is greater than its TCO, sales leads or prospects will view your product as being a smart investment, thus increasing your chances of scoring a sale.
Remember, don’t hold back if the prospect says ‘they know’. Just say, “I’m sure you do, but let me know if there’s details here that are different that make us different.”
Sometimes a freebie is all it takes to convince a sales lead / prospect that your product is worth buying. Even if the freebie doesn't necessarily make your product's TVO higher than its TCO, it gives prospects an incentive to purchase it. Maybe you can include a relevant accessory with purchase, or purchase you can give away a free first year maintenance. Freebies such as these are selling points that can help you overcome rejections attributed to TCO.
If a sales lead or prospect is hesitant to buy your product because of a high TCO, offer him or her tips on how to lower the product's TCO. Using the same example of industrial construction equipment as previously mentioned, you can tell recommend that prospects obtain maintenance and repair quotes from multiple service providers. By obtaining quotes from multiple service providers, prospects can choose the lowest-priced maintenance or repair service.
If the TCO of your product is high, offer customers multiple payment options from which to choose. This will allow them to use their financial resources for other, indirect costs associated with owning the product. And remember, selling full ownership of a product is just one option. Many industrial companies lease their products -- the customer pays to use the product but doesn't actually own it.
When a prospect needs an industrial product to conduct his or her business's operations, they'll purchase it regardless of the TCO. However, this doesn't necessarily mean that they'll purchase it from your company. If a competitor offers a better product and/or lower price, prospects will probably choose them instead of your industrial company. So, research competitors' products before calling prospects so that you can convey the benefits and advantages of choosing your product. Sounds simple? Yet, many don’t do it.
It's always frustrating when a prospect rejects your offer due to a high TCO, but the good news is that you still convert these prospects by taking the right approach. Follow the tips described here to overcome sales rejections attributed to a high TCO.