It Really Isn’t About Price

My wife took me shopping at the mall. As we passed Macy’s, I saw a display of men’s shoes, all very good looking. Later, we were picking up some household items from Wal-Mart and I saw the same styles of shoes sitting on top of boxes in the middle of their aisle and at least 70% less than Macy’s. At that price, only a fool would pay more for (more or less) the same product.

But, I went back and bought the shoes from Macy’s anyway.

Why did I spend the extra money? Because Macy’s provided me with an experience, perception of quality and personal attention that Wal-Mart couldn’t. If it were all about price, I would have made a different decision.

But, it wasn’t.

And it usually isn’t in B2B sales either.

Recently, Primary Intelligence interviewed a lost sales opportunity for one of our clients. They had battled it out with two other providers and in the end, they weren’t selected, but it wasn’t about price.

Primary Intelligence: What were the primary reasons you did not select Rare Gems?*
Prospect: “The program costs were high relative to the other finalists, especially under the subscription model. We looked at both scenarios because we weren’t sure we wanted to keep the subscription model. They were pricier either way, but especially pricier if you looked at the subscription scenario. The other thing was they made a business decision to withdraw from retail participation, and so that was going to be viewed negatively by our client base.”
Primary Intelligence: Would you say that Rare Gems' final price proposal was more than, less than, or about the same as the other short-listed vendors?
Prospect: “More.”
Primary Intelligence: Were you going to choose the lowest-priced vendor no matter what?
Prospect: “No.”
Primary Intelligence: Would you have selected Rare Gems if it had been less expensive?
Prospect: “No. That was not the only factor.”
Primary Intelligence: What could Rare Gems have done differently to win your business?
Prospect: “If you are going out to the marketplace and you are looking for a vendor, moving away from the retail thing—that whole business model—is a difficult approach for our population. They came with a great variety of products, but they were high-end products, which is not always what people are looking for in terms of product. I think there was a gap there that they weren’t filling. Their price was way off as well.”

*Vendor names were changed for confidentiality purposes

To be competitive, you have to understand the value that sells. Price will be a component in the value equation, but it won’t be the only one. And, from our experience, it isn’t even in the top two most of the time.

Don’t believe the price myth. Listen to your wins and losses. Find out what they value and how you can best meet those value needs. If you do, you will win more. Lots more. Otherwise, you’re hoping that your price is attractive enough to lure in the price shoppers and those clients are hard to keep around.

If you have thoughts on the subject, give me a call at 801.838.9600 x5050 and we’ll chat.