I buy all my suits at Hugo Boss even though there are a dozen more or less comparable shops closer to me. So why am I loyal to this brand at this location? Because I work with a salesman there named Martin who periodically calls me about new offerings or special deals he knows I’ll like. I only go to the store when I know he’ll be in. Martin’s service goes well beyond the sticker price on the suits. He makes it worthwhile for me to do business with him, even though his prices aren’t the lowest and his location isn’t the best.
In home building especially, the sticker price often becomes a sticking point—both with customers and salespeople. Customers don’t consider each upgrade, extra feature, or premium location that goes into the $30,000 price difference from a competitor’s home across the street. They just see a five-figure gap. Similarly, salespeople may be tempted to simply close the gap (i.e. lower the price) when they’re having a hard time selling.
Just as saying, “our product is better” doesn’t persuade a customer to sign on the dotted line, salespeople need more information to internalize their belief in the value of the product. When they do, they’ll be able to overturn objections about the price, first within themselves and later for customers. The following four-step process will put them in position to believe in the product and close the sale.
Step One: Do the Research
Identify your top two competitors and do a side-by-side comparison of key features. Competitor one is offering a, b, and c at this price. We’re doing a, b, and c, plus d and e for $X.
Step Two: Take a Closer Look at the Price Gap
Let’s say Competitor one’s price is 15% lower than yours. Make a list of all the tangible features and intangible benefits you bring to the table that justify your charging more. The tangibles might include a better warranty, higher resale value, lower maintenance costs, and more/better standard features than the competition. Intangibles might include your brand, customer experience, service turnaround time, location, and even the salespeople themselves.
Step Three: Assign Values to Your List of Tangible Features
Determine the actual market/retail value of the identified features. What would it cost to add these features to the competitor’s product? As an example, let’s say your company’s models include as a standard feature a warranty three years longer than your competitor’s. They sell an upgraded warranty, but it costs an additional 10%. Bingo! You’ve started to close the gap and make a strong case for your pricing.
Step Four: Assign Values to Your Intangibles
Repeat Step Three, this time focusing on your intangibles. For example, maybe your firm has a strong reputation as a green builder, or maybe your models have been featured in a local publication for having “the look” everyone wants. Maybe there’s a prominent community member who is a satisfied and vocal customer. Or maybe you’ve just been in the market longer than anyone else. These valuations will be more subjective, so talk each benefit over as a group and reach a consensus about what it’s worth, then assign a specific value to each intangible.
Continue working through this process until your team is convinced that the value you’re offering exceeds what you’re charging. This exercise will get them to see their product in a different light so they’ll be in position to counter their initial internal reaction to seeing a higher price. You’re empowering them to say—and, more importantly, to believe—“Wow! We are worth every penny we charge and more!” instead of “There’s no way I can sell these homes at this price.”
Once your team is convinced, applying what they’ve learned with real world customers is natural. Coach them to close their customers on the price for each tangible and intangible item and not stop until they’re above and beyond the value that the competition can offer. A sales team who believes wholeheartedly in their product is wholly unstoppable.