I went to the National. I collect sports memorabilia and the National is the place where everyone who is a serious collector or dealer goes. People fly in from all over the world to buy and sell every kind of sports collectible imaginable. And 50 sports celebrities are there signing autographs (for a fee). I got there early because I’m not just a collector; I’m a fanatic. And I wanted to get the jump on all the other collectors who might seek to purchase what I want to purchase -- proving that fear of loss is greater than desire to gain.
One of the most interesting elements of the National is that each of the dealers (more than 500 of them) has their own museum full of collectibles dating back to the turn of the century. Every form of ball, bat, glove, helmet, card, jersey, and autograph are available. Prices range from one cent to $100,000.
When I go to a dealer’s booth, I look very carefully at the items for sale. If I like one, I ask the price – even if it’s marked on the item.
As you know, asking, “How much is it?” is the second biggest buying signal on the planet. “I’ll take it,” being the first.
Once I ask this question, every element of salesmanship is revealed. I’ve basically told the seller that I want to buy what he or she is offering. How much more of a signal can I throw out? More than 90% of the sellers will say something like, “I’m asking $150 for it, but I’ll give it to you for $100.”
Now maybe this is a ploy on the part of the seller to make me feel like I’m getting a bargain, but the bottom line is he just cut his price by one third as an incentive for me to buy.
BUT, my real incentive was I wanted it.
And I was willing to pay $150 for it!
A small percentage of the dealers will say, “I’m asking $150.” And I’ll say, “Is that your best price?” Or I’ll say, “Is that your cash price?” And then the bargaining begins.
But there are a small handful of dealers who will look me straight in the eye and tell me that $150 is their firm price. And you know what? I pay it. The same guy who reduced his price by 1/3 could have had more money if he had just changed his language, if he had just changed his manner, if he had more self-confidence or belief in what he was offering, or if he hadn’t developed the habit over the years of having to bargain, dicker, or haggle over the price with each customer.
As I said, maybe it’s a ploy and the seller only wanted $100. But the bottom line in sports memorabilia is that it’s a supply/demand marketplace driven by both desire, perceived value, actual value, and pride of ownership.
By now you’re wondering what my sports memorabilia buying has to do with your selling structure or strategy. And the answer is: the price process of the memorabilia dealer is no different than yours. Your customers ask for discounts, and the first thing you do is try to figure out how low you can go, still making somewhat of a profit, to complete the deal. Big mistake.
Regardless of your thinking (because many people think that their product is becoming a commodity -- bad thought), if you were able to stand your ground by proving your value, and having your customer perceive that the value was there, not only would you earn your price and get your price, but you would also gain the beginning of a mutually respectful relationship that will end with customer loyalty rather than customer satisfaction.
REALITY: More than 74% of people are willing to pay the price. Ditch the other 26%, let them hammer your competition into no profit and bankruptcy, and concentrate on the customers who are willing to pay.
BUT THERE’S A SECRET: In order to get them to pay your price, you have to know which ones are willing and which ones are not. This requires engagement.
Oftentimes, when I ask a dealer, “How much is this?” he begins with a story rather than a price. A story of what the piece is, where it came from, why it’s unique, what gives it value, and why it’s worth owning. He’s proving the worth or the value by telling a story. The stories are not only compelling, they’re historical and actually heighten the desire to buy.
CHALLENGE: What stories are you telling? What value are you proving? How deep is the engagement with your customer?
REALITY: If your engagement boils down to a proposal, or if your main contact is a purchasing agent or someone in a procurement department, you lose. Even if you win the order, you lost the profit.
I’m a loyal customer to sports memorabilia. I will continue to go to the National and try my best to negotiate price at the point of sale. But the bottom line is if any dealer put up a banner behind his booth that said, “Our prices are fair and our prices are firm,” they’d make a heck of a lot more money at the end of a show, and so would you.
I have a few more points to share about the negotiation process. Go to www.gitomer.com, register if you’re a first time user, and enter the words PRICE POINTS in the GitBit box.
Jeffrey Gitomer is the author of The Little Red Book of Selling and eight other business books on sales, customer loyalty, and personal development. President of Charlotte-based Buy Gitomer, he gives seminars, runs annual sales meetings, and conducts Internet training programs on sales, customer loyalty, and personal development at www.trainone.com
. Jeffrey conducts more than 100 personalized, customized seminars and keynotes a year. To find out more, visit www.gitomer.com
. Jeffrey can be reached at 704.333.1112 or by e-mail at email@example.com