My friend’s baby looked like a cross between Gollum from Lord of the Rings and a Troll doll.
When I met the little guy—and I’ll admit, I lied—I said, “He’s so cute!”
Don’t judge me, you know you would have done the exact same thing! As humans, sometimes we avoid telling others the truth in order to not hurt their feelings.
Buyers do this to sales reps every day. We’ve all been there. You’ve been working on a deal for months, and now that you can see the finish line, your prospect comes back with some variation of “It’s just too expensive” or “We don’t have the budget right now.”
It’s the business version of the classic breakup line: “It’s not you. It’s me.” And it’s rarely the truth.
But since you have nothing better to report, you open up the CRM, select the “Pricing” option in the “Closed lost” field, and close out the opportunity.
Over time, those closed-lost opportunities stack up. Eventually, someone runs a CRM report in an attempt to understand why you’re winning and losing deals, and they see that a huge percentage of losses are being attributed to “Pricing.”
But what does that actually mean?
Does it mean a competitor is undercutting your pricing? Or that you need to offer coupons and discounts? Is your pricing model too confusing? Are you offering buyers too many options during the sales process? Maybe it takes you too long to deliver pricing options to the buying committee. Or maybe there are six other reasons your buyers don’t purchase from you.
In each of these cases, pricing is simply the easiest and most palatable excuse a prospect is willing to offer your sales rep.
Without a better understanding of what pricing really means, you’re left to build your sales strategy based on guesswork and assumptions. It’s like closing your eyes, pulling the trigger, and hoping you hit the target.
This is where Clozd can help.
“Clozd helps us better understand a variety of factors in our sales motion, including product feedback, pricing and packaging, sales process efficiencies, and general competitive intelligence.”
Nick Roco | Senior Manager of Partner Strategy and Operations at Dataminr
Win-loss interviews conducted by an unbiased third party enable you to dig deeper and understand what your buyers mean when they say your product or service is too expensive. Here are five specific buyer concerns that may be masked by the generic statement, “It’s just too expensive.”
No clear and justifiable value proposition
Often, “too expensive” means that the buyer is unable to justify their perceived value of the product. Expensive is a relative term in any business decision. It comes down to the buyer’s ability to justify an ROI or make a business case to the larger organization.
"That's usually a cop-out answer that really means, 'I don't see the ROI in this or couldn't convince my CFO that there was an ROI.’ CFOs aren't dumb. If their money can make them more money, they'll spend it."
Brady Tengberg | Director of Revenue Strategy at Clozd
After performing thousands of win-loss interviews, we’ve found that there’s often a disconnect between what your sales team is saying and what the buyer is hearing—especially when it comes to a product’s value proposition. In every evaluation, buyers place value on solving their current problem or need, and that value is compared to the offered price point.
Effective sales messaging shows how a product meets those needs and delivers value. Buyers are then empowered to go back to their leaders and clearly articulate why a product is a must-have.
The license model doesn’t fit their business
A company’s licensing model is another common roadblock during pricing conversations. Buyers may disguise this as too expensive, but in reality, the pricing model just may not be conducive to the way they operate.
For example, a SaaS company changed its pricing structure from a concurrent licensing model to a per-seat model. Previously, licenses were determined based on the number of users that were able to simultaneously access their product. This helped ensure that each license was used at 100% capacity. After changing to a per-seat model, each license required a named user. Buyers became frustrated because they had to purchase individual licenses for users that rarely used the product.
Through win-loss interviews, this client learned that the license model was a point of frustration for their buyers. Buyers actually preferred a tiered licensing model because it provided more options to fit each user type. It was the licensing model—not the actual license fee—that was the issue.
The pricing model doesn’t scale well
Sometimes a company’s pricing model just doesn’t fit with a buyer’s expected growth.
One buyer we interviewed was totally fine with the vendor’s current price. At the rate the buyer’s company was growing, however, the vendor’s pricing model quickly became cost-prohibitive. Without reassurance or clarity on how the price would change over time, the buyer simply concluded that the product was too expensive. What they were really saying was: “There’s a risk that it will become too expensive in the future.”
The way a pricing model is presented and explained signals to the buyer how much risk they’re taking on by signing up. Companies that design and communicate a relevant pricing model for their market win more deals and grow with their clients. Conversely, we see that companies who fumble on this principle struggle to retain or gain new customers.
Learn more about this by checking out our pricing strategy guide.
The package doesn’t match their needs
People don’t like buying things they won’t use. Sometimes companies, in an effort to make their product more compelling, add in features they don’t need (or even care about). Because of this, some buyers may feel like you’re selling them more than what they need, which leaves the impression that they’re spending more than what they should. Packaging your product and/or service correctly* will ensure that you avoid this potential pitfall.
*Always offer a bare-bones option.
The price point doesn’t line up with the competition
Win-loss interviews often help you get a better understanding of your competitors’ pricing strategies. This awareness is vital when providing an initial quote to a buyer. If the initial quote isn’t competitive, most buyers will eliminate that vendor out of hand, without even trying to negotiate the price. While some buyers may freely volunteer the price of competing vendors, sales reps must be prepared to deliver a price that’s in line with the competition. If companies are unable to do this, buyers will begin to label them as too expensive.
By understanding what “too expensive” really means, sales reps can make adjustments to their messaging and turn pricing into an advantage—not a deterrent—as they seek to convince each buyer of their product’s value. When the pricing model fits the buyer’s business operations, projected growth, and market expectations, a company’s price can drive commitment and secure long-term customers.
To see all the ways win-loss interviews can help you gain clarity around exactly why you win and lose deals, download our Definitive Guide to Win-Loss Analysis here: