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[EDITOR’S NOTE: This is a replay of the CREATIVITY IN SALES Webinar sponsored by the Institute for Excellence in Sales and hosted by Fred Diamond on September 12, 2020. It featured Sales Leader Peer Group Facilitator and Business Coach Mike Schmidtmann.]
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EPISODE 292: Sales Expert Mike Schmidtmann Explains How to Accelerate Past Any Objections You May Be Encountering Right Now
MIKE’S TIP TO EMERGING SALES LEADERS: “There are five different ways to respond to an objection with the acronym READY. You can REVERSE an objection, hit it right back at them with, “That’s exactly why.” The reason a Reverse is so powerful is because the reason you’re against it is the reason you should be for it. You can EXPLAIN what happened and that’s a perfectly reasonable answer, it’s not an argument, it’s just, “Let me explain what this is. You can ADMIT something. Occasionally there will be a bad piece of news, they’re going to look at how you DENY that. Vehemently, strongly, affirmatively deny that that happened. Finally, ask WHY. It buys you some time and it gives you more information.”
Fred Diamond: Today we’re talking about how to handle tough objections. Mike, it’s so good to see you, you’re a favorite at the Institute for Excellence in Sales, you’ve spoken a number of times on getting huge deals and getting past objections, it’s a huge topic right now. Getting past objections is always a huge topic but particularly now. You look great, I’m excited to hear what you’re going to say, we have a nice big audience for you so take over the stage.
Mike Schmidtmann: Ask yourself, what would you call a person who never gets any sales resistance? Here’s what I would call them: an order taker. People who don’t get any resistance at all are order takers and if you don’t get any resistance in your selling, you’re going to get paid like a McDonald’s counter clerk because that’s what we are. If we’re order takers, we‘ll get paid like order takers and yet I’m guessing all of us get these objections from time to time, we get these kind of things happening, “I’m not interested”, “Call me in six months”, “Happy with my current provider”, “Let me think about it”, “This needs board approval.” I’m guessing you’ve run across these stalls and objections from time to time, how do we handle them persuasively and get people to take action?
That’s what we’ll talk about, that’s where the money is, folks. If this were easy, we wouldn’t need to pay you a lot of money to do it so the money is in the resistance. The more resistance you get, the harder it is, the more money you make if you’re good at it. We’re going to talk about getting good at handling resistance and persuasively getting people to take action. In our session today: why you get objections, a framework for handling them, I’ve got some specific tools because there’s really not one way to handle objection, there’s a series of ways to do it. Then we’ll finish so make sure you stay till the end, I’ve got a lightning round of 10 tips you can take that’ll help make you a better objection handler once you get out of this session.
For those of you who don’t know me, I’ve been a friend of Fred and the Institute for 10 years at least and I speak on sales and topics generally in information technology. I was in the DC area selling telephone systems for many years with the #1 telephone reseller for 3 years according to the Washington Business Journal. For the past 10 years I’ve been a sole practitioner and I can proudly state I’ve been employee of the month every month for 10 years. Cal Ripken, I’m on the track to beating him in time. For those of you who don’t get it, I have a free newsletter bulletin, humorous take on sales and marketing, you’re welcome to sign up for it if you want, it comes out maybe 6-7 times a year and like this, do webinars and sales training sessions on sales topics usually for information technology. 50 Ways to Get New Business, Persuasive Techniques to get Sales, How to Gain High Value Selling with High Margins, these are all subjects that I love to cover.
Now let’s just take a second and let me ask you because I’ll make sure during this session that I find time to cover everything that’s irritating you or giving you a hard time, maybe some thoughts and ideas. In the question box that Fred mentioned, type an objection that you have trouble with and we’ll get to all of them. If something’s giving you trouble, put it in the question box to Fred and a little bit later we’ll take each one, one by one and we’ll talk about how you handle that tough objection.
Let’s start out. The one thing you don’t want to do with an objection is to argue and those of you who are married know who the winner is in every marital argument [laughs], in my case it’s not me.
Every argument I’m in in a marital argument I lose, every argument with a customer, you’re going to lose too so whatever you do, you can’t argue your way to success even when the customer is wrong, and often times they are mistaken, they have misinformation or they’re jumping to a false conclusion. It doesn’t matter, you never argue a way to a sale. What you do need to do is to get your customer to look at the world in a different viewpoint, so I say you put on the rose colored glasses, get them to view the world in a different way and they’ll come to a different conclusion. Our job in sales is to get the customer to look at the problem not as an objection but look at it in a different way and then they’ll come up with a different answer which is what you want, get them to take action. When I interview salespeople, my first interview question of all every time is how do you handle a price objection? “I really like your proposal but your price is too high.”
First of all, if anybody in an interview says, “I’ve never heard that before” then I know they’ve never been in sales before [laughs]. We’ve all had price objections, you’re going to get that and I’m guessing those of you on this session have heard this hundreds if not thousands of times, “Your price is too high.” You’ve heard it thousands of times, you would think if you know something is coming, you would have a perfectly crafted answer so you might say if it’s a fast ball right down the middle, you whack it out of the park every time. If you know a fast ball is coming you can gear up, get ready for it and hit it out of the park, that’s what you want to do but salespeople don’t and this never ceases to fascinate me. When I ask this question, 80% of the salespeople have really bad answers. “Why would that be?” If you know you’re going to get a price objection and you can’t handle it, that shows a lack of training and preparation on your part so generally people will either answer it and say something along the lines of, “We’re higher but we’re worth it” which is not persuasive, or, “How much is too high? I can talk to manager, would you be willing to go ahead?” which is a bargaining response.
Neither one of those ways in and of itself is a good answer, a lot of times I’ll get an argumentative answer, something that’s not persuasive and you sound sales-y and cheesy and you’re not prepared. How can you be not prepared for something that you know is coming? In my opinion, we should all be prepared for objections. There aren’t that many, we’ll go at the end and Fred will categorize them but I’m guessing some of the objections you hear quite frequently are, “Your price is too high”, “I don’t have time”, “I’m happy with my current vendor”, “Call me later”, “I’m in the middle of a contract”, “Never heard of your company” or some variations of these objections, but there aren’t that many. When I do this in a whiteboard session with a client, we generally don’t get more than 7 or 8, I don’t think I’ve ever had more than 10. So if there are so few objections, wouldn’t it make sense to master your responses to each one so when it comes, you hit it out of the park?
WHY YOU GET OBJECTIONS
Our session today, let’s talk first about why we get objections. I’ll often ask somebody, “What do you think when you get an objection?” and sometimes people will say something like, “I don’t like it, I wish I didn’t get objections.” Somehow as if that were a feeling of failure on your part if you get an objection, nothing can be further from the truth. Imagine for a minute somebody comes to you and says, “I have a wedding dress for sale and this wedding dress is a designer dress, it normally sells for $5,000 dollars but I can get it to you for $500.” For most of you, if you are not in the market for a wedding dress, you could care less what the price is [laughs] you don’t care if it’s $5,000 or $5 dollars, you don’t want it, you don’t need it, you don’t care. But what if you did? I have three daughters, they’re in their 20s and sooner or later one of them probably will want to get married. If they want to hit dad up for a $5,000 dollar wedding dress and somebody offers me one for $500, I’m all ears. But put yourself in that position, let’s say you are in the market for something and you’re open to it but it seems off, you might ask a question like this, “What’s wrong with it? Why are you selling it for $500 if it’s really worth $5,000? Was it stolen? Is it fake? Why are they selling it for that? Maybe the guy’s desperate, maybe I can get it for even less than $500.”
You can see these objections come up only when you’re interested in buying something. If you don’t want a wedding dress, you don’t really care what the price is and so it is with objections. As a matter of fact, in my younger days for three years I was in 100% commission sales, what they call the eat-what-you-kill sales, selling real estate, home improvements, I was commission only [laughs]. No benefits, no salary, nothing and we used to call people, they would say, “That’s nice”, “That’s wonderful”, we used to call them strokers because they’re not buyers at all. The buyers are the ones that give objections so we knew if nobody gave us an objection, they weren’t a buyer, if they gave us objections, they were. Our phrase was, “A barking dog doesn’t bite”, if they’re barking, that’s a good sign, they’re not going to bite. It’s the dog that isn’t barking you’ve got to worry about, they get up from behind and bite you but a barking dog doesn’t bite and a person who gives you objections is a buyer, that’s the mindset I want you to have. Objections are a positive sign, they’re interested in what you have and they’re processing it right now and thinking of all those reasons that maybe they can get it for less or maybe there’s some other reason, but they’re thinking about buying.
THE REVERSE
I’m going to share with you right off the bat five different ways to respond to an objection and this comes right here from the Dale Carnegie sales course, I was a Dale Carnegie trainer for quite some time so I have to give them acknowledgement that this comes from the Dale Carnegie sales course. They have five things, first is a reverse so the acronym here is READY. You can reverse an objection, what do I mean by reverse an objection? A Reverse is actually a very powerful technique and here’s a couple examples of it. Let’s say you call somebody and they say, “I’m really too busy.”
A reverse would be, “If you weren’t busy, I wouldn’t want to talk with you anyway” and you go right back at them. You could say something like, “It’s the busy people who need to hear this, can we take 10 minutes and talk about it?” A Reverse is you hit it right back at them with, “That’s exactly why.” In fact, the next statement, [Unintelligible 13:02] uses this as an exercise with salespeople sometimes in sales meetings. A Reverse could be something like this, “You’re concern with money is the very reason you should invest in this solution, let me explain why.” The reason a Reverse is so powerful is because the reason you’re against it is the reason you should be for it, and it smacks them on the head and makes them think about it. We play this that’s-exactly-why game, “That’s exactly why you should do it.” If you’re concerned about the investment, that’s exactly why you should do it because this will give you the best return. Let me give you some examples of this.
In fact, I’ll sometimes do this at a sales meeting and we’ll play the that’s-exactly-why game and the salespeople usually have a lot of fun with this, they joke around about it. We’ll go around a table and I’ll give them an objection and they have to respond with, “That’s exactly why you should do it.” If your price is too high, “That’s exactly why you should go with this, because it’s an investment, you want the best return and the best investment gives you the best return and it may run the most money.” If you’re too big, “That’s exactly why you should go with us, because you really need a strong and stable company.” You’re too small, “That’s exactly why you should go forward with us, because you need somebody who’s small and nimble.” Never heard of you, “That’s exactly why you should work with somebody like us, because you want somebody who’s’ going to work extra hard to build our name and reputation up and we can use you as a reference.” I had a bad experience once with you, “That’s exactly why you should work with us, because we worked those kinks out, we identified the systems and problems and work to make sure it never happened again, we’ll work twice as hard to make sure that never happens to you again.”
You can see the power in the reverse of an objection is that it catches them unexpected, that’s why it’s such an attention-getter. You can also see that it’s more of a mindset than the words. I’ve seen salespeople who are really in the zone, they’re selling everything in sight and they have such a swagger and such a confidence in what they’re doing and I’ve had people say to me, “There’s no objection people can give me that I can’t overcome.” They have that swagger and mindset and if you have that swagger and mindset, that actually conveys to the customer more than the words do. The mindset is, “You need this.” I work half the time with salespeople on their own mindset, they think their price is too high, they think their service is terrible, they think their company is flawed because they’re aware of all the deficiencies and nobody’s perfect. You don’t see your competitor’s deficiencies, you just see your own and you think for some reason, “We’re not that great a service, maybe our prices are too high.” You’ve got to get past that and the mindset is, “That’s exactly why you should do it” and you should feel those customers out there need our services desperately, especially in times of recession. They need the productivity that our services can bring, they need the productivity that our offers have, they need it, it’s a mindset.
What happens if you have a generic product? “That’s exactly why you should go with us, because it isn’t just the product, it’s all the things around the product, it’s how it’s designed, it’s how it’s implemented, how it’s trained, how it’s integrated, how it’s supported.” One of the most profitable companies in technology is Red Hat Linux, Red Hat Linux is free, it’s worth billions of dollars because they’re selling something free but the design, implementation, training, integration, support are not and that’s where your value add is. That’s exactly why it’s a mindset, somebody hits you up with that, your attitude speaks better than the actual words. The mindset is, “That’s exactly why you should do it.
LET ME EXPLAIN THAT
You can explain, many times they’ll hit you with an objection and say, “The other company has more engineers.” “Okay, I can explain that.” “I see that you recently had a merger”, “Yes, let me explain it.” “I saw something in the paper about your company”, “Let me explain it. You can just explain what happened and that’s a perfectly reasonable answer, it’s not an argument, it’s just, “Let me explain what this is.” “Yes, we’re 20% higher, let me explain why that is.” You can admit something, admit is occasionally there will be a bad piece of news. “I saw something about your company”, “Yes, that’s true. Having said that, that’s exactly why you should go forward with us, because…” You can deny it, many times as we know there are unscrupulous competitors and they’ll spread misinformation. How many times have I heard, “I heard your company is going out of business” or, “I heard your company is in financial trouble”? Folks, that flat out is not true. You can deny it and they’re going to look at how you deny that. Often times competitors will sometimes spread fear, uncertainty and doubt and you’ve got to vehemently, strongly, affirmatively deny that that happened.
The most powerful of all is the ask why. Sometimes they’ll hit you with something and you need a little time to sort things out, sometimes they’ll hit you with something hard and what you don’t have to do is answer it right away, you can ask why. One, it buys you some time and two, it gives you more information. Sometimes people will give you an objection that’s not immediately clear where it’s coming from and you can say, “Why do you say that?” This is most useful when you get the price objection and I mentioned before, a price objection really has two different ways it can go and each way is handled differently. It could be a value objection, they think your price is too high because they don’t understand why you cost more, it seems to be the same as everybody else but it costs more, or it could be bargaining. It could be they recognize that you’re better, they’re just trying to get you a lower price. Each of these is handled differently so before you can answer this question, you’ve got to ask, “Why do you say that?” For example, let’s say I’m in a car lot and I go to a person, I want to buy a Lexus and I go to the salesperson and say, “I don’t understand, Lexus is made by Toyota, what if I got the Toyota Camry? It seems to be the same car, it’s $20,000 less.”
If that’s a value question then the salesperson needs to answer in a value way. “Here’s exactly why it is, here’s how it’s manufactured differently, here are the different materials, here’s the longevity, here’s the longer warranty, here’s the value.” Or it could be, “I want the Lexus but I want to pay the Toyota price.” In this case it’s bargaining and if the salesperson goes into detail about the different manufacturing process and the different materials, they’re wasting their breath because it’s not a value objection, it’s a bargaining objection. “I know I want it, I’m just trying to work you down and see what the bottom line is. When you get a price objection, many times the best thing you can do is to say, “Explain to me why you say that, why do you feel that way?” Buy yourself some time, let the customer break it’s either a value problem, “I don’t understand the value, it seems like you do the same thing as the other people but you’re more money”, that’s a value objection. Or it could be, “I know you’re better, I just want to get you for the lower price” which is a bargaining. They’re handled differently but you can see asking the question, “Why do you say that?” helped me understand. There’s always a perfectly natural reaction especially into a tough objection or one if it’s not really clear where they’re coming from. That’s the READY formula, Reverse, Explain, Admit, Deny and ask Why. That’s one set of tools, but I’ve got many more [laughs] so I’ll give you some of these.
That’s the whole thing about objections, there’s not one tool that works for everything just as if you’re doing an addition on a house you’ve got the hammer, saw, nail, wrench, screw driver, different tools for different type of tasks. You have different objection handling tools for different kinds of objections and different circumstances. Here’s a real simple one and I like that this is a fast one if you’re swatting a fly, feel-felt-found. I understand how you feel, other people have felt the same way and then they found. This is one that’s a lighter objection. Let’s say for example somebody says to you, “You don’t have as many certified engineers as the other guys do.” “I understand how you feel, other people have felt the same way, what they found was that our people are actually more responsive and that’s really what they cared about.” Feel-felt-found is always a nice construct that you can use for a variety of objections. I want to think about it, “I understand how you feel and other people have felt the same way, then they found they were saving money right out of the gate and they wish they’d done it earlier.” Feel-felt-found is a nice little fast tool.
Some objection handling techniques are like this jet ski which can turn on a dime. If you want to turn fast, you have a jet ski but sometimes you’re the super tanker and a super tanker cannot turn on a dime, in fact it sometimes takes a couple miles to turn that around. In some objections you can turn like a jet ski and some are going to be like a super tanker that just take time, so I can’t give you a rule of thumb for this but the bigger the objection, the harder it is, the longer it’s going to take for you to gain. What are you doing? You’re not arguing with them, you’re not talking them out of it, it’s not an argument, you’re getting them to view the world in a different way. This could take just a few minutes or it could be like swatting a fly with feel-felt-found, it’s just a short simple one. You have to be the judge, is this a big long super tanker turn around or is this a jet ski? That’s where you have to use your sales experience to get the answer to that.
There are lots of tools, let me give you some more. If I had to say there’s one formula that I use more than any other one is this four step objection handling formula, the four steps are you cushion it, you restate it, you give a different perspective and then you handle it. Let me drill into what this four step formula is. First is a cushion, somebody says, “Your price is too high” or, “I think I can get it cheaper by going direct.” The first thing you do is you don’t argue, a cushion is just an empathetic response, “I understand how you feel”, “I can appreciate it, I can understand.” You’re not agreeing with the objection, you’re not saying, “Damn right, the price is too high” [laughs]. You don’t agree with that, what you do say is, “I understand, I appreciate it.” The second thing is you restate it and what I mean by restate is you take it and you put it in different words. A cushion is, “I understand how you feel”, a restatement is something like this, let me share with you what some of these restatements can be. If somebody says it costs too much, I rephrase it as an investment. “I can appreciate you want to get the most for your investment.” See how I rephrased this? Then I’m going to talk about this, I’m getting them to look at this not as a cost but as an investment, it’s getting them to look at the world in a different way.
If somebody says, “Look, we don’t need your services, I want to do this in house” I would say, “I can appreciate you want to keep your total cost of ownership as low as you possibly can.” I’m not arguing here at all, I’m empathizing but I’m also rephrasing it and rewording it because I’m going to take the reword and get them and I’m going to turn that supertanker around little by little. “We don’t need this much”, maybe they say you’re proposing more than we need, I say, “I can appreciate that you don’t want to overspend for anything.” If somebody says, “You guys are too small”, “I can appreciate you want solid, reliable expertise.” By rephrasing it I’m going to handle the rephrasing it, I’m not going to handle the ‘too small’ because if you say, “We’re not too small”, that’s an argument. If they say you’re too big, “We’re not too big”, that’s an argument. “I can appreciate that you want personalized services and you may feel that a big company can’t give you personalized services, let me share with you why a big company like us focuses on personalized service.” What you’re doing is you’re responding to the rephrasing of it. If somebody says you’re too small, “I can appreciate you want solid, reliable expertise and if you can get that from a small company that’s even better because we’re faster, more responsive. If you can get the expertise there at the same time, that’s everything you’d want, right?” You can see what you do is you take the words, you rephrase it and reframe it in a different way.
CHANGE THE PERSPECTIVE
Next is you change the perspective. Again, you get them to look at it in a different way. You can do the reverse here, “Your desire to save money is the very reason you should go ahead with it.” A lot of times I’ll do something like this especially with a price objection, I’ll use a Warren Buffet example. “Warren Buffet, one of the wealthiest people in the world, when he looks at investments, does he look at the cheapest investment or the one that gives him the most return? Warren Buffet gets the one with the most return. As a businessperson, you’re accustomed to making investments and getting return and as a businessperson, don’t you want the most return? If we can share with you that this is a better return than the other one, would you be open to that?” That’s the third leg to that which is the would you-could you, quid pro quo. “If we could show you this is a better investment, if we could show you this is a better use of your money, would you be willing to invest more?”
I’ve turned the super tanker around from a cushion, I’ve rephrased it from cost to investment, I’ve changed the perspective. Instead of spending too much money, I’m getting more money back from my investment and if we can show you that this is actually a better return, would you be open to that? That’s really hard for somebody to say no to, so I love this construct. Those of you who’ve seen me before know that I preach this a lot, the quid pro quo, which is Latin for how much in return for what? In the south they call it would you-could you [laughs], “If we could do this, could you do that?” “If we could show you this is a better investment, would you be willing to move forward even if it is somewhat more money?” “If we’re able to show you we can give you the service you want, would you be comfortable working with a smaller company?” ‘If we could show you this, could you do that?” This is a very powerful tool, anytime somebody gives you an objection you can do a would you-could you back at them. If they say, “We only deal with nation-wide vendors”, “If we could show you we could provide better service for this office, would you be open to that?”
Here’s the four steps in order. Cushion – let’s say somebody says, “We think the other solution better suits our needs”, “I can understand how you feel and I can appreciate you want to get the most for your money”, I’m empathizing here. “Your concern for the investment is the very reason you should go ahead with this”, this is the reverse, that’s the very reason you should do it, that’s exactly why. “If we can show you this gives you a better return, would you be prepared to move forward?” and it’s hard for them to say no to that because that shows them being a stupid business person. If I gave you a better return, would you want to make it? Yes, if you’re a good business person, you would.
That’s the four step process there and again, this is a tool in the toolbox, this is the most powerful one that’s a multi-step process, I found this a very powerful technique. A couple more tools in the toolbox and then we’ll get to your objections. This is called pencil sell, had you ever had a buyer that looks like they’re not really open to persuasion that much? Pencil selling or a reduce to the ridiculous works this way. “You’re $100,000 bucks, everybody else is $80,000.” “Price aside, do you believe our solution is superior?” “Yes.” “That’s right, because with our solution you get this advantage, this advantage and this advantage.” The guy says, “Yeah, it’s still not worth the extra money” and you say, “If you were to go ahead with this you’d want to be using this for at least 5 years, right?” and they always say yes. The longer the better, and the longer the term the better it works for you. “The difference between an acceptable solution – the other guys – and a great solution which you acknowledge is $20,000 dollars, the difference between $100,000 and $80,000.
On a five year lease that’s $400 dollars a month, that’s $15 dollars a day, that’s less than $2 an hour. For less than $2 an hour, for less than you’re spending on coffee creamer, for less than you’re spending to water the plants, for less than you’re spending to clean the conference room once a week you could be having this, this and this. Are you telling me that’s too much to spend?” What do they do? You’ve turned the supertanker but you’ve taken a big number and you’ve broken it into smaller pieces and then compared it. What’s the process here? This is called a reduce to the ridiculous. Get a confirmation that your solution is superior, they have to agree it’s superior otherwise it won’t work. Review your competitive advantage – let’s review, here’s why we’re better and you agree with that. You always pencil sell the difference, I didn’t pencil sell $100,000, I pencil sold the difference between a hundred and 80 which was $20,000 and then you compared the ridiculous amount which is the per hour charge. A lot of times if you’re doing this it’ll be like 15 cents an hour or 20 cents an hour and you say, “Look, you’re spending more on the toner of your copier.” It makes it sound trivial, what the difference is.
A couple more tools and I do want to wrap this up quickly and get to your objections so I’ll just do some of these briefly. What if you get sticker shock? What if you’re two or three times more than somebody else? Here’s an example, I’ll tell a quick story from Michael Lewis, the Flash Boys, he’s the same author of Moneyball and The Blind Side, my wife’s favorite movie and book. He tells about a Wall Street firm that decided to lay a fiber optic cable between Carteret, New Jersey and the Board of Trade in Chicago. Instead of following the railroad tracks where the right-of-ways were for the fiber, they went in a direct straight line. Why did they do that? Because at the speed of light they spent $300 million dollars to lay 827 miles of fiber optic cable that saved them 4/1,000 of a second in speed. You might say, “Big whoop, who cares about 4/1,000 of a second to execute a stock trade?” Actually, in the world of stock trading, 4/1,000 of a second is enormous and what the people could do is in New Jersey, they could sniff out that Fred Diamond wanted to buy a million dollars’ worth of IBM stock. They would race ahead of Fred Diamond with 4/1,000 of a second advantage, buy a million dollars’ worth of IBM stock and raise the price two cents. By the time Fred bought it, it would be 2 cents higher than he thought it was when he pressed send and they were doing this thousands of times a day and they would make a penny or two every time they bought a share. Nobody noticed it because it’s only a penny and they said, “Well, there must have been a little bit of a lag time” until finally some guy in Toronto figured it out and says, “Every time it’s a penny but it’s every time, it’s not luck. How come every time I buy something it’s more money than I thought it was?” and they finally figured out it was because they had this fiber optic cable that saved them 4/1,000 of a second.
The salesperson who went to Wall Street to sell this fiber optic cable went to a Wall Street firm who did hedge fund trades and they said, “This is a $10 million dollar deposit. If you want one strand of this fiber, $10 million and $500,000 a month.” Think to yourself for a second as a salesperson, would you choke if you had to give somebody a bid for $10 million dollar deposit and $500 thousand a month? That must have been hard for a salesperson to deliver but the answer that they got, the first person they called on, the answer they got was, “Can you double the price?” Wouldn’t that be great if a customer said to you, “Can you double the price?” and why was that? Because he immediately calculated in his head the millions of dollars he would make and recognize $10 million was chump change. They could make millions, the higher the price, the fewer of their competitors who could do it too and he wanted to double the price because he had it. Occasionally your price actually works in your favor so don’t assume just because it’s a high price that people won’t do it. If they’re smart, it may be a great investment.
Getting back to sticker shock, don’t assume they’re going to freak out. They may recognize immediately it’s a great investment but there are three things you can do real quick and then we’ll move onto your objections. Anchoring is one, anchoring says that the first number you always give is higher. In this redwood tree example they ask people what’s the height of the tallest redwood, if they said it’s taller than or shorter than 1,200 feet they guessed 800. If they said it was taller or shorter than 180 feet they guessed 282. The point being, the first number you give is the reference point so the first number you give in any price is higher than your proposal is going to be. How can you do this? You could say for example, “Many people with 20 employees would pay perhaps $20,000 for this” and of course your proposal would be less than that, you toss out a reference point. People in your industry often spend 10% if you’re in financial services, that means you’d be spending about $2 million dollars for our solution.
Of course, you’ll be less but the first reference number is higher. I always coach people to say in manage services, “Manage services run from 80 to 150 per person so if it’s 150 that would be $15,000 dollars a month for you, the good news is we’re coming in a lot less.” The first reference point, the anchor has to be higher than your proposal. An anchor number could be, “What happens if you get hit with ransomware? It could be $80,000 dollars and we’re a lot less than $80,000 dollars or if you had a fire and had to replace everything it’d be a lot less.” Your anchor number doesn’t have to be another proposal, it can be just any number that’s a lot higher than your proposal number. Tied to this is the Goldilocks principle which is to say that your price is always in the middle, so you give them three numbers. “The people in your size range from $1,000 a month to $4,000 a month. Luckily, we’re right in the middle.” I like to phrase things like, “You can get a bare bone solution for as little as a thousand, you can get a Cadillac solution for $4,000 that does everything, we’re going to come right in the middle.” If we say like with anchoring, you start off with the high one. “The Cadillac solution does this, the bare bone solution does this, where you probably want to be is in the middle.” The Goldilocks is in the middle.
The last thing you can do is use a metaphor so time is money, it’s a metaphor that we use in sales quite a bit because time is money but here’s some metaphors that you can use, “This is like an insurance policy. Yes, this is $250 dollars for this manage service security solution but it’s an insurance policy against $80,000 dollar loss.” You can say, “This is like a gated community, once you protect your network with these firewalls, nobody is going to be able to get in.” Or you can say, “Our service department is like the Mayo Clinic, whatever is wrong with you, we have the right specialist to come in. One place, all the doctors converge to give you a solution and that’s how we work.” You give a metaphor for your solutions that you can use and get them to look at the world in a different way. Anchoring, going high, Goldilocks when you’re in between the bare bones and the Cadillac and the metaphor, “We are like something else.”
With that, there’s still time for some questions, Fred, if you’d like to pop out and join me here [laughs]. First of all, any objections that the people have given you that you’d like to have me handle?
Fred Diamond: First off, Mike, I want to thank you for an amazing presentation, this was so much great information. We have a couple here and we’ve got a couple more minutes, a couple of them you really addressed well. Price of course is one that came up from a couple of people, here’s a couple fresh ones that you might not have really touched on. The topic of urgency, this comes from Faheem, what would you say to a prospect who says, “Let me think about it” or, “Let’s talk about it next month”? Let’s talk about that response, urgency. Thanks, Faheem.
Mike Schmidtmann: Urgency is one of my favorite topics and I’ll say this. Urgency needs to be built in in the beginning of a sales presentation, beginning, middle and end, it’s baked into every part of your presentation. If you throw urgency at the end, you’re being sales-y and pushy so I pull. When I say I pull, you push by telling, you pull by asking. I pull, so in the beginning – and I call this a triple close, you use the quid pro quo as well, Fred – “If you like what you see and the price is fair, can you take action in 30 days?” You do this again in the beginning, middle and end, you cannot do it at the end if you haven’t done it in the beginning because otherwise you’re being pushy. I ask in the beginning innocently, “If you like what you see, the price is fair, could you take action in 30 days?” or 60 days or 90 days, whatever it is. A lot of times I’ll give them a reason for that. For example, in the technology world you have end-of-quarters, you have end-of-month, end-of-year and you could say, “The reason I ask is we’re going to go get a registration for you but it expires in 60 days.
If you can’t take action, I don’t want to do it because the first question the vendor is going to ask me is, ‘can you take action in 60 days?’ So if you can’t, don’t do it, I won’t do it but if you like what you saw, the price is fair, could you take action in 60 days?” and they say yes. That’s leg #1, leg#2, what would you need to see in order to feel comfortable taking action in 60 days? They’ll say something like it’s got to leap tall buildings in a single bound, it’s got to be faster than a speeding bullet, it’s got to cure world hunger. You leap tall buildings in a single bound, it’s faster than a speeding bullet and we cure world hunger, if you see that, you could take action? Yes. Now you filed that away, you planted a seed in the customer’s brain and now at the end of the month you say, “You told us if this, you could do this so obviously we jumped through hoops to give you this, are we prepared to go ahead?” and they say, “Let me think about it.” “That’s up to you, I of course appreciate it but aren’t you the one that said you saw these benefits? Aren’t you the one that said you wanted this to happen? If that were to happen, why wouldn’t you want to go forward with this? Why wouldn’t you want to save money, why wouldn’t you want to get increased productivity, why would you want to not do that?” You pull by asking questions, not by pushing. Again, urgency must be built in in the beginning, middle and end. Two, you ask them what needs to happen, you ask it innocently, you give them a reason for taking action and why it makes sense to do it now. Nothing works 100% of the time but that’ll probably double your close rate on the urgency one.
Fred Diamond: We have a whole bunch, Mike, that are coming in here so let’s do a lightning round. This comes from Keith, “Your product doesn’t do what we need.” That’s an interesting one where you feel pretty good about your product but the customer pushes back with, “We don’t think it really does what we need” but you know it does.
Mike Schmidtmann: First of all, it’s a great question too and that’s fair. I would ask you the question, Keith, have you earned the right to deliver this proposal and its solution? Imagine you’re a doctor, do you have the right prescription? If you do and the customer doesn’t realize it, then I say you have to have earned the right. If you’re going to use the wrong solution then you shouldn’t be selling it. I would only promote a solution if it’s the right solution for the customer and I’ve earned the right to say that to them by understanding their need. You might do something like this, “I can’t do this but I can do this.” For example, Keith, let’s say somebody says you can’t provide 7/24 service. “That’s true because I’m not going to promise something I don’t deliver and we don’t have people 7/24. Having said that, what we can do is we monitor 7/24 and what that means is if something happens, we’re probably going to fix it before you’re even aware of it and as soon as 8:01 happens we’ve got somebody at your door.” I can’t do this, I can do this. “Based on what we saw of your business, you’re not open at 3:00 a Saturday morning anyway.”
Fred Diamond: Mike, we have a couple that come in here of the same general theme that either you’re talking to too low of a person and you realize that you need to go up a level or two but they’re not allowing you to do so. There’s always the nervousness of if you go above somebody’s head, they’re going to shut you down or blacklist you. A couple of those questions come from Deborah and from Paul. Basically the objection when you know that they’re not the financial buyer or the executive buyer, maybe they’re in the manager level or director level but you know you need to get to the VP. Talk about how you would handle that.
Mike Schmidtmann: Deborah and Paul, that’s one of my interview questions. I mentioned the price too high is an interview question and I ask this gatekeeper question all the time too. I’ll share with you, there’s two wrong answers to this question and then there’s one right one. The wrong answer is what I call the bull in the China shop which is to say, “I don’t deal with underlings, get away little people, I’m going to go to the boss.” Some people do that especially in an interview because they think, “I’m the tough guy.” The wrong approach is, too, “I will try to sell these people and maybe they’ll think I’m so wonderful that they’ll invite me to the boss.” That’s the wrong answer too, you can be too timid, you can be too bold.
Again, the Goldilocks principle, what’s just right? The best answer for this is to avoid it in the first place. I’ll share with you in a minute how to handle it if you do hit it but the best thing to do and when I ask this as an interview question, the best answer is, “That would never happen to me because before I even get started I find out if they can do this or not.” You can ask in the beginning and say, “Fred, it’s so great to meet with you, I really appreciate this. Let me just ask you something, if you saw this and you really liked this and the price was fair, could you take action in 60 days?” and Fred said, “Yeah, we probably could.” I’d say, “Great, what would have to happen for that to happen? Is this something you could approve?” “No, the CFO has to do it.” Now I know that the CFO has to be a part of it and before I get too far down the selling process, again, this problem is best avoided.
Sometimes people will lie to you, “Yeah, I’m the decision maker” even if it’s an office manager they’ll say, “Yeah, I can make a decision” and then when it comes to closing time they say, “Well, I’ve got to talk to the senior partner.” That’s where sales experience comes in, are they perhaps lying to you? You can ask a few probing questions such as, “If this were a significant investment, wouldn’t the senior partner need to touch this? Wouldn’t your CFO want to see an RO?” “Yeah, they’d need to see an RO.” You find out early and you do everything possible in your power to make sure that you’ve got those senior people involved. Again, the answer to that question is avoid the problem rather than fix it if you can. Do everything you can to get those people. Sometimes you have no choice and then you have to say, “Is it worth my time to be dealing with sparky here? Sparky can say no but can’t say yes.” If I don’t have access I say, “I don’t play that way, I deal with people who can make a decision. I appreciate your desire to gather information, I’m not a free research service for you.”
Fred Diamond: Mike, this has been amazing, I just want to ask one last one because we’re getting tons of them that are coming in but I have to go buy that IBM stock that we were talking about before, if you want to lend me a million dollars… No, seriously. Again, we’re doing today’s show, it’s September 11th, a day of reflection for everybody and we’re still in the middle of a pandemic, a lot of companies are still coming out of the shut-down and all the things that happened. You were on one of the first mindset webcasts that we did back in April once the pandemic kicked in, what do you recommend for today? The question comes in from Rudy, “We’re not sure how many employees we’re going to have in the office when we return.” Mike also says here, “I’m not sure if they’re going to be back in an office anytime soon” which probably has something to do with what they sell. Is it an objection, “We’re in the middle of a pandemic and I don’t have marketing budget right now”?
I just want to say one quick aside. As you know, I used to be a marketing director with Apple and Compaq and a large software company called Compuware and the one thing that I learnt having controlled millions of dollars of budget is you might not have budget, but there’s always money. That was the one lesson I learned as a marketing executive. How about specifically today, is that a reasonable objection?
Mike Schmidtmann: Let’s say you’re selling office desks, nobody’s in the office or you’re selling commercial real estate and nobody wants to be in an office. There are going to be times when you’re selling something that nobody’s going to want, there are those times. I would say that you need to figure out in your solution set, products and services that you have, what can people do? If this is a pandemic world, what do those people need? That’s exactly why now that your business model has changed, all the more reason you have to change and pivot the way you run your business. “That’s exactly why you need our services to enable those remote workers to work.” You’ve got to find a that’s-exactly-why for that but that’s the mindset you have. I’ll just leave you with this, Fred, then I do want to wrap up here.
About a third of the people that I know – of course, I know just a tiny small subset of all the people in the sales industry – are busier than ever before, they can’t write orders fast enough, they’ve never been busier. A third of them are falling off a cliff and crickets are chirping, they can’t get any attention and about a third of them are about the same but different, obviously it’s different for everybody. The point is if you think nobody’s buying, you’re wrong, there are some industries that are big, fast and hot right now, there are industries that are selling so much that they can’t get product. In fact, the constraint from China is a big problem but there’s always opportunity and you’ve got to find that opportunity and pursue it. Nobody is disagreeing that COVID hasn’t changed things but that presents an opportunity for you to find new and innovative ways to sell and provide services. Your customers need to change, you can help them and that’s a profit opportunity.
Fred Diamond: Mike, I want to thank you again for the great insights. Thank you all for participating today. Do you want to give us a final thought to leave today’s webinar on?
Mike Schmidtmann: I had ten… I’m going to move ahead. Can I do my lightning round in three minutes?
Fred Diamond: You can do it in one minute.
Mike Schmidtmann: One minute, okay, lightning round.
- Be empathetic, never argue.
- Be prepared. There are no more than 10 objections, no one says you can’t have them all written up, planned out, great answers ahead of time so you’re prepared for it.
- Feel-felt-found is a tool you can use, it’s real simple.
- Use the READY formula, five different ways to respond.
- f you get hit with a big one, ask, “Why do you say that?” and dig into it before you respond, it buys you time.
- Reframe the conversation. Never argue, have them look at it in a different way.
- Mindset, that’s exactly why, this is a perfect time, they need you, they need your help, they need your services right now. There’s never been a better time for that.
- You’ve got that four step objection handling process.
- Quid pro quo, if we could —, could you do that?
- Reduce to the ridiculous.
There we go, I’m a sales guy, fast talker. That’s it for me, Fred, thank you for the time and the attention. Thanks, everybody, for being on the call.
Fred Diamond: Everybody else, thank you so much. Thanks, Mike, great job.
Transcribed by Mariana Badillo