It’s not the cost that’s important – It’s the Opportunity Cost. Of all of the questions posed to factoring companies and consultants from potential clients for which they ask my help, the most common must be that of what to do when a potential client says, “The price of factoring is too expensive.”
There is a well known theory that states that if a salesperson has to sell the lowest price than he/she is no sales person at all. While I subscribe to the theory in part, I find it impossible to believe that even a GREAT salesperson – every once in a while – will never have to lower the price to beat the competition.
Before you lower your price, however, “STOP / LOOK / LISTEN / FOCUS YOUR CLIENT” and most importantly, keep the “Psychology Of Selling” in mind.
Psychological Leverage
Your client, more often times than not, is struggling with a cash flow that is making it hard to seize existing business opportunities or even make payroll for that week. Most times, the client will feel as though their needs are desperate.
As a salesperson, you have the power to psychologically leverage that desperate need of a client to make their problems disappear. Right There “Right At That Moment “- YOU ARE THE SOLUTION!
Focus that person on the fact that you are standing in front of them — are the solution to their existing problems. Don’t discount the power of that psychological leverage. An Example Of This: Many people go to a convenience store and pay up to twice as much for their groceries just because the convenience store holds the solution to satisfy their immediate desire for a Pop Tart at that moment.
Keep The Customer’ Eye On The Prize
During an election year, all you ever hear about is how the politicians fight a negative public relations battle.Everyone gets tired of the negative campaigning.
Unlike the politician who uses “negative selling” to score points in a campaign, as a good salesperson, the most important thing that you can do is accentuate the positive. If a client is lamenting a poor cash flow, remind him/her of what they can accomplish with a cash infusion. Then, if the potential client tells you that your services are too expensive, focus on the opportunity lost if they do not utilize your service.
Here is an illustration of what I mean. If your client sells a product or service for which they usually profit 20%.It may seem expensive for them to pay 3% or 4% for the funding. However, if it creates the opportunity to do more business at a 20% profit margin, isn’t it costing them 16% to 17% if they do not utilize your service?
In addition, be creative as to ways the client can limit the cost. For instance, a client of mine had the ability to use their enhanced cash flow to pay their suppliers faster.After negotiating a 5% discount for the more expeditious payment, the client realized that the funding costs for factoring were more than offset by the savings realized from his supplier. (Not to mention the enhanced relationship and better credit which would come from faster payment to the suppliers). In fact, factoring in this case “made” him money.
When you accentuate the positive aspects of your funding and focus the client away from the negative cost issues, you will seal the deal.
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