Something Scary Is Hiding Inside This Recession
Tuesday, September 22nd, 2009
There is a universal buyer behavior shift that quietly started about 1997. It is a change that is profound, permanent and growing. It has already affected every sales professional reading this sales tips blog. One of the least endearing characteristics of this transformation is how it is concealing itself inside our current economic circumstances, while its effects become increasingly far reaching.
I call it Buyer 2.0™.
Malcolm Gladwell, author of The Tipping Point writes that “The best way to understand the dramatic…changes [we see in business]…is to think of them as epidemics. [Seemingly insignificant] ideas, products, messages and behaviors spread just like viruses do.”
The Foundation For Buyer 2.0™
Let’s review some buying trends over the last few years that don’t appear to be abating whatsoever in consumer or business sales.
Walmart’s continued strong growth is one of the biggest indicators. It is the largest corporation in the US and by far the largest discount retail store. It has achieved this status not through any kind of traditional value selling; they’ve done it through pricing. There is no “buying experience” or added value at Walmart.
The proliferation of “big box” stores like Sam’s and Costco has taken the Walmart concept and put it on steroids. You go, you buy bigger quantities than you need, you pay cheap prices and you leave. You’ll have to carry your stuff out in your hands (literally) if they run out of trash boxes to give you to carry your purchases. These stores are everywhere.
The “cattle call” airlines like Southwest only offer low prices, a bag of peanuts and a destination. Their load factors and profitability are better than the more conventional airlines. They offer a bus ride with wings that cheaply gets you from A to B.
Shopping.com and Amazon.com have made shopping for price almost stupidly easy. These websites do all the work of finding the cheapest price and their traffic is growing rapidly.
Car companies are increasingly moving away from the $30,000+ car segment and focusing on the less than $20,000 car buyer. These cars were being designed before the current recession. How do we know that? Some of these inexpensive cars will be available within the next 12 months; car companies take at least 3 to 4 years to design and build a car. Automobile manufacturers have to be hyper sensitive to buyer trends – obviously some do a better job than others do. Simply stated, some car manufacturers are already aware of Buyer 2.0™.
Ski resorts are starting to charge skiers according to the condition of the snow. Good snow – higher price. Bad snow – lower price. Skiers are more interested in the price of the skiing, not how cozy the ski lodge is.
There are sports venues that adjust ticket prices according to the standing of the visiting team and importance of the game. Playoff game – higher price. Preseason game – lower price.
Buyer 2.0™
As sales professionals we have historically viewed price objections as the most commonly stated objection. While this is the objection we hear most frequently, we also know that research indicates it actually falls to number 5 behind availability, risks, service and quality on the list of the buyer’s real decision criteria.
However, are we seeing a significant renumbering of these criteria that pre-dates the recession? Is price no longer number 5 and covertly moving up in the rankings? My answer to both questions is yes. This is the essence of Buyer 2.0™.
We’ve Been In Denial
There’s nothing new here; it was inevitable. The Internet has taken all of the sales professional’s pricing secrets out of the closet. Burglars like to operate at night because they’re more effective when undetected. Our current recession provides a perfect cover for this swiftly building trend, which started over 10 years ago. It was around 1997 that the general population was becoming familiar with the wealth of pricing information available on the Internet. This was the genesis of Buyer 2.0™.
Sales Tips For Responding To Buyer 2.0™
The first thing we must do is understand that this is a change or evolution in sales, not the commoditization of all products and services. Sales has changed dramatically in the last half century. This is but one more of those changes. We are not all destined to become unemployed salespersons or lose our jobs to e-commerce websites.
However, to continue forward as if nothing is changing would represent a dismissal of reality. Companies and sales professionals can adapt and thrive by recognizing the following:
Companies will be required to get very serious about controlling costs and increasing efficiencies. In other words, provide the same product/service but at a very competitive price, much like our global competitors are already doing.
Sales professionals will legitimately need to understand and demonstrate ROI (Return on Investment) and TCO (Total Cost of Ownership). Buyers are increasingly demanding performance metrics from vendors.
Differentiation of your products and services in the market will become more important and heavily supported by marketing.
Marketing departments will play an increasingly important role as the town criers of value and price competitiveness. They can no longer merely print nice and colorful product/service collateral materials.
Bundling, kitting and packaging of products and services will be a way to recover lost margins in a discounted pricing environment.
Purchases will be pushed down to lower-level decision makers. Sales professionals will have to more effectively deal with purchasing departments since Buyer 2.0™ will mean a swing back that direction. This is a change that is already being seen in many companies.
Contractual purchasing agreements will become more common, even for smaller customers.
Selling service can be a safe haven in many selling situations. I’ve always felt that no 2 companies offer the same service. This makes it difficult, if not impossible, for customers to shop price when it comes to service.
Sales Tips Wrap Up
It was unavoidable. The Internet has put the seller in a more difficult position when it comes to pricing. The recession has made it seem that this is a recent phenomenon, but it is only hastening a pre-existing trend.
Further reading:
- Attention sales representatives, the Internet is not replacing you
- Has Price Quoting Made You A One-Trick Pony?
- Collateral Material, Sales Brochures, What a waste!
- Kits, Assortments, Bundles and Packages as Selling Tools
- Service Providers – Don’t be so Quick to Discount
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>©2009 Scott R. Sheaffer
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