Sales Trainer Issue #2 – Pricing & Business Success

Sales Trainer

Sales TrainerMost of the people you are competing with are going broke and are on the way out of business. The fact is that 16 out of 17 businesses that are started in North America fail. 800,000 new businesses are started in the US each year and within two years, three out of four of those businesses fail. The primary reason for their failure is, they do not sell enough merchandise, products or services at a high enough profit margin to stay in business.

The second sales trainer issue deals with the myth that under pricing is a successful route. Bottom line – your purchases driven by a low price have been a disappointment. It’s simply not a good idea to sacrifice quality for a low price. You have tried it. The exercise has proven that doing so does not work.

Likewise, your customers have also made purchases in the past which they thought were deals. Some of them may have also thought that they were really getting a steal. Others actually thought that they were pulling one over on the person who was selling it to them.

Ultimately, they went out and they bought something at low-price only to be disappointed. This experience made many of them come to the realization, “Hey, you know, I am just not going to buy low-price junk anymore! It just doesn’t last! It doesn’t perform!”

Putting the Second Sales Trainer Issue into Focus

Consider this scenario. A company, small group or an individual looks at a successful business and decides that they can provide the same product or service at a cheaper price.

They jump out there and decide to go about lowballing the marketplace in an effort to buy market share. This works as long as they have a large enough wad of cash to fund an operation that makes little or no profit

Allow me to further illustrate this Sales Trainer issue with this Anecdote

Sales Trainer

Two guys from Texas had a pickup truck. They heard that they could go to Mexico and buy watermelons for a dollar each. These two Texan geniuses decided that they were going to go to Mexico where they would load up their pickup truck with watermelons. Then they were going to come back across the border, drive to Dallas and sell their product for $10 a dozen.

Before they had traversed half the way to Dallas, the watermelons were sold out. While sitting alongside the road counting their money, they realized that they had lost money on this deal.

They could not comprehend how such a loss was possible. After pondering the situation for a while, these two geniuses came to the resounding conclusion that their problem could be easily solved. They just needed a bigger truck so they could sell more watermelons.
Before you laugh, you must bear in mind that a lot of people in business think like these geniuses. They truly believe that they can make up for their lack of a profit margin by increasing their volume.

Now the only ones who really believe that illusion are the professors that teach economy 101 in universities. How do you make up for low margin by selling more stuff? It is impossible.

Such ingenuity didn’t work for neither Woolworths nor Kmart. Surely Walmart will eventually fail and so will you if you believe such a method can work. Woolworths went out of business and Kmart is pretty much out of business. If Walmart fails to appeal to the more affluent at a higher price point, they too will go out of business.

However, a lot of people believe it and a lot of people try it. They condition themselves into thinking that if they cut prices, they shall see a profit in their margins. Consequently, lo and behold, it just never works out that way.

More than likely such idiotic thinking will provide you competition until – they run out of money and cannot fund their failing operation anymore. This will of course result in the closure of their business. Now you know why a lot of the 16 out of 17 businesses fail.

Without fail, by the next week, there is another idiot who thinks he can do the same thing. You are always going to have simpletons competing against you. Their only strategy is to undercut price and sell stuff for less than what it costs them to actually provide that service.

In reality, it is futile to consider eliminating such competitors or emulate them. If you are going to stay in business and be competitive, learn to compete at a higher price point by becoming a more skilled sales professional. That is the only strategy will prevail long term.