Tuesday, March 30, 2010

A Sales Epiphany

Does price really impact how we view a product? Can price influence what we think of a product? The answer is surprisingly, yes!

Researchers at Stanford and the California Institute of Technology asked volunteers to taste five different wines with the following price labels: $90, $45, $35, $10 and $5. The results?

But wait, that was only the setup. The real `aha' moment came when the volunteers were told that the $90 wine was also the same as the $10 wine ($90 = $10). And that that the $45 wine bottle was the same as the $5 dollar wine bottle ($45 = $5). Yet, the wine tasters never noticed it.

Without fail each of the wine tasters found the more expensive bottles to be the best wines. In fact, brain scans confirm that when recipients try an expensive wine, part of the pleasure centers in their brains light up. When they try less expensive wine, and they're aware of it, their brain registers less pleasure.

In other words, the expectation based solely on the price, influences how the brain `chooses' to perceive how good (or bad) the wine tastes. Price influences opinions. Price does matter! The cognitive heuristic: expensive equals good holds true.

What can we learn from this study? How can we use it to help us sell or market our products? Well, if a client believes that they are buying a high-end item, they will enjoy the experience that much more. So instead of `hiding' the fact that your product is more expensive, maybe you should make sure the client knows it IS expensive…for a reason! But more often than not, the sales conversation goes like this:

Client: I hear your product is very expensive.

Salesperson 1: Well, uh,..that depends on what you're comparing it to. Sometimes they're not comparing apples-to-apples. I can assure you our product is very good.

Sound familiar? Sounds a bit weak don't you think?

Knowing that price impacts perception, instead of making excuses for why your product (service) is more expensive or trying to justify why you're a higher priced vendor, maybe, just maybe you should defend the quality of what you provide. What if you, the salesperson, decided to not make excuses for your product and decided to focus in on selling the value? How would your attitude be different? Imagine the following conversation taking place:

Client: I hear your product is very expensive.

Salesperson 2: People who don't value quality will always say it's expensive. But connoisseurs or experts in the field who understand the value of a quality product will tell you that it's very reasonable. It's not the cost of the product but the total cost of ownership and enjoyment over the lifetime of the product that matters. Wouldn't you agree?

Who would you take more seriously, salesperson number 1 or 2? The first salesperson sounds defensive while the second one sounds unapologetic and confident of what they're selling.

Too often salespeople use the excuse (sales crutch), "Well if we weren't so expensive I could probably sell more." Well maybe being expensive (assuming great quality) like a bottle of wine is an advantage and not the disadvantage most salespeople whine (pun intended) about.

This study also gives us a tip for the next time we have guests over our house for dinner. First, buy cheap wine and tell them it's expensive imported wine. You'll be doing your pocketbook a favor and you'll ensure a pleasurable outcome for your guest if they think they're drinking expensive wine.

Lastly, for personal and selfish reasons, don't ever buy your own wine. In the future have someone else go out and buy the wine and tell them NOT to tell you how much they paid for it. You'll enjoy the bottle that much more.

Next time someone tells you, "You're too expensive." Instead of trying to convince them you're not, tell them, "Yeah, what's your point." I'm kidding of course!