Negotiating Past the Price Barrier 

As we head into retail’s biggest season, businesses are cautiously optimistic about consumer spending. Yet even though peak inflation has subsided, consumers are still not buying like they used to. Surveys show that many are putting off major purchases or plan to reduce their spending on discretionary items. It’s a scarcity mindset that is very difficult to combat. So, why are Americans stuck in this “inflation overhang” and how can businesses encourage consumers to spend again? We look at some ways that sales agents can negotiate past the price barrier. 

Why Price Sensitivity Persists 

Though inflation has dropped from its 2022 peak, consumer confidence remains shaky when it comes to spending on non-essentials. More than half of Americans are still concerned about rising prices, especially food and housing costs. Which means that discretionary spending is often foregone or certain purchases are delayed, until consumers feel more confident about their personal finances or the economy at large. In fact, this year, consumers plan to spend 30% less on semi-discretionary items such as toys, skincare and makeup, and new vehicles. 

Yet, if inflation is down, why aren’t consumers spending as they once did? There are several theories. First, many families have now run through most of their COVID-era savings. Second, though employees have made significant wage gains over the past few years, these increases have failed to keep pace with inflation, leaving more than 60% of U.S. households with little left over after paying monthly bills. The U.S. economy is also experiencing slower job growth and certain industries have seen company-wide layoffs, which means many Americans are carefully holding onto the savings they do have, just in case they find themselves unemployed. 

Another theory is that consumers just need time to adjust to higher prices. It’s called “inflation overhang”, and despite the Fed reining in inflation to its 2.5% target, this stubborn consumer sentiment can sometimes take months, or even years, to dissipate, acting as a drag on sales across industries. In fact, nearly one third of Americans say they have cut back on spending due to “concerns over the economy “and will be delaying at least one major purchase in the next year.  

The Bid to Win Back Consumers 

One way that companies have tried to encourage consumer spending is to lower prices. McDonald’s just relaunched its $5 value meals and companies from Target to Ikea have already pledged to lower prices in a bid to lure back price-conscious consumers.  

However, the problem with discounts is that it doesn’t necessarily translate into increased sales. One such example is Starbucks. Facing declining revenues, the company turned to its Starbucks app, offering discounts to repeat customers. Yet, when this failed to fully revive sales, the company blamed it on an “overlooked demographic”, thinking they had not done enough to attract and communicate value to the occasional customer. When in fact, what they had done was erode the overall perception of value by focusing on price alone.  

What made Starbucks great in the first place was never a focus on price. It was delivering value beyond price - the experience of community, of belonging and connection, in a place that felt like a second home or second home office. Driving sales through the mobile app and encouraging quick “in and out” purchases might have helped the company through the pandemic, but it forever changed their business model. Empty stores with frenzied baristas trying to keep up with both mobile app and in-store orders, meant they had less time to interact with customers in any meaningful way. It slowly degraded the customer experience to the point where the overall perception of value diminished. 

How to Negotiate Past the Price Barrier 

The truth about selling is that objections are rarely about price. Price does matter, especially to budget-conscious consumers, but over half say that they would happily pay more if they were offered a better customer experience.  

That “experience” now begins, not just in-store, but in those early moments in the sales journey, when customers are acquainting themselves with your brand, services and products -when they search for information online, or when they call, email, or live chat with a contact center agent. In fact, that sales agent may be the first and only point of contact with your company, and what they do or say could deeply impact whether a sale is closed or missed. If price becomes a barrier, it’s often because agents have failed to communicate enough value to the customer. 

Establish Value vs. Price 

Discounts are often a temporary fix and won’t often result in long-term loyalty. If businesses want to capture the lifetime value of a customer, agents need to understand how to communicate value versus price. Just listing a bunch of features and prices will not always sway customers. They need to understand the total value of your solution. How will it benefit them personally – what problem will it solve, how will it make their life better or easier? If you position enough value, price becomes less relevant. Agents also need to come prepared with key points of competitive differentiation, in case competitors offer cheaper solutions. This is where advanced sales training comes into play. 

All itel agents go through a rigorous Sales Academy, learning sophisticated selling techniques that includes persuasive selling, how to overcome various objections, negotiation tactics, active listening skills, and how to upsell and cross-sell to existing customers. Agents benefit from continuous coaching and feedback, as well as interactive workshops, to drive continuous improvement in performance and daily sales. 

Position Relevant Products  

Price objections can sometimes happen because a customer doesn’t think a solution fully addresses their problem. Or they might be in the early stages of the sales process and don’t fully understand what they need. Agents who fail to close sales often don’t ask enough discovery questions or fail to listen to the customer’s cues. They haven’t uncovered the actual need or maybe they’re positioning the wrong solution, in which case customers will likely focus on the price. To prevent this, it’s vital that agents listen closely and attentively, while availing themselves of new technologies and tools that give critical insights into the customer’s history with the company.  

At itel, we use a custom-built, AI-enhanced platform called itelligence® that equips agents with real-time insights and analytics that empower them to better serve customers; such as, advanced sentiment analysis, to see which phrases and actions lead to greater customer satisfaction, and a customer’s interaction history and historical purchases, so agents can position more relevant and personalized offers and product recommendations. 

The Overall Sales Experience is Key 

While consumers may be price-conscious, that doesn’t mean sales revenues have to fall. Discounts and price reductions can lead to short-term revenue gains, but keep in mind that nearly 90% of consumers say the buying experience is just as important as a company’s products and services. In fact, that is how one of our top-selling sales teams were able to secure over a quarter million dollars in daily sales for a niche healthcare client by creating a high-touch concierge experience.  

Creating the best sales experience will not only make the price more palatable but will also add perceived value to what you offer, which can help you overcome the price barrier much more easily. That’s why a customer experience partner that uses the latest technology, the right sales techniques, and actively positions helpful solutions will often lead to higher sales, even when customers are on a budget. 

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