Rate Resistance

Over and over I hear the same thing from sellers and managers. "How do I overcome rate resistance? I have been calling on this client for six months now and all they say is that I am too expensive. I don't know what to do with this client."

Well, there are a couple of issues we can address here, right now and they are:

1. How people perceive or do not perceive value for a product or service.


2. When to know it is time to give up on a client and move on.

Let us start with why rate resistance ever comes up to begin with.

When someone is uneducated about a particular product or service, the first objective is always the price or rate. Think about it. When someone is trying to sell you something you do not completely understand, the RATE or COST will always be your first line of defense. It is the first "card" you will use in your "hand" of resistance. I have got a personal example for you.

While remodeling the exterior of my house recently, my wife (Nancy Fancypants) pointed out that both the pool and the spa needed attention badly. She had taken several bids on refurbishing a 30-year old swimming pool. I thought the cost was astronomical, but after comparing bids, I became okay with a general price range for the work we needed done. But I PUT MY FOOT DOWN on the spa. "Thirty-five hundred MAX is what we will pay for that spa," I told her. And, she agreed. By the way, we knew NOTHING about spas. We had never shopped for a new one.

So, we went spa shopping. Five or six reputable places. They listened to me as I told them what I wanted and they all nodded when I "laid down THE LAW" on the price I was willing to pay. "Well Paul," they said. "Sure, you can get a spa for $3500. But it won't be the same spa you're looking at here on the showroom floor. It will be one of these over here." I wasn't impressed with what they showed me, but I was sticking to the price. "Sure, it's a working spa," they told me. "But the motors aren't really that powerful. In fact, when you turn them on, it might feel like somebody is PEEING on you...that's about what it will feel like when you turn on the jets. And, if the thing breaks, who's going to fix it? The warranty's not very good."

By the time I had heard the same story five or six times, I had NO PROBLEM revising my estimate for the spa. I wound up paying more than $5,000. And, I am very happy now with my purchase. So the question becomes, where did I come up with the number 3500? Truthfully? I pulled it out of my rear-end. I did. And, I am sure you've done the same thing with some other product or service.

Right now, I mean RIGHT NOW, many companies are preparing their budgets for the year 2004. And, where do you think a lot of companies come up with the figure they'll use for advertising? Is it possible that they too, will pull a number out of their rear-ends? Remember that for most companies, the side of the business triangle that says ADVERTISING is always the WEAKEST LINK. It is the hardest side to qualify and to quantify. It is always the most MYSTERIOUS side of the business triangle. So if their perception is that advertising is a crapshoot to begin with, why would they RISK much on that budget item? They know far more about the PRODUCT/SERVICE side of their triangle. They know far more about the SALES FORCE side. And, they know the LEAST about the mysterious ADVERTISING side. So, which side will get the shortest end of the stick?

EDUCATED CLIENTS BUY MORE THAN UNEDUCATED CLIENTS. That is why I take every local direct client through ALL TEN of those PRESENTATION ICONS (see article) . I know that if my client is on the "same page" I am on regarding the importance of advertising to the overall success of their business, they are much more likely to spend more with me. If I can show them the huge hole in their competitor's advertising and marketing strategy and explain the rules for the difference between a good and a bad spot--If I can use the Mediator™ and show them how to calculate RETURN ON INVESTMENT for any advertising they do, I might DOUBLE OR TRIPLE the amount the client thinks he can "RISK" on my station. Rate resistance goes away. No "added value" even comes into the discussion. It does not make any difference whether I am number one or number 20. And, what's wrong with that?

SECOND POINT: Sometimes, we get ourselves into a TRAP in dealing with local direct clients, who are consumed with nothing but rate. Typically, these are clients who have become SPOILED over time, because every chiquita from every station in town is "educating" them with nothing more than RATES and RATINGS. Many of these clients are now completely consumed with RATE THINKING and it will be very, very difficult to focus them on anything else. What to do?

Sometimes, the best thing about BEATING YOUR HEAD AGAINST THE WALL is that it feels so good when you STOP. Sometimes, it is time to QUIT WASTING YOUR VALUABLE TIME and MOVE ON. While you are busy beating your brains out with this one client, there are THOUSANDS MORE out there that are uneducated about marketing, advertising and especially you and your station, and the value you could bring to their businesses.

Occasionally, it is just a good idea to GIVE UP on the contentious rate-oriented client. FIRE HIM. And then, call on and properly educate every single one of his competitors. When you finally make a sale, be sure to ASK FOR AND GET A LONG-TERM CONTRACT. This will give you time to build a good relationship with your new client, and the annual contract your client signed will keep the wolves and chiquitas from the other stations at bay--FOR A WHILE. But, after you have proven yourself to be a real resource and a good friend to your client, your rate will become secondary to your value as a consultant.






Paul Weyland: 5450 Bee Cave Road, Suite 1-C, Austin, Texas 78746, 512-236-1222, paul@paulweyland.com
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