Price Transparency Fear
By Ibby Smith Stofer
Handling difficult customer requests can be challenging to even veteran sales personnel.
Suppose for a moment that your customer calls you out of the blue and asks you to lower your price for medical supplies? Or perhaps it is regarding pricing of a new purchase that you have forecasted for this quarter. What will most likely be your reaction?
Generally these types of requests that happen out of the blue are due to customers implementing standardization projects or pressure for cost reductions. As the profile and landscape of your customer’s business changes, they may identify inconsistency in the prices they pay for the same products and services under different sites, they may have simply chosen to assess the prices they pay using independent companies, or a competitor has come in and is undercutting your price.
Regardless of the source, the request is presented and you need to reply. Often the first reaction is to push back, explaining the limitations of their group purchasing organization’s restrictions, or that you know that they have one of the best prices. Or you may question the reason they are asking this of you.
But the reality is there are companies offering services and software to the acute care providers with access to competitive assessment of both contracted and proposed pricing for various medical devices and medical or surgical supplies.
The options available to both you and your customer can be challenging. They most likely do not want to disrupt their clinical staff with a change of providers, but they are under severe cost reduction pressure as well as process improvement initiatives. The customer will be able to provide data to support their request that is indisputable from their perspective.
You and your company need to look at the facts presented and assess the validity of the data and the reasonableness of their request. Have their mergers or acquisitions or expansions into new service centers (Skilled Nursing/Nursing Homes/Surgery Centers etc.) provided your company with the expansion of business? Has your discount policy changed since you entered into this contract with them that is now being questioned? Has the group purchasing organization or other consulting business advised the customer that they are overpaying for your product or service? Maybe it is your competitor who is acting as their advisor, knowing what other customers in your market are paying for these same products or services.
No matter where the information is coming from, it is front and center in your customers mind and how you and your company react will either make or break the relationship with your current customer.
Be open and cautious. Do not immediately offer to see what you can do, or worse yet, agree to lower the price. Rather, be professional and advise that you need more information to discuss with corporate and reassure them that there may be different reasons why another customer has a different price and you will work with them to understand the situation and find a solution that works for all.
When you go to management or corporate, go with facts about the request. This will enable others to understand the situation and help clarify or make a decision to honor the request.
Who is your customer?
How long have they been buying from you?
What is their annual purchase volume with your company?
What is the group purchasing organization? Do they belong to any others? Has this changed since you entered into the current contract with them?
Have they recently expanded or moved into added care sites that also use your products or services?
What other key accounts are they affiliated with or sharing data with?
Name the source of the information provided as well as the actual data if the customer was willing to share it with you.
Think creatively about how you and your company can compromise with the customer to create a win for both of you. Perhaps it is to extend the contract, provide added products or services, or by entering into contracts with their non-acute care sites.
The answer may still be a difficult one to deliver, but if you have worked with the customer to find a solution as well as worked with your company by providing the facts, remaining professional and sharing the reason why the discrepancy exists or existed, the customer will appreciate your honesty and creativity, while they may still be disappointed and frustrated, they at least will have some facts to justify why they are paying a higher price.
But don’t stop there. Keep trying to find a way you can help them lower their costs by working together. Maybe it is offering extended service, or maybe asset management, or renewing a contract, or finding a lower cost distribution solution. Who knows what may work, but if you stop looking, be assured someone else is probing behind the scenes offering to help them achieve these goals.
We would love to hear your experiences dealing with this or similar customer issues as we learn best from the examples we share in the field of sales and customer relations. Thank you in advance for joining us in this endeavor. We look forward to hearing of the challenges and rewards you have experienced serving customers and markets.