Profit vs Price

SHORT TERM PROFITS VS. LONG TIME CLIENTS

In today's world, price is everything.  Everyone seems to be looking for a bargain.  Shopping the grocery stores for the weekly deals:  hunting down the gas station with the lowest price, or waiting for retail stores to put merchandise on sale or clearance.  Everyone wants a bargain.  But is shopping for a bargain always the best strategy?  For sales professionals, bargain shoppers will not guarantee long term business prospects.  Although it is essential to be competitive, it is more important to be trust worthy, service oriented and conscience of the specific needs of the client.

For the mortgage and real estate professional as well as most sales professionals, losing a sale means not only commissions lost in the present, but the opportunity for future business and referrals.  Building a referral based business focuses you as the best person for the job.  Undercutting price to ‘get the deal' may work for awhile, but without substance behind it, business will soon dry up.  Negotiating a price for the sake of a sale without consideration of profit will soon leave you with no income.

Referrals are the only way to sustain business for the long term.  Sometimes negotiating a price will preserve the sale, and that may be prudent if the client has the potential to be a solid referral source or possibilities of future business.  When you lose the sale, you lose the opportunity of future business and referrals. 

If the majority of your clients are a result of a referral, you have already been pre-sold as an expert and a have a high level of credibility.  You have the responsibility of establishing trust by asking the prospect probing questions.  Know your products well and know your competitor's products.  If negotiating price becomes an issue you are prepared to position yourself as a top authority, with a commitment to small details.  That can be the difference between saving and closing the deal at a respectable profit and losing it entirely because of price alone.  Although internet shopping for lenders has become popular as of late, it is the classic example of price isn't everything.  One study shows only 16% of loans through internet lenders closes at the quoted price with the quoted rates and will close on time.  Your clients place a lot of trust in you and what you represent.  Always, under promise and over deliver!

Be a problem solver.  This is the reason they are hiring you.....they have a problem and are you the right solution.  By asking questions, building rapport and caring about the customer's needs will establish that you are concerned more about the client and not about the commission.

Develop rapport, listen to the client, understand their needs and execute your services better and faster than anyone else.  Every appointment needs prep time; make sure you are as prepared as possible for each and every client.

Be readily accessible for the client during the process.  Explain the best ways the client may communicate with you and ask the most convenient way and how frequent the client would like to be communicated with.  Keeping even the smallest commitments will slowly build trust.

Sometimes it becomes absolutely necessary to negotiate price.  Move cautiously.  Jumping to your lowest price leaves no latitude for discussion.  Clients who are merely ‘shopping for price' will pin you to a price point with no guarantee of commitment.    When you are up against price, by negotiating and meeting halfway with the client's price, gives you have a better than 50-50 chance in getting the business.

Building your business through referrals keeps a steady stream of reliable income.  Negotiate price only when necessary.  Remain professional in every aspect, respect the client's needs and concerns, build trust and communication, and be mindful of the small details.  Your clients want someone they can trust and feel confident in referring others as well as the best price.

 

 

Tom Ninness is Vice President/Regional Production Manager for Cherry Creek Mortgage in Denver, CO.  He is also the President of Summit Champions, Inc. and creator of the "The 90 Day Journey to Your Sales Success", a powerful 90 day action plan for the sales professional.  To learn more about The Journey and  Summit Champions, go to www.90dayjourney.com, www.summitchampions.com  or contact Tom at tomninness@summitchampions.com   Office: 720-221-4396.