Financial products and services are a commodity. Whether it comes from the green or blue bank, or a corporate or boutique firm, the differences in the various investment or credit solutions are often in the fine print and habitually end up in a price, fee, or rate competition. Using price competition as a strategy is a risky proposition to be negotiating from.
Price Competition Cons
First, it affects your business’ profitability by how low you are willing to go to “buy the business”. But more importantly, it suggests that you too believe that the only difference between you and your competition is your price.
The other problem with focusing on best rate and low fee offers is that when a client buys on price, guess what? When their investment or mortgage comes up for maturity, or there’s a downturn in the market, they will leave on price too. There is no hardiness to this type of transactional relationship.
Go for a Non-Competition Price Strategy
As a Transformational Seller, you’re not going for the one-hit wonder, best price, or low fee offer. But of course, you may have some of those in your inventory to share with clients. However, these offers act as a sweetener to the deal, not what you lead or close with. You’re going in for a long-term, loyal, and mutually-rewarding relationship—a relationship where you and your client see you as their financial well-being partner. This is not a one night stand; you want to go steady.
Price is not your nemesis, nor is it your competition. It’s your client’s default human nature to choose what is over what could be. It’s called status quo bias.
According to Sales Benchmark Index, close to 60% of qualified sales pipeline opportunities end up in “no decision“. They note that in industries such as banking and insurance, it can be as high as 80-90% of prospects who stick with the status quo. You’re spending an inordinate amount of time and effort using fear energy to discount prices and fees to get the business, when instead you need to be tapping into love energy to uncover your clients’ aches and aspirations to give them motivation to say yes.
Price Competition Example
A good example of price competition is evident in the neobank space. According to an Accenture 2020 Global Banking Consumer Study, “despite their recent growth, consumers’ enthusiasm for neobanks is lukewarm.” Even though “most are pleased with its convenience, simplicity, and price point” most do not use it for most of their transactions because they say they are happy with their existing bank. There are two things to note here:
- Happy customers value their relationship more than price.
- Status quo bias wins even if it’s a more expensive option.
I recall my financial advisor days when no matter how easy and electronic we made our bank switch service, clients would resist moving their primary bank account. Status quo bias was in full effect. Consciously and unconsciously, clients were thinking: “Was it worth the headache? What if a payment was missed? What if payroll didn’t switch in time? What if they are just like my current financial provider, and this was a futile attempt at getting something better?” No matter how many assurances we offered, it was a game that the human default system of staying with what is often won.
It's Time to Emphasize True Value
What if there was another way? What if instead of hollering rate discounts and free fees you’re telling a delightful story of who your clients will get to be, what they will do, and what they will have because they chose to work with someone like you, a Transformational Seller.
As a Transformational Seller, you’re inviting your clients into a new future that is filled with possibility, meaning, and potential. This is about who they get to be, what they can do, and what they get to have because of choosing you as their financial well-being partner. It’s more than the transactional needs you are meeting. Indeed, your products and services are the transactional vessel, but you are here as their financial well-being partner, helping them solve their problems, achieve their goals, honour their values, and fulfill their dreams.
It’s time to stop the distilling down your value to a transaction that negotiates on price. Instead, it’s time to start upholding yourself to the real value you bring and the transformational impact you deliver.
If you’d like to learn more about our programs and how you can retain and grow your business, deepen client relationships, and sell with integrity visit us here or connect with Finka at: finka@finkainc.com
