Sales Tips for Carriers – Should You Discount Your Rates?

Guest blogger Jeff Schneider is president of Schneider Training Solutions in Portland, OR. This article is adapted from “Should You Lower Your Price?”

Well, the recession has been officially over since June 2009. What? Nobody told your customers the good news? While the economy may be growing (slowly) many shippers still find the business environment to be challenging. So they’re not thrilled about paying higher rates for freight transportation.

Meanwhile, trucking companies continue to face rising costs, and they can’t always get the rates they need to be profitable. I know of some fleet owners who say that, no matter how hard they try to sell based on service and value, the shippers end up making their decisions based on price. So, what do you do?

Faced with a prospect who is price sensitive, a seller usually feels an almost irresistible urge to offer a discount. But what if the prospect is really asking for a more clear understanding of the value you offer?

This is where it is so important to remember what motivates your customers to buy from you in the first place. Usually, people buy to relieve their pain. Pain is defined as an emotionally compelling reason to do business. If you relieve your prospect’s pain, you provide value. So your price should be related to how much their pain is costing them.

Salesmen who are able to quantify the prospect’s pain can often overcome price objections. Keep reminding your prospects of the results they are hoping to achieve by doing business with you. In my case, that means revenue improvement that results directly from well trained salespeople. Is it really logical for my prospects to choose the least expensive sales training company? Or should they choose the one that can produce the desired results?

To be fair, a lot depends on your market and your competition. If your trucks, drivers, routes and service are no different from another carrier’s, and there is no shortage of trucks at your location, your service may be viewed as a commodity. How do you make your company stand out? Economists talk about a concept called price elasticity, when customers are willing to spend a little more in order to receive an increase in perceived value. The added value might come from better service, higher quality, better terms, etc.

Sometimes pricing concessions can be effective. You might offer a discount by bundling additional services, such as warehousing or detention, along with shipping. We used to employ this tactic often when I was in the television advertising business. I could give you two free spots in the weekend news if you would buy one spot at full price during a popular prime time show. Take a look at everything you have to sell, and determine which services you can afford to discount and which ones you cannot. Then bundle them so your customer or prospect will perceive the added value.

Another pricing strategy is one we call a Monkey’s Paw. (There is a story behind the name, so if you are really curious give me a call and I will explain it to you). A Monkey’s Paw is a product or package that is smaller and more affordable than your typical offering. It allows the prospect to begin doing business with you. One example could be a one-time haul that you find on a load board. If there are a lot of trucks and not many loads available at your location, the rate might not be great. But that experience could be the start of an ongoing, more profitable relationship with the freight provider.