Handling Customer Objections

Rejection is one thing - objections are another: I'd generally describe Objections as the concerns that a potential customer has that will delay (best case) or prevent (worst case) a purchase decision. Handling objections is the core skill that any salesperson must be adept at in order to increase their close ratio. So what are the steps to handling objections from customers effectively?

The first skill that you need is what I call Isolating the real objection. In an effort to save confrontation, most customers deliver fake objections that really don't provide the salesperson any meaningful data to work with at all. Some examples of these 'fake' objections are:

• It's too expensive.
• I need to think about it.
• I need to sleep on it.
• I need to do some more research before making a decision.
• We are evaluating other solutions.
• I don't like to make decisions like this without careful analysis.

The common element in all of these objections (and others like them) is that they provide ZERO actual details that you can address as a salesperson. Intentionally or not the customer has formulated them this way in an effort to exclude details and delay actually making a decision. Many of these if expanded with details and data are legitimate reasons to continue considering or evaluating different solutions - but you can't truly assist in this effort without isolating the real objection. WAY too many salespeople accept the fake objection and bring it back to HQ and sales management as if it's a legitimate reason for not moving forward - and the questions that your sales manager brings to you are a good primer for what you should be asking your customer: e.g. Too expensive compared to what? How do they justify these types of expenditures? What is the Payback period they are looking for? What product is giving them the desired cost?, etc.

So, the first step in isolating the real objection is identifying when a customer is giving you a platitude-type objection hoping that you just go away! Listen carefully to the objection that the customer relays and learn to identify quickly whether it actually contains any meaningful data or not!! For example: "Your product is just too expensive" - does not - but "We calculated a 2.5-year ROI on your product implementation and our company standard is less than 2 years". You need to dig into more questions in either case but the second is a legitimate objection that you can address, whereas the first one is a "hope they go away" platitude. I'll address the example where we have a real objection with some quantifiable feedback later in the article - for now, we want to work on identifying the Platitude-type objections and then asking probing questions to isolate the real objection.

Once you've developed the skill to identify a platitude-type objection, you need to work on isolating the real objection by using probing questioning techniques. I like to start by congratulating the customer or giving them praise for getting to this point. The praise tends to put them a little off-center because they expect salespeople to react in a more neutral or even negative way. So, for example when someone responds with a platitude like "I need to think about it", I like to open my probing questions with something simple like "That's great! - but I'm guessing that I haven't answered all of your questions if you have something to think about - do you mind sharing with me what it is you need to think about or consider" - Usually, simple positive feedback and the probing question will uncover what their real concern is. There are many other ways that you can ask the probing question in order to isolate the real objection - I'll provide some examples for different types of objections and different ways to ask - but the key here is you have to become comfortable both formulating AND asking these questions when confronted with a platitude-type objection:

• So I totally understand that sometimes my products are just too expensive for a given application, but I'm not sure that I understand the criteria your company uses to evaluate this decision - Do you mind sharing how you came to the conclusion that we are too expensive?
• It's great that you are getting close to a decision, what else is it that you need to consider before finalizing?
• I completely get sleeping on the decision - can you share what elements you will be reviewing?
• I really like to research my purchase decisions too, Do you mind sharing the areas where you are going to research?
• I completely understand needing to review other solutions, can you share what problems you feel my solution doesn't solve? (or Can you share the other solutions that you are planning to review?) (or Can you share what criteria you will be using to make a decision between the various options?)
• I agree, making a careful analysis is important to good decision-making, do you mind sharing the elements that you want to analyze? (or Can you share where you think the shortfalls are in my offer?), (etc)

As your customer answers any of these probing questions, they will usually reveal their true concerns and objections, but you still have to listen carefully (as above) to ensure that you aren't just getting a second platitude-type objection. If you do get a second platitude-type objection, I recommend at least one more round of probing questions to try to isolate the real objection, but if that doesn't uncover a real objection - I'd take that as a signal from the customer that you just haven't built enough trust for them to share it with you --- Back off and follow up in the coming days to see where they are at. However, usually by this point, you've earned enough truth that the customer will respond with their real objection. It helps that you've reacted positively to the fact that they have one and have asked probing questions. You now need to ask qualifying and quantifying questions to get a very good understanding of what their real objection is and how they calculated the data points to support that objection.

Quantifying their objection is the next step in managing it and it's beyond the scope of this article to provide examples for every type of objection, so I will focus on the most common: "Your product is too expensive". After asking the probing question you will usually deliver one of the following answers:

• It's over the budget that we assigned for this project.
• We calculated a payback time of 2.5 years instead of our goal of 2 years.
• Our process requires 3 competitive bids and we haven't looked at any other solutions yet.
• Any purchase that exceeds $100,000 requires Capital expense approval.
• etc. etc.

This is a great situation to be in because the customer has now given you enough data to work with in order to determine if there is a practical way to overcome their objection. Some ways to defend/address these types of objections include:

• When you've exceeded a pre-defined budget - you really need to uncover who and how the budget was set. You can ask probing questions to determine this and then investigate what type of budget was established (CapEx or Expense) and how this can be increased. I like to focus on this series of questions first and I only explore if a competitor exists within the target budget level and who that competitor is if the customer is not forthcoming with the first round of questions. By focussing on the process, you build a clear understanding of who and how the decisions are made and can address incorrect assumptions, calculation errors, and even if there is any "slush fund" for errors. I've often found through probing that the allotted funds for overages could already cover the delta between my solution and their defined budget. It's really about understanding and then influencing the decision process effectively. Common elements that I've discovered: Available overage funds, incorrect maintenance or wear estimates, items that are expensed and funds are still available within this budget, poor Break even and ROI calculations that don't account for increased efficiency, throughput, running additional shifts at almost zero cost, ergonomics, reduced injuries and other avoided costs (a lot of time people are only looking at the labor replacement component). The bottom line - there's almost always a way to bring the project into the budget when you dig into the details.
• The 3 bid objection is particularly common with Government and Educational customers. Ideally, you've uncovered this need early in the process and you've influenced the writing of the bid documents to favor your product and highlight unique capabilities and features that you have as required. For this example, I'll assume that this didn't occur and your probing questions have uncovered the need for 3 bids for the first time this late in the game. I'd probe several things after uncovering this: 1) Are there any exceptions to the 3-bid policy? Sometimes organizations have a special tier of approved vendors who have been specially vetted and offer a standard discount that allows them to bypass the bid process when orders are sent to these vendors. Sometimes there are urgency exceptions that may apply to your application and sometimes there are sole-source exceptions. Understand what exceptions exist and consider your options for presenting your solution through one of them. Maybe you presented direct and there's a partner who can bypass the Bid process? etc. etc. 2) Can the bid responses be for the same solution? Thus 3 different bids for your solution from different resellers? Maybe you can have 3 dealers or distributors bid for your solution - essentially ensuring that your product wins, no matter which ultimate vendor they select.
• The capital expense limit is one of my favorites if your product pricing is close to but over the limit. Let's say you have an automation solution that comes in at $115,000 against a CapEx approval requirement at $100,000: (First shame on you for not uncovering this much earlier in the process) - but this is usually very easy to overcome by splitting costs in the project along NATURAL LINES. For instance, your $115,000 quote may include both hardware and installation services - Say $85,000 for hardware and $35,000 for installation services. Explore with the customer several alternative ways of addressing the bid: 1) Mr. Customer would you consider taking on a larger component of the installation via your in-house maintenance team? You could reduce the installation quote to a "Installation Assistance" quote with their team providing labor under the instruction of some key apps engineers from your company and bring the total project in just under the $100,000 limit. 2) You could explore whether two independent orders could be let against two independent quotes - One for $85,000 for the hardware and another for $35,000 for the installation. 3) You can explore other financing alternatives - What if we turned this into an operating expense by providing a lease for the equipment and installation? 4) Similar to the lease you may be able to execute through a partner who will offer the solution as a service, again turning it into an ongoing operating expense. The bottom line is this is usually a very easy objection to overcome when you are close to the limit. If you are way over the limit - you will want to explore the process and timing and sometimes you just have to wait for the next round of CapEx approvals.

Like many topics, this one is really a little too complex for my 5 minute or so "Read" objective for these posts. I hope that this article has been a valuable primer for handling objections and that you've learned at least the critical first step of isolating the real objection. I'd encourage further reading and practice on the skills I've discussed.