How to sell more to a customer? Use the endowment effect
In any sales deal, instead of starting with the minimal or basic configuration for your products or services, start by proposing the full option or the best complete offering that includes already several options.
Do explain the benefits and the necessities of the included options.
Make clear this is the best suited and complete package for him.
Then the buyer will:
- Only take out those options that are not relevant to him or his company.
- Only remove those options that make the price exceed the budget.
- Take a faster decision as the package is the best suited for his needs.
Selling more using endowment
People don’t want to give up ownership of something in order not to feel or minimize the pain that this generates.
This is called the endowment effect by Victor Antonio Gonzalez. People place a higher value on objects they own than objects that they do not.
Once the sales process has reached final phase, people already imagine they own or have taken ownership of the solution. From then on they become reluctant to give something or a part of it up. It will feel like a loss to them.
B2B and budget
This sales method not only works in consumer business but also in selling to enterprises. Not all purchases are completely based upon rational facts and figures as emotion comes into play too.
Moreover if a budget has been set, how would you know the exact amount? You can extimate the budget or have a best guess. Anything you propose below the budget is less revenue.
Proposing a complete package deal that is slightly over the budget that you have estimated will be adjusted by the purchaser to the real budget limit by taking out one or two options.
As such your price will be just under the budget limit, probably offering the best price/quality, best price/functionality or price/features compared to your competitors.
If the purchaser was looking to buy at the lowest price in the market then this endowment method will not work.
However as you are the best salesman around, it is your job to convince the buyer the lowest price is not necessarily the best choice for the company.
If you want to sell more, offer the best suited complete offering.
What did you offer lately?
