By Stephen Tweed
How do you respond when the caller says, “Your price is too high”?
In too many home care companies, the person who most frequently answers the phone and takes inquiries from prospective clients has not been fully trained to “capture the caller and turn inquiries into admissions”. When that’s the case, the most challenging objection is price.
On Monday of this week I was conducting a coaching call with the office staff for one of our client companies. The owner had asked me to cover several key points, and the most significant one was how to handle the price objection. We had covered this in a training program we had provided for all of the offices in this company, but the team in one office was still challenged by the price objection.
The symptom of the problem was that inquiries frequently mentioned their price was too high because a local competitor was charging $4.00 less per hour and they were losing a lot of clients to that company. In preparing for their training, we had facilitated a strategic marketing session where we discussed the “seven sources of competitive advantage” and helped them identify their Strategic Focus Pyramid – the three factors that make them different from their competitors.
In their case, they decided their primary focus is “Exceptional Customer Experiences” followed by “Caregiver Quality” and “Personal Relationships”. We talked a lot about low price and how it is nearly impossible in the home care business to successfully compete on low price.
In order to compete on low price in any business, there are three things that must be true:
1. You must have the lowest price in your local market by a significant margin
2. You must always have the lowest price
3. You must have the lowest cost of service
In the home care marketplace, someone can always come along and offer a lower price. And you can’t sustain the lowest cost because 60% of your revenue goes to the cost of providing service; the wages of your caregivers. Since you hire your caregivers from the same talent pool as your competitors, you can’t hire them for less and then charge less. Companies that try to compete on price are only a bankruptcy waiting to happen. You can’t survive and prosper in this business if you don’t have reasonable gross margins.
Back to the Price Objection
So how do you handle the price objection? Ask questions. Using good questions, help the caller identify what is most important to them in selecting a high quality caregiver for Mom or Dad. For example, you might say …
“You are absolutely right. Our price is a bit higher than our competitor. May I ask you a couple of questions?”
“What is most important to you in looking for a caregiver for your Mom?”
Whether they know it or not at the time, as our research at Leading Home Care shows, the two most important factors for the client are dependability and continuity. The client wants a caregiver who shows up on time as scheduled and they want the same caregiver every time. Then, they want peace of mind, quality of life, and independence at home. You can’t provide those features using a low price caregiver.
After asking some questions, we then encourage the person taking the inquiry to talk about the three sources of competitive advantage.
“While price is important to everyone, we at [your home care company] focus on three things in providing service to our clients. They are:
1. Exceptional Customer Experiences – We want you and your Mom to have an amazing customer experience when you receive home care services from our company. We want to make sure our caregivers are there on time. We want you to have the same caregiver whenever possible. We want to communicate with you regularly and we want to solve any problems quickly and effectively.
2. Caregiver Quality – In order to provide an exceptional customer experience we know that we need to have exceptional caregivers. To make sure we hire only the best, we have become a member of Caregiver Quality Assurance® . This is a program that helps us recruit, select, train, and retain high quality caregivers. We’re the only CQA certified company in our community.
3. Personal Relationships – We believe that people like to do business with people they know. We make every effort to stay in touch with you, to listen to your concerns, and go out of our way to help you because you are our friend. We care about you and your Mom.
“Are these things important to you and your Mom?
That’s why we charge a little bit more for our services. We deliver extra value and all of our clients believe what we do for them is worth a little more.”
As a Last Resort
Sometimes you will be dealing with a “Wal-Mart shopper” who only wants low price. In that case, we have developed a script you can use. It’s a bit risky, but what do you have to lose. They’re probably not going to do business with you today anyway.
“Well, Cindy. I’ve loved talking with you about providing care for your Mom, but it sounds like you’re going to make your decision based only on the price. I can understand that. We get a few callers who are only interested in the lowest price, so we’ve done some homework for you.
If you really want the lowest priced home care, I would suggest that you call Sally Mae’s Home Care at 123 Main Street. The number is 555-1234. Tell Sally that I sent you. The last time I checked she was charging $14.95 and that was the lowest price in town. She will be happy to try and find a caregiver for you.
If that doesn’t work, call me back and I’ll see if I can help you. It was a real pleasure talking with you and I wish you the best for you and your Mom. Bye now.”
I’ve used this example dozens of times in my seminars around the country and there are always a few people in the room who are aghast at such a brazen response. But what do you have to lose? We have found that when you take this approach the caller often goes to Sally Mae and has a bad experience. Then they come back to you with a new appreciation for the value you provide.
Don’t try to compete on price. Be clear about what makes you different and then sell the value to the client and the family; not the price.
For a more detailed understanding of how to create competitive advantage without using price you can purchase our previously recorded web conference, “What Makes You Different in Home Care: Competitive Advantage in Private Duty Home Care”.