The difference between cheap and frugal customers – and how to deal with them

Today, many clients, whether they are B2B (business) or B2C (consumer), are looking to save money. Why? Times are uncertain, markets and demographics are shifting, there is a wide variety of choice, and it’s much easier for buyers to make product comparisons and compare prices. It is said that we are currently under the influence of a buyer’s market, and some buyers can and do drive a hard bargain.

At the same time, businesses are seeing their margins eroding so they’re putting more pressure on their salespeople to hold their margins and deliver value. That’s not always easy, especially if we hit the bargain hunters and we have done nothing to move beyond having product and price conversations.

Chances are many of us have come across bargain hunters who are prepared to whittle us down to the lowest price they can take from us.

It’s exhausting. Especially those bargain hunters who bargain after the fact: for instance when we have assessed their needs, priorities and budget, put a proposal together that has been properly priced along their budget guidelines, and they then decide to try for a cheaper price, the old ‘thrust and jab’ to take our pricing down further. Sometimes these tactics come with promises of other lures like the promise of more work with them or the introduction to other clients if we cut our prices now.

My advice is don’t fall for these promises or let yourself be bullied by their price reduction tactics, at least not until you have properly assessed the situation. Because chances are you are being played by a ‘cheap’ prospect who wants something at your expense.

Those ‘cheap’ prospects or customers are different from those who are frugal and as salespeople we need to know the difference if we want to deliver real value and not be sucked into price wars.

So let’s look at the similarities and difference between cheap and frugal customers and what to do about it.

Cheap and frugal people both love to save money; however, frugal people do not do so at the expense of others. This last point is very important for anyone in a sales role as this will help you determine how you will proceed with a customer who is looking to save money.

Cheap customers look like this:

  • Being cheap is about spending less
  • Those who are cheap are often afraid to spend money
  • Cheapness uses price as a bottom line
  • Cheap people are driven by saving money regardless of the cost. They are willing to sacrifice quality, value and time in order to cash in on some short-term savings

Frugal customers look like this:

  • Being frugal is about prioritising your spending so that you can have more of the things you really care about
  • Frugality is about assessing the bigger picture and having the patience to cash in on the simple saving strategies
  • Frugality uses value as a bottom line
  • Frugal people are driven by maximising total value, including the value of their time

When you look at what drives cheap and frugal customers, it becomes very clear that you are most likely to want to work with frugal Customers if the overarching mandate is about saving money.

How to deal with frugal customers:

  • Ask questions to understand what your frugal customer really values, what they want to achieve and what is driving their decisions in the now and longer term
  • Listen to how they speak about value and the context they are operating in
  • Make sure you know how to talk about your products, services and solutions as they relate to saving or making money, reducing risk and affecting short and longer term goals
  • Make sure you can describe and link your solutions to how they add value in relation to the frugal customer’s value set and priorities, and how they can save money
  • Stand up for the value of what you do by showing how you can help them be more effective and efficient as well as mitigating risk over the total cost of what or how they are doing it now
  • If they have a budget issue, do not discount. Instead look at what you can leave out of the deal and reduce the price that way.

How to deal with cheap customers:

  • Don’t start from a desperate or weak standpoint. Cheap customers love to intimidate and bully people. Recognise you are dealing with a certain type of person who loves to get their own way no matter what and be prepared to walk away
  • Stand your ground on pricing and be prepared to demonstrate your value by showing how you can help them be more effective and efficient as well as mitigating risk over the total cost of what or how they are doing it now. It may fall on deaf ears but worth a try at least once
  • Know your bottom line – that which you will not go beyond – and be prepared to walk away from the deal
  • As with frugal customers, if they have a budget issue, do not discount. Instead look at what you can leave out of the deal and reduce the price that way.
  • If you are currently inundated with ‘cheap’ customers and don’t like that, simply raise your prices and see what happens.

Tips on how to help cheap and frugal customers buy from you in a positive way

  • Have on offer a range of options from ‘no frills’ and ‘off-the-shelf’ to ‘premium’ and ‘bespoke’
  • Always find out their budget first and then direct them accordingly to your most relevant offers that fit within these parameters. Do not stay outside these parameters with cheap customers because they will try and get you to give them ‘premium’ for cheap
  • Keep them posted of any special offers so they can take advantage of these ‘sales’
  • Offer volume discounts where appropriate (but remember hold your ground on these too)

If you are unsure about what do with either cheap or frugal customers, remember you do not have to give an answer to them on the spot. You can walk away and think about it with a cool head or seek advice before responding to their request.

Remember everybody lives by selling something.

Sue Barrett is the founder and CEO of the innovative and forward thinking sales advisory and education firm, Barrett and the online sales education and resource platform www.salesessentials.com. Get to know her further on TwitterFacebook, and YouTube.

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