Chapter 6 - Customer Objections to Price

Question 1

What is the best answer to this objection: The larger the customer account for BT the bigger the resistance on overall cost, why?

a. “I do not spend that much in AR today”
b. “I don’t have enough margin to cover the cost”
c. “The ROI is not there due to BT high cost of the program”
d. “My cost of incremental capital is lower than your price”
e. All of the above

Answer 1

ANSWER: (e) All of the above
a. “I do not spend that much in AR today”
REASON: BT Statistics show most companies spend between 2.5% - 4% (in-house credit), between 2.5% - 4% (credit cards), and 3.5% or more for bank lines.

b. “I don’t have enough margin to cover the cost”
REASON: Fees are not incremental. They will be off-setting expense savings that we provide.

c. “The ROI is not there due to BT high program cost”
REASON: Same as two above

d. “My cost of incremental capital is lower than your price”
REASON: BT is not a bank. BT supplies shield risk, provides back office support, is a partner and adviser to your credit program.

Question 2

Are these three statements considered “VALUE?”
• BT Answers the Cash Flow crunch.
• BT assumes the risk of non-payment
• BT manages the credit program giving you the cash and time to grow the business.

Answer 2

Yes, the three statements address value. BT funds suppliers up front based on sales and is seen as an Expert in Credit Management / Financial Services.

Question 3

Which statement does not represent Value?

a. BT Reduces the Risk – takes on the recourse
b. BT Offers sales growth opportunity
c. BT has a dynamic logo.

Answer 3

Answer: (c) BT has a dynamic logo

a and b both offer Value. The logo is not of value to a customer.

Question 4

True or False: These are four components to be considered when overcoming cost objections:

1. Personnel/Accounting cost/HR Cost (turnover expense)
2. Fees of Line of credit - cost of money
3. Credit checks, collections and legal fees, statements, invoices.
4. Bad debt expense

Answer 4

True: All four categories total the cost for in-house credit program. BT Reps should identify these variables, up front in every discussion.

Question 5

What are the 4 points to address Cost vs. Value when a pricing objection surfaces; “I’m tired of being the bank!”

Answer 5

1. BT solves for cash flow
2. BT offers risk protection
3. BT is a less expensive solution than most in-house programs and credit cards.
4. BT helps solve for credit management team (human resources) instability.

Question 6

When speaking to a CFO or accounting contact, what 4 discussion points are important to have proactively?

Answer 6

1. Break down in-house credit management cost (money float inconsistencies, staffing cost, liens cost, attorney cost, credit bureau cost, collections cost, inexperience cost, missed opportunity cost)
2. BT offers a return thus should be viewed as an investment and not a cost.
3. Solves for negative balance sheet entry (BT keeps AR entry at zero - if funded twice a month).
4. Negative AR impacts borrowing base.

Question 7

What 3 variables are important to discuss with customers UP-FRONT?

Answer 7

1. BT is NOT A FACTORING Company. We do not take a position on receivables nor do we file UCC1. BT is a credit management partner. We become a tender type (like a check or credit card).
2. BT cost replaces the higher cost you currently have ((money float inconsistencies, staffing cost, liens cost, attorney cost, credit bureau cost, collections cost, inexperience cost, missed opportunity cost)
3. BT helps suppliers obtain early pay discounts by funding them quickly.