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Buyer and Seller Money Tolerance: What Kills Sales Before They Start

Buyer and seller Money Tolerance differences can kill the sale.

This is a relatively advanced and powerful concept you're unlikely to hear about from other sales experts.

Money Tolerance, as we’ve discussed before, is your personal answer to, “How much is ‘a lot of money’?” This is a sort of thermometer we use all the time in our daily lives, though we are not aware of it.

Everyone is walking around with this number in their heads. The chief problem with it is that they believe this limiting belief, which they are typically not conscious of but heavily impacted in life by, is the same for everyone else.

Not so.

My money tolerance is almost assuredly different from yours.

money tolerance money comparison dollar bills buyer seller sales tactics

Photo by Karolina Grabowska

How Buyer and Seller Money Tolerance Impacts The Sale

In my observational experience over the past decade, for people in North American countries like the United States and Canada, the money tolerance level you’ll usually encounter is $500 - $2500. Anything over that number is “too much money” for the average individual. Translate that into Euros or Pounds and we have something similar for European residents. Now consider:

A woman who works at Walmart and makes $15 per hour walks into a cell phone store. The salesperson knows the latest phone model is $999. The retailer and manufacturer know this, too, so they break the investment down into “Just $33 per month.” This is well within the buyer’s money tolerance, and in fact is such a swallowable amount that she is delighted to be getting the new toy for “such a deal”. Never mind that she’ll be paying this thing off for the next three years—that doesn’t enter into her head.

Buyer Money Tolerance Up Against A Higher Value Offer

This same woman later looks at an advertisement for a Mercedes-Benz SUV. It’s a beautiful car. She loves the ad. But she also knows the price is going to be over $100,000. And her gut tells her the monthly payment is going to be over $2,000. She instantly knows, with a quick sad feeling, that this will never work. She closes the ad and wistfully moves on with her life.

Take a careful look with me at what happened with this second example. Her money tolerance could not allow her to entertain the possibility of getting the Mercedes-Benz. The idea collapsed. She withdrew. She could not even consider the idea of going to the dealership. Consider this deeply.

What "Just Looking" Can Show Us About Buyer and Seller Money Tolerance

In situations where the buyer is “just looking” and not aware of what the price really is, but did manage to get themselves into the showroom…

…you can imagine the seller has the money tolerance required to be comfortable selling $100,000 automobiles. They would be ejected quickly from the organization if not. But the buyer? As soon as they find out the price, they will “pull a fade”. Their money tolerance does not match the situation. They will collapse and withdraw. The buyer physically cannot stay in that location.

As a salesperson, observe your prospects. Whether it’s over the phone or in person, you can witness this behavior. Call up a prospect who was expecting the investment in the offer to be free, for example. You don't even have to see or be in the same room with them. As soon as they find out there is a monetary investment required, observe what happens. They’ll be off the phone with you so fast you’ll be wondering what happened. It is this money tolerance of theirs leading to collapse and withdrawal that takes them away.

In general, you will not hear the words, "just looking," from a qualified, offer-matching money tolerance prospect. Those people are always ready to buy—when the offer makes sense to them. I have to say, I have not said, "I'm just looking," to ward off a salesperson in over a decade. It doesn't match who I am. (I might say, "Leave me alone to look around for a bit," with a smile, which every salesperson understands without hurt feelings).

As a seller, you will become more effective by understanding your own money tolerance and that of your prospect. This is a key qualifying factor. The faster you can identify the prospect’s money tolerance, and see if it is a match for your offer, the better.

How To Uncover The Buyer's Money Tolerance

Some ways of accomplishing this are:

  • Be direct. Ask the question outright: “Before we go any further, Ms. Prospect, I’d like to share that the investment level in our services ranges between $10,000 and $20,000. How do you feel about that?” This is suitable early on in conversations where you have many leads and must filter quickly, or wish to cherry pick and the lead flow can handle doing so. Employ when you suspect their money tolerance may be far lower than your investment requires
  • Use a parallel question. “Mr. Prospect, what’s the most you’ve ever invested in” something similar—a coaching program, agency monthly fee, consulting package etc. Ask follow up questions about the reasons why, and whether that amount was capped artificially, say by the seller’s pricing level, ie. the buyer would have spent more, but that was all the seller asked for (oh look, there's money tolerance again). Utilize in the mid of the conversation, after you've developed some rapport
  • Asking about investments in their personal life during the rapport phase. Examples: skydiving experiences, boat or RV purchases, event facility rentals (they had to have their 20th wedding anniversary hosted somewhere), art investments and the like. By demonstrating their interest in investing over there, they show you their money tolerance and that they could invest similarly in this area of their lives. Best done when the typical prospect you attract is involved in such activities, and you want to know, "Are they one of us?"

As the seller, as always, it is your responsibility to run the process, guide the prospect, qualify the buyer, and manage the sale. Do not blame prospects for having too-low money tolerance to take advantage of your opportunity: they simply do not qualify at this time. It is usually quite clear to both of you when money tolerance is identified. There are no hard feelings. The prospect knows they do not have enough going on to be a fit for your offer. And they will collapse and withdraw.

I share this concept with you so you will understand what is happening. In understanding, you will not become confused, frustrated or disappointed. You will get a sense of how good the marketing is in attracting qualified vs unqualified prospects, and after awhile you can take quantitative not just qualitative evidence back to marketing as feedback. They will appreciate this—if not immediately, after awhile as they too wish to hone in on their message-to-market match.

On Talking About Money Tolerance In Public

One final word of advice: do not use the phrase “money tolerance” in your sales conversations. This is a technical term and useful for us. To the prospect, just as calling them a prospect to their face, it will seem weird. Use it as the tool it is but do not refer directly to it in discussion. Understanding buyer and seller money tolerance and the differences or similarities is a powerful qualifying and selling tool.

You can use it today to filter who should hear about your offer and who should not…and who is likely to be a straightforward buyer who “gets it” without convincing, arm-twisting, or pushing. Of course we do not want to do any of those things, as they often lead to buyers remorse, so understanding money tolerance helps us again by keeping us away from situations where as the seller we might feel like doing so.

>> Jason Kanigan is a business development expert who can dramatically accelerate your sales effectiveness. To book a time with Jason, click here. <<

Jason Kanigan

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