As a sales rep your job is to get an purchase agreement signed. And then another. And another. At the same time you need to be sensitive to the timeline and pressures faced by buyers to make the right decision. You want to reach an agreement that the buyer feels good about and creates a long-term business relationship. You can’t push too hard, but you want to move the decision making process along as quickly as possible. It’s a balancing act that can be really frustrating.
Here are a few approaches that can help decision makers make quicker decisions:
1) Provide only a few options. In concept, buyers like choices, but in practice too many options slow down decisions and increase the risk of buyer’s remorse. In his TED Talk and book The Paradox of Choice psychologist Barry Schwartz notes that with too many options can cause buyer paralysis. “With too many options, people find it difficult to many any decision at all”. By providing a few options, you can narrow the scope, help the buyer focus but still retain control over his or her decision. When confronted with overwhelming variety of styles, cuts and colors of jeans, Schwartz quips to the sales person “I want the kind that used to be the only kind.” In technical sales, infinite permutations and feature options may look great on a product comparison chart, but should be simplified in the buying process. In most case the term “few” should be interpreted as three giving the buyer an acceptable spectrum but simple enough to make a quick comparison. You can see this commonly used in many pricing options — bronze, silver, or gold; small, medium, large; personal, pro or enterprise; coach, business, or first class; etc. It’s also immortalized as the key number for launching the holy hand grenade in Monty Python’s Holy Grail. Yes, it’s a stretch to compare sales to launching a holy hand grenade, but for the sake of a humorous mnemonic it could be helpful to keep repeating to yourself ” the number shall be three” (with a British accent, of course). [Movie clip inserted at the end of this post].
2) Provide guidance based on what “companies like yours” have decided. The bottom line is all buyers are risk averse. If you can make a recommendation based on what’s worked for similar companies, it will help them feel like they’re making a safe choice. In a famous study conducted by Solomon Asch, he made the surprising discovery that people are so motivated to act in concert with their peers that they’ll often conform even when they know the decision is wrong.
To Asch’s surprise, 37 of the 50 subjects conformed themselves to the ‘obviously erroneous’ answers given by the other group members at least once, and 14 of them conformed on more than 6 of the ‘staged’ trials. When faced with a unanimous wrong answer by the other group members, the mean subject conformed on 4 of the ‘staged’ trials.
Why did the subjects conform so readily? When they were interviewed after the experiment, most of them said that they did not really believe their conforming answers, but had gone along with the group for fear of being ridiculed or thought “peculiar.” A few of them said that they really did believe the group’s answers were correct.
While your goal isn’t to pressure a buyer into the wrong decision this study clearly illustrates the propensity for people to make the same decision as others rather than risk being singled out. The more information you can provide that shows others have made the same decision will provide a level of comfort (conformity) required to sign the purchase order.
3) Create a shared deadline. Buyers will recoil if you simply say “I need an answer by next Friday.” But the dynamic changes if you’re both facing the same deadline – something you both need to manage around. For example, in a software company it could be an upcoming release that will increase the price. Or there could be a pending deal that will impact the deployment timeline. While your buyer doesn’t necessarily care about helping you make your quota of end-of-quarter deadline, they do care about missing out on a discount or being negatively impacted by a delay.
4) Negotiate one deal point. By focusing negotiation on one deal point, you help the other aspects of the deal become an accepted part of a defacto agreement. For example, when we sold SaaS technology at Prospero our pricing was a combination of a fixed monthly fee with an allocation of usage and then a variable fee for usage over the allocation. In some cases we would alter the formula for additional usage — either by bundling in more into a higher base fee or setting up step tiers so usage fees would never be beyond the budget. In fact, for a few deals where the client imagined off-the-charts success (which were happy to reinforce) we created a “not to exceed” provision that protected against any surprise invoices but enabled the structure to be renegotiated the following month. This on-the-fly creative negotiation can drive some sales managers nuts, but it’s a very effective way to enable the client to “win” at negotiation while addressing their unique requirements — and closing the deal. Once we got to the point of negotiation the fee for usage for Prospero’s services, the probability of closing the account increased significantly.
keep choices simple; provide just a few options
use comparisons to illustrate the choices made by similar companies.
work towards a shared — not made up — deadline.
engage in negotiation but focus offers and counteroffers on one aspect of pricing rather than the whole package.
Photo Credit: Cmjcool via Fickr
And now for something completely different:
Instructions for the holy hand grenade of Antioch from Monty Python’s Holy Grail featuring the paramount importance of the number three: