Monday, March 30, 2015

The Psychology of the Sales Cycle – Negotiations

If you’re like the vast majority of people, when you make a purchase you want to believe you got a good, or great, deal. What’s your definition of a good deal? The deal is really the value you get from the transaction and when I talk about value I use the following equation:

V = WIG/P
Value equals What I Get divided by Price.

There are two simple ways to look at it. If I can get more of something for the same price, that’s a better value. If I can get the same amount but pay less, again, that’s a better value.

When it comes to value, getting a good deal, everyone would like to get more for less. We might not get as much as we want, or pay as little as we’d like, but believing the old adage – everything is negotiable – we’ll try our best to get more and/or pay less. And so will your prospects.

Negotiating isn’t simply about lowering your price or giving away more stuff to make someone happy and close the sale. It’s about knowing when to deviate from traditional pricing or when to make concessions that will make both parties better off in the long run. It’s fair to say all the principles of influence and the contrast phenomenon might come into play as you negotiate but a few will stand out a little more.

Liking remains very important because the more the prospect likes you and really wants to do business with you, the better your chance of getting to yes as you go through negotiation points. Continue to remain friendly, bond over things you have in common and offer compliments when warranted because those simple acts will grease the wheel. One study I regularly share in my influence workshops clearly shows people put in a negotiation scenario had a much better chance of avoiding a deadlock if they take the time to get to know each other on a personal level.

The principle of reciprocity describes the reality that when you give, quite often people feel they should give in return. This is very important in negotiations because your act of conceding on some point might cause the other person to make a concession too and you’re now closer to agreement. A concession might be sweetening the deal with something that may not mean much to you but might mean a lot to the prospect. Again, your act of giving is met with something in return. That’s the basis for bartering. The key here is to be the first to take the step to the middle.

Consistency allows you to fall back on what the prospect said earlier in the sales process. If they wanted certain features and those features have a price tag then the reason for the price being what it is might be due to their choices. Reminding them of what they said they wanted is powerful because most people won’t come back with, “I know what I said but I’ve changed my mind.”

Scarcity is closely aligned with consistency because you can always offer to remove certain features to get the price more in line with customers’ expectations or budget. If you recall in the post I wrote on qualifying the prospect, I shared a conversation between an insurance agent and prospective customer. The agent shared a little about business income coverage and the prospect asked to have the price included in the insurance quote. The new coverage will cause the premium to be higher but could be modified in some way or removed as a concession if the prospect feels the price is too high. With a new understanding about the coverage and their exposure, prospects might just find a way to keep it because no one wants to think about an exposure they clearly know is not covered.

Contrast is used to help the prospect see what is being offered is in fact a good deal. If they believe your price is too high you need to figure out what their comparison point is. Whatever they have currently might not be a valid comparison point because the features may have changed. If that’s the case you need to move away from the old price and get them to see the value in what you’re offering.

For example, how does being $1,000 higher than a competitor breakdown over the life of a product with a five-year lifespan? Over five years, there are 260 weeks so your product will cost the prospect less than $4 a week. Can you show the prospect how your product is worth much more than the extra $4 a week you’re asking them to pay?

Bottom line – Don’t be offended that the prospect wants more for less. We’d all love to have a Cadillac but it’s not reasonable to think we can get it for the price of a Volkswagen, is it? And so it is quite often in your negotiations during a sale. You need to work with the prospect to come up with a solution that makes them feel their needs were met and they got a good deal.


Next time we’ll look at the part of the sales cycle I’ve seen salespeople struggle with the most – closing the sale, i.e., asking for the business. This doesn’t have to be difficult if you’ve set the expectations early on. Using the principles of influence effectively can make closing a natural part of the sales conversation.

Brian Ahearn, CMCT® 
Chief Influence Officer
influencePEOPLE 
Helping You Learn to Hear “Yes”.

Monday, March 23, 2015

The Psychology of the Sales Cycle – Objections

“Let me think about it” and “Your price is too high” are two phrases salespeople dread. They’re perhaps the most often cited objections put out by prospects during the sales cycle. As I noted in closing last week, it’s not often a sale is made without resistance. Objections might come after your presentation or they could be peppered throughout. This week we’ll look at some principles of influence that can be very helpful in overcoming objections.

Two principles that are particularly useful are consensus and authority. They’re the ones to focus on because more than any other principles they help people overcome uncertainty and that’s the root of most objections. We’ll also touch on the contrast phenomenon because it’s particularly useful to demonstrate your offering is actually a better deal than the prospect might believe.

You may have heard the old saying, “The devil you know is better than the devil you don’t.” What that means is, as bad as things may be sometimes, there’s always the chance they could be worse with change. That fear of change is always in the back of the prospect’s mind, especially with big-ticket purchases. Below are a few thoughts prospects may have as you present. In fact, you may have held some of these very thoughts last time you bought something expensive. 

  • Will it last?
  • Will it perform as advertised?
  • Will it be worth the extra money?
  • Will I regret this decision down the road?
  • Can I really believe the salesperson’s claims? 

The challenge for the salesperson is to uncover the real objection. For example, when it comes to, “Let me think about it,” there may be something underneath that statement. Perhaps the prospect met with another salesperson and kept their appointment with you only because they said they would. It’s okay to ask, “What specifically will you be mulling over? I ask because I might be able to answer some questions for you right now to make the decision easier for you.” People generally don’t like confrontation so it’s easier to avoid it by saying, “Let me think it over.”

Let’s start with price. When it comes to price I tell people, “There’s nothing high or low but comparing makes it so.” If someone says your price is too high it’s because they are comparing it to something else. Your challenge is to find out what they’re comparing your price to and then to reset the comparison point so they’ll see your offer is actually a better value. The contrast phenomenon comes into play because what you present first will make the difference in how they perceive the next item presented.

The principle of consensus, that desire we have to move with the crowd, can help deal with objections. You never want to tell someone they’re wrong because that will only produce resistance. A better approach would be to incorporate consensus through the “feel, felt, found” approach. An example might go like this:

“I understand how you feel because other customers have felt the same way initially. However, here’s what they found…” Then you go on to show them what others discovered. It might be the realization that a higher price, say 10%, is worth it because the product life is 20% longer. Getting 20% more product for only 10% more money makes for a better value!

When we’re in a state of uncertainty making a decision is a lot easier when an expert tells us what to do. Establishing your expertise early on in the prospecting phase makes this much easier. That’s using the principle of authority. You can defer to this casually:

“Ann, as I told you when we first met, I’ve been doing this for 25 years and I can tell you…”

Maybe you don’t have that much experience or the credentials just yet in order to be viewed as an expert. You can still refer to others who are experts and you can share various facts to support your case.

“Bill, there’s a reason Consumer Reports has rated this product #1 for the past three years.”

“Sarah, several independent studies show…”

Dealing with objections isn’t something most salespeople look forward to but there’s good news. First, most of the time people who throw up objections are engaged in the sales process and that means you still have a shot at making the sale.

Second, if you’ve been in your role for any length of time you probably know 80% or more of the objections you’ll face. That being the case, you should be ready to answer those objections each and every time. Give thought to the proper responses, utilize the psychology or persuasion, then drill on the proper responses until they roll off your tongue in a very natural way.

Even if you successfully handle all the objections and the prospect clearly wants to do business with you the sale might not be a foregone conclusion. It’s very likely you’ll find yourself negotiating over price, terms, conditions or other items related to your product or service. The next post will look into which principles of influence will help you negotiate most effectively.

Brian Ahearn, CMCT® 
Chief Influence Officer
influencePEOPLE 
Helping You Learn to Hear “Yes”.


Monday, March 16, 2015

The Psychology of the Sales Cycle – Presentation

You’ve made it through your first meeting and perhaps subsequent meetings with the prospect. These meetings were designed for you to build rapport, learn what the prospect needs and what it will take to land his/her business. Now comes the big day; your opportunity to present.

Just for clarification; I use the term “present” when you’re sharing intangibles such as insurance, accounting and other services. When you have a tangible product where you show how it works or involve the prospect, I call that a demonstration. Either way, it’s your chance to build compelling reasons why the prospect should choose to do business with you and your company. Here are a few things to keep in mind: 
  1. Don’t talk yourself out of the sale – You might have 10 items to cover but if you sense prospects are satisfied after hearing their top three issues addressed, cut it short and ask if they’d like to get to the paperwork. Poor salespeople have a tendency to talk themselves out of the sale during this part of the sales cycle. Here’s a visual from the movie Jerry McGuire, when Tom Cruise made a long speech to Renee Zellweger asking her to marry him and she said, “You had me at hello.”
  2. Involve the prospect – If possible have the prospect handle your product as you demonstrate it. If not, make sure you ask plenty of questions to keep the prospect mentally involved. What you don’t want to do is drone on and on in a monologue because the prospect will tune you out. 

The two principles of influence you want to focus on during this phase are consistency and scarcity. Both of these principles are great when it comes to motivating people to action. Let’s take a look at why.

The principle of consistency alerts us to this reality; we feel internal psychological pressure and external social pressure to be consistent in what we say and what we do. This is why it’s so important to ask the right questions during your initial meetings. Perhaps the most important question is something like this: Exactly what will it take for me to earn your business?

This is not only important because of consistency but also because you might learn some things that you know you can’t come through on. If that’s the case, let the prospect know you won’t be able to help them and move on to another prospect where you might be able to help.

Scarcity highlights the human tendency to want things more when we believe they are rare, going away or can’t be gotten elsewhere. Throughout your presentation you need to highlight aspects of your product or service that are unique to you or your company. Maybe there’s not one thing that’s unique but perhaps there are several features that, when combined, make your product or service unlike any other.

This is important – it’s not enough to talk about what you think is unique. You need to frame it in such a way that prospects realizes that by not going with you they lose something; i.e., that uniqueness that you offer. Six months to a year down the road why might prospects regret not having gone with your recommendation? That’s what will give them pause to think long and hard about what you're offering. 

It’s not often a sale is made without resistance. Objections might come after your presentation or they could be peppered throughout. Next week we’ll cover how to effectively use different principles of influence to handle objections.

Brian Ahearn, CMCT® 
Chief Influence Officer
influencePEOPLE 
Helping You Learn to Hear “Yes”.


Monday, March 9, 2015

The Psychology of the Sales Cycle – Qualification

You made it through the first meeting with the prospect, rapport was established and he/she liked you enough to allow you to come back and continue the sales process. And you enjoyed the prospect enough to want to pursue the business. Now it’s time to determine if you can do business with the prospect. By that I mean, after you do your fact finding, you have to honestly assess whether or not what you have to offer can help him/her.

On the flip side, you also want to figure out whether or not you want to pursue the prospect any further because not all business is good business. If you get sense that prospects’ demands will be more than you want to take on, or if you begin to get the feeling you might not like working with them, this is the time to politely back out of the process. Better to not take on a customer than to have to end up “firing” him/her.

As you qualify the prospect through a series of well-planned questions the principle of consistency becomes very important. During the follow up meetings after the initial contact, you want to ask LOTS of questions. A rule of thumb is that a good salesperson should talk no more than 25%-30% of the time. That might be contrary to what you’ve experienced with salespeople in the past because a misperception about salespeople is they have to have “the gift of gab” to talk people into anything. Nothing could be further from the truth! Excellent salespeople talk so little because they ask good questions that allow the prospect to do most of the talking. Excellent salespeople are also good listeners because it doesn’t do any good to ask the right questions if they don’t care about the answers.

Here are some benefits of asking good questions: 
  1. They allow the prospect to feel in control of the situation.
  2. They help you gather information so you can understand the prospect’s needs.
  3. They will let you know whether or not you should go forward. If you can’t meet the prospect’s needs or requirements then be honest, remove yourself from the sales process and go work with prospects you can help.
  4. They help you tailor your presentation or demonstration.
  5. You will be able to tie back what you ultimately propose to what the prospect told you in earlier meetings. This is where consistency becomes a powerful principle to leverage the sale.  

One more point about questions. Whether you win or lose an account, you should always try to understand why. Replicate your winning behaviors and change whatever led to you not making the sale. When you lose, you need to see if there’s a question or two you can add to your qualification process to avoid that from happening again. For example, if you find out the prospect’s brother-in-law works for the company the prospect is currently doing business with then add a question in your qualification process to uncover that next time. Refining your questions over time will make you more efficient and successful.

Last, consider scarcity as you go through the qualification phase. People naturally want more of what they don’t have, can’t have or perceive as going away. By asking the right questions you can start to highlight what prospects might be missing currently and they’ll want it more. An example from insurance might be the following: 
Agent – “If you’re like most customers I work with you probably want to make sure your building is fully covered in the event of a total loss, correct?” 
Prospect – “Of course. I can’t get stuck paying tens of thousands of dollars out of pocket if the building burns or a tornado takes it down. That’s why I buy insurance.” 
Agent – “How about your employees? If your business was shut down for six months or longer would you want them to come back when you reopen? 
Prospect – “Sure. Without them I have no business.” 
Agent – “I thought so but right now you don’t have business income coverage. If you can’t pay them while the rebuilding is going on they’ll end up looking for other jobs so they can pay their bills and feed their families. Should I include this coverage in your quote?” 
Prospect – “I never thought about that. I couldn’t afford to hire new people, retrain them and do all the other stuff you have to do with new employees. Yea, include it so we can see what it will cost.”
Tom Hopkins, a well-know sales trainer and author regularly tells audiences, “If you say it, they doubt it. When they say it, they believe it.” Telling prospects what they need is never as effective as them seeing the need themselves and verbalizing it. This comes about more easily when you know you product or service and ask the right questions.

Next week we’ll delve into the presentation or demonstration with a prospect looking to leverage certain principles of influence that will help that go smoothly.

Brian Ahearn, CMCT® 
Chief Influence Officer
influencePEOPLE 
Helping You Learn to Hear “Yes”.