BUS403: Negotiations and Conflict Management

It is this line from the classic 1996 movie Jerry Maguire that says it all about negotiating and closing the deal. In the movie, Jerry Maguire (Tom Cruise) is a sports agent who has second thoughts about the way business is conducted, and when he voices his concerns, he loses his job and all his clients except one. Maguire's passionate plea to his sole client, NFL player Rod Tidwell (Cuba Gooding, Jr.), has become a dramatic metaphor for negotiations and deal making ever since.

While the movie is fictional, Maguire's character was based on real-life sports agent Leigh Steinberg, whose firm has negotiated and closed more than one hundred multimillion-dollar deals for high-profile clients in every professional sport. Steinberg's philosophy on negotiations and closing deals is based on the fact that life is filled with negotiations and deals – from deciding where to eat to buying houses and cars – and each should be handled with "a clear focus and principled philosophy." There is nothing better than closing a big deal…the right way.

Whether it is a major professional sports deal, business deal, or a major purchase, it is easy to visualize what the "desired state" is in any kind of deal. You can actually see the athlete in your team's uniform, imagine two companies merging together as one, or see yourself in the car you want to buy. In fact, you negotiate every day. You negotiate with everyone from your roommate about how to arrange the furniture to your siblings about who will use the car. You might even negotiate with your professor about when you can hand in an assignment that is late.

The step in the selling process that moves the conversation to a sale (or the desired resolution) is the close. Many people believe that the close takes place at the end of the selling process because that is when the prospect agrees to buy the product or service. But nothing could be farther from the truth. Closing the sale, or getting the order, starts at the beginning of the selling process, long before you even come in contact with the prospect.

Start Strong

"What it takes to win a championship is to have your preparation meet the opportunities, whether it is out on the racetrack or behind the scenes," according to NASCAR driver Kurt Busch. This is true in sports and in selling. Winning in selling – delivering value to customers and to your company – requires good solid preparation and hard work. Sure, there are some sales that fall into your lap. Those are the ones that make it feel like selling is easy. But most sales do not happen that way. In fact, in many industries closing the sale may take weeks, months, or even years.

Despite the term close, which implies the end, closing the sale starts with the first step in the selling process – qualifying. Sometimes salespeople want to fill their sales funnel (or pipeline) with lots of leads so they do not take the time or ask the right questions when they are qualifying. While it is true that you want to "go out and get as many nos as you can," you will get a lot more yeses when you pitch to the right prospects. In fact, the selling process is analogous to building a house; if the foundation is poured right, everything else will easily come together. The same is true in selling – prospecting is the foundation of the entire process.

Not only does closing start at the first point in the selling process, but it also is far from the end of the selling process. In fact, closing is a lot like graduation – it is actually the beginning, not the end. Just like graduation is not the end of your education but rather the beginning or commencement of the rest of your life, the closing in sales is the beginning of the relationship with the customer, not the end of the selling process.

Closing Time

The close might be a definitive part of the selling process. It is not a single statement, question, or event. Rather, the close is an ongoing series of events throughout the selling process, according to Mary Delaney, vice president of sales for CareerBuilder.com. Qualifying is the key; it is virtually impossible to close a sale with the wrong prospect. But the preparation does not stop there. The preapproach, approach, presentation, and overcoming objections all play a role in the closing the sale.

According to author Ray Silverstein, the close is made in the first 30 seconds of the sales presentation. He says that is when a customer has an emotional response to you and your product or service story. Silverstein points to research that was conducted by William Brooks and Thomas Travisano that concludes that people want to buy from people they like and trust. If this sounds familiar, it should be. We have discussed the concept of building a relationship based on first impressions. And understanding the difference between needs, which are rational, and wants, which are emotional, makes a difference in how your prospect perceives you and the message you are delivering.

To demonstrate that the close takes place at virtually every point in the selling process, Daniel Sheridan from Extensis Group LLC, a sales training consultancy, says it best: "If you are waiting for a proposal to close, it is too late." He goes on to say that the most important meeting is the first one because that is when trust and rapport are established.

The close builds on everything that has already taken place throughout the selling process – rapport, trust, information sharing. It is also important to know what the close is not. The close is not a high-pressure exchange between seller and buyer. It is not a time when the salesperson resorts to trickery, manipulation, or other unsavory tactics just to get a sale. While sales are the ultimate financial goal of the selling process, relationships, trust, and understanding a customer's business and providing cost-effective solutions are driving factors behind making the sale. The same principles that guide the rest of the selling process also guide the close.

If closing is not a specific event that happens during the selling process, you might be wondering how you effectively get the order. The trial close can take place during any part of the selling process. The trial close allows you to get specific feedback from the customer as it relates to their likelihood to purchase at any point during the process. While the trial close is most likely to come during the presentation, it could come even earlier in the process depending on the prospect and the product or service being purchased.

A trial close asks for an opinion ("What is most important to you about this product or service?"), whereas a closing question asks for a decision ("Shall we complete the paperwork?"). The trial close gives you the opportunity to learn what the prospect is thinking and will give you some insight as to when to make the close. In some cases, the trial close may result in a close, but if it does not, the prospect's response provides valuable insight. The trial close should be done early and often throughout the selling process. Getting the prospect's opinion at various points throughout the process helps you determine your path and how and when you should make your close.

ABC or ABO?

There is an old adage in selling that says, always be closing (ABC). This means a salesperson should never miss the opportunity to close a sale, no matter where it occurs in the selling process. But in today's collaborative environment, it is better to approach closing as always be opening (ABO). In other words, the best strategy is to always help your customer identify and solve their problems, just like you do when you open the selling process. Focus on asking the right questions and learning about how you can suggest solutions (in some cases, the solution might not even be your product or service). When you deliver value to your prospect, they will look to you for advice and counsel. "You become much more than a salesperson, you become their marketing expert, a resource, an ally," according to Mario Russo, general sales manager at WBEN-FM in Philadelphia. That is when you are successful in selling.

Asking for the order is critical to succeed in selling. But if you close too soon, the customer may think the process is over and mentally moves on to something else. It is a good idea to ask exploratory questions: open-ended, nonthreatening questions that encourage your prospect to discuss their business needs. This supplements the information you gathered during the preapproach, allowing you to understand what the customer needs so you can meet those needs. For example, if you are selling accounting software, you may ask the exploratory questions: What are the top three activities that consume your people's time daily? What is the ideal way you would like your people to spend their time? What are the types of activities that you think can be automated? None of these is a hard-sell question. Rather, each question allows you to listen and gather information so that you can identify how you can help the prospect solve his problem.

While you always have your eye on the prize of closing a sale, the focus is to extend your relationship with your prospect beyond selling to servicing and being a business partner. That is what ABO is all about. When you focus your selling efforts in this way, it makes it easier to sell additional products and services to existing customers because you are constantly learning about ways in which you and your company can add value.

Ask for the Order

When you focus on delivering value to your prospects and customers, you have earned the right to close or ask for the sale. It might seem obvious, but sometimes salespeople get caught up in the selling process and lose track of the fact that it is a buying process for the prospect. Sometimes, simple questions like "Will delivery on Tuesday work for you?" or "Should we start your service the week of the 21st?" help you and the customer focus on moving from the sales presentation to the delivery of the product or service. The specific closing questions will most likely differ based on the product or service you are selling. For example, in pharmaceutical sales, industry sales expert Jane Williams adds, "Never end a successful close without adding the proper patient dosing." She says, "It is very important that your physician prescribe your product properly."

Sometimes salespeople do not feel comfortable asking for the order. Earn the right to ask for the order. Be confident: believe in yourself and your product or service. The trust you establish from the beginning will translate into how you can close the sale. Closing the sale is all about presenting solutions for the biggest problems that your prospect faces. "If you cannot help them with their biggest challenge, they will not have time for you," says Mary Delaney from CareerBuilder. Author Barry Farber includes the element of confidence in the closing equation by saying, "The important factor that contributes to your success at closing (or knowing when to move on) is the leverage you have going in and the confidence you have to back it up."

Not every contact results in a sale. Typically, 80 percent of prospects say no to a sales offer, and that percentage may be as high as 90 percent during these challenging economic times." This underscores the fact that it usually takes several closes to actually close the sale. In some cases, it will take at least three tries. In other cases, it can take as many as five or more attempts. It is best to view closing as an ongoing part of the process, not a single event in which a prospect can say no. Confidence and the right mental attitude can make all the difference in taking all the nos on the way to yeses.

When to Close

It is rare for a prospect to say, I am ready to close this deal. That step in the process usually belongs to the salesperson to actively close the sale. The best way to know when to close is to listen and watch. There are verbal and nonverbal cues that prospects provide that help you understand when they are ready for you to close. Here are some of the signals that your prospect is ready to buy:

• When the prospect displays positive body language and interaction. The prospect is engaged, interested, asks questions, reviews literature, and provides insights about his business.
  
  
• When the prospect asks questions. It is a good time to close after answering a question. Questions like "How long will delivery take?" or "How would that integrate into our current system?" are good cues that the prospect is close to buying.
  
  
• After you handle an objection. This can be the perfect time to close, as you have just provided some insight that will help the customer make their decision.

Tips for Closing with a Committee

It is one thing to close a deal with an individual buyer. It is another thing to close with a buying committee. Here are four steps to close with a committee:

1. Have a specific, measurable, actionable, realistic, and time-bound (SMART) objective.
2. Know each committee member's name and role in the decision.
3. Identify your champion on the committee.
4. Leverage your champion to help "sell" the committee for you.

Types of Closes

There is not a single surefire way to close every sale. You should be prepared with several different types of closes and use them as appropriate for each situation. Some situations may require a combination of closes.

Direct Request Close

Direct request close means that you simply ask for the order. This is the most straightforward approach to a close. The fact is customers expect salespeople to ask for the order. This is a simple but effective way to close the sale.

You: Can I write up the order as we discussed?

Prospect: I think we have covered everything. Yes, let's wrap it up.

Benefit Summary Close

The benefit summary close is a natural extension of the selling process. It simply summarizes the benefits of everything you have discussed throughout the process. This approach is especially effective when you are able to integrate and present benefits from the prospect's point of view that you have discussed over the course of several meetings. This is an opportunity to focus on how you can help them solve the largest problem they face.

You: We've talked about the fact that speed is extremely important to you and your company. We can deliver your complete order to your 27 construction sites within 48 hours of your commitment. In addition, you will never be at risk for product performance because we guarantee the product 100 percent. If you ever have a problem, you just call us, and we will replace it, no questions asked. Will you be willing to commit to an initial order of 50?

Prospect: Yes, we are looking for a partner who will not only provide the highest quality product but also be able to deliver it on time to all our locations. It sounds like you have your bases covered. If you can deliver what you say, we have a deal.

Assumptive Close

The assumptive close asks a question that when the prospect replies, they are committing to the sale. In other words, you are assuming that the customer is going to make the purchase. This close can be effective if you have done your job of developing trust and rapport with your prospect.

You: Shall we set you up on automatic billing?

Prospect: Automatic billing definitely works best for us.

Alternative-Choice Close

The alternative-choice close gives the prospect a choice between two options rather than a choice between buying and not buying. This close is related to the assumptive close but gives your prospect the option of which product or service they will buy.

You: Would you prefer the white or blue?

Prospect: White is a more neutral color.

Compliment or Vanity Close

The compliment (or vanity) close helps you relate the purchase to the person and appeal to their sense of identity. You are making a positive connection between the purchase decision and the judgment of the buyer. When you use this approach to closing, you are confirming their role as a subject matter expert. You are paying them a compliment.

You: One of the reasons I like calling on you is because you and your team understand your business and your customer. You make it easy for your customer to buy from you and offer them the product at a fair price. No games, no coupons just good, honest value. I think that our product can expand your offering to your customers with a company that shares your values about putting the customer first. I suggest you start by adding this item to your line and let's gauge the customer response.

Prospect: I'm glad to hear that you feel that way. We do take our commitment to our customers very seriously and we only like to do business with people who feel the same way. I think it would be a good idea to start out with this one product and get some customer feedback. If they like it, we can talk about expanding to more products.

Combination Close

It's best to have several types of closes ready to deliver. In some cases, it is a combination of closes that helps you ultimately gain agreement with the prospect. Virtually any of the different closes can be used together.

You: The horsepower on this model is the highest in the industry. And the model is so efficient that it will lower your cost per unit in all your factories starting on day one. Can we wrap this up?

Prospect: It looks like this is going to be a good short-term and long-term investment for us. Yes, let's get the paperwork ready.

Keep It Brief

Whatever close you use, it is best to keep it focused and brief. Salespeople have a habit of talking too much, especially when they are ready to close. According to Michelle Nichols, contributor for BusinessWeek, author, and sales trainer, "Ask yourself what aspect of your offering would customers want so badly that they would miss lunch or cross a very busy street to get it?" That should be the focus of your close.

What Works?

Closing is part of the selling process. A process is a systematic approach, which, by its very nature, can be measured. You will not be able to be successful closing every sale. After all, even professional baseball players only hit the ball three times out of every ten pitches to be considered above average. While hitting the ball 100 percent of the time would be considered unrealistic, every professional hitter takes practice to help increase his batting average. His batting coach gives him tips as to how to stand, swing, and ultimately increase his percentage of hitting the ball. The same can be done in closing. Record the information about your closings – what works and what does not.

You do not have to wait until the close to be able to track your progress. Sales veteran and author Barry Farber suggests managing accounts and the sales process with a simple visual tool. Post your prospects in the different stages of the sales cycle on a corkboard. While there are several software programs that perform this function, there's nothing more powerful than seeing it play out on the wall in front of you every day.

Closing Complex Sales

A complex sale is a term that usually refers to high-value purchases (usually $100,000 and higher). Products and services such as enterprise systems, health care providers, commercial real estate, manufacturing equipment, logistics services, and other major business-to-business (B2B) purchases are considered complex sales. These types of sales have a long selling cycle because there is a lot at stake for such a major purchase and there are multiple people involved in the decision-making process. In fact, it may take as long as six months to three years to close the sale. The product or service commitment is usually a long-term commitment with a contract as long as three, five, or even ten years or longer.

While the selling skills discussed throughout this book apply to complex sales, there are some differences. According to Jeff Thull, author of Mastering the Complex Sale, there are four phases to a complex sale.

1. Discover. As with any other sale, research about the prospect and his needs is critical to success. During the discover phase, you set the stage for the ongoing relationship or engagement. This stage includes your detailed research about the company and its current provider including several meetings and phone calls with the prospect. It is at this stage that the prospect determines whether the engagement has potential.
   
   
2. Diagnose. In a complex sale, the decision is likely to be centered on what should be changed, such as the location of a warehouse, and includes a collaborative effort between the salesperson and the customer to determine if the change is feasible and desirable. This stage also includes extensive financial analysis to determine the impact of the decision on the company. The role of the salesperson is to be a true business partner and help the prospect understand the trade-offs and benefits of making a major change in the operation.
   
   
3. Design. Complex sales usually involve products and services that are customized for each customer. For example, an ad campaign, software, retail fixtures, or other major purchases are adapted, adjusted, or designed exclusively for that customer. At this stage, the sales rep works closely with key people in the customer's organization to design the best solution to fit the customer's needs.
   
   
4. Deliver. If the first three phases are implemented correctly, this final stage should logically follow. At this point, the key people at the customer's organization have been involved in the design and financial justification of the product or service so the presentation of the formal proposal should lead to acceptance. Then the efforts are focused on the delivery of the product or service and implementation. For products such as software and other major purchases, there may even be training, troubleshooting, and other transition issues that are handled by the salesperson.

During each of these phases, it is important to identify all the decision-makers and their positions in the process. As with every stage in the selling process, this is about asking the right questions. "How will your organization go about making this decision?" and "Who else do I need to talk to?" are good questions to ask during the discover phase so that you can get input and feedback from all involved at the beginning of the process. Once you identify all the people involved in the decision-making process, you will want to identify the decision makers. Again, the right questions will help you focus your efforts appropriately.

Knowing who will pay the expense helps identify the ultimate authority. The person who controls the budget is most likely different from the person who will be evaluating the technical aspects of the product or service. For example, while the chief information officer may make the budget decision, the systems implementation manager may be evaluating the technical aspects of the software. Finally, you want to identify the power broker, the person who will ultimately make the final decision. This is usually the person, a subject-matter expert, who is the right hand of the person who controls the budget. In other words, you want to identify with whom you will be negotiating and ultimately closing the sale.

This text was adapted by Saylor Academy under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License without attribution as requested by the work's original creator or licensor.