Closing the Deal

Jul 18th, 2010 | By | Category: application, Career advice, closing, mentor, negotiations, persuasion, sales, skills, success

The PracticaL Mentor

Perhaps the best definition of closing a deal is when a commitment is made.  The classic business definition is when money changes hands, but in our careers and life in general we make a lot of deals that do not involve money.  Deals are a social concept where one side gives some thing in exchange for something else.  The exchange does not have to be tangible.  How many times a have you heard or used the statement “I’ll do X if you do Y.”   In reality you are proposing a verbal contract.  If your experience is like mine, I usually get a counter proposal that either starts a negotiation or a withdrawal of the offer.  So in effect most of us have been closing deals since we learned how to talk.  So what makes closing deals so difficult?

Sales is the classic setting for the “closing the deal” concept.  There are hundreds of books and articles written on salesmanship and how to persuade potential customers to buy products.  Since the world economy is based on the sale of goods and services, it is no wonder sales is the primary focus in closing deals.  However, since in theory everything a person wants depends upon other people, it is imperative to be good at making and closing deals on all levels.  Some may question my last statement, and to be honest I keep thinking about different scenarios in which my goals do not depend on other people.  Take some time and think it through.  Let me know when you find a person who came into this world through no assistance of others, and survives with no interaction with other people. (I would be interested to hear your thoughts and discuss it with you.) Even if you are not convinced that everything you want depends on other people, indulge me the premise that it is important to each of us to learn to be more effective at closing deals.

The three fundamental parts to a deal is a perceived need or desire, an offering of a perceived solution, and an exchange to obtain the solution.  The need or desire, the proposed solution, and the exchange do not have to be tangible.  Advertisers are masters of promoting the first two parts developing a perceived need or desire, and suggesting a solution.  A lot can be learned from advertisers, and how they ply their trade by creating a need or desire and then suggesting a solution.  However it is up to the sales force to complete the exchange.  Although all three parts are necessary to make a deal, the exchange is where most of us stumble.

One of the fundamental complaints of the sales force is the product is hard to sell because it does not provide a solution or is not worth the price.  It is hard to close a deal that you do not believe in.  Although we have all heard of “easy as taking candy from a baby” few of us practice this technique.  I am sure we have all pulled a few fast ones, but by in large if we question the validity of something, we automatically think others will reach the same conclusion.  Although I do not advocate taking unfair advantage or intentionally telling a lie, you should not jump to conclusions about what others think.  As an illustration, an article on selling life insurance included a short story of a life insurance salesman who tried to talk his brother-in-law out of buying life insurance, because he thought it was a bad deal for someone so young to buy life insurance.  The salesman argued that the chances needing life insurance so young were slim to none. The brother-in-law finally said, “If you do not sell me life insurance, I will buy it somewhere else. “  So the salesman reluctantly complied. Within a year the brother-in-law was in a fatal accident leaving behind an expecting wife. The message is clear.  Don’t prejudge someone else’s needs or desires.

Setting a fair price is tricky.  In business there is a philosophy to charge what the market will bare.  There is also an idea to charge what a product is worth.  In essence both of these statements say the same thing.  Market theory stresses that the value of a product is what the market will pay.  That is what makes markets.  So the trick is to price what you are selling within the customers perceived value range.  Too many of us over price our products.  This causes two problems.  One is that you will not close the deal because the other party is not willing to pay your price.  The other is it entices the other party to raise the value of their end of the exchange, which flips the deal, making you the customer instead of the salesman.  For example, you propose to work an hour extra a day in exchange for getting a free day off every week.  Your thinking is that you are working overtime by giving the extra hour every day, and it should be worth time and a half.  Your idea is that each extra one hour a day is worth 1 ½ hours so by working 4 hours extra week would have a value of 6 hours so your employer would be giving you only 2 hours a week.  Perhaps your employer looks at a little differently, and offers a counter proposal of you working an hour over every day for nine days for the tenth day off.  This proposal has you working 9 hours in exchange for 8 hours off.  His thinking is that there should be some compensation for doing without you for a full day.  On the other hand if you would have propose and hour extra for an hour off you may have been able to come to an agreement of working 8 hours of extra for 8 hours off. Then each side is getting the same basic perceived value for your time.

I have studied sales and negotiations since I was 12 years old.  One of my first jobs was with a man who made his living buying and selling used and recycled “stuff. “ My conclusion is there are no magic words to induce someone to accept your proposal.  There are some basic concepts that may aid in your success of closing deals.  They are: have a realistic view of others needs and desires. – “Selling iceboxes to Eskimos” is not a sound business model; your solution should meet the customers perceived need or desire.  – Don’t be a “snake oil salesman. “ Your customers will come after you when they sober up. and;  propose a fair exchange.  Don’t try taking candy from a baby, their parents are watching.

The PracticaL  Mentor

 2,120 total views,  1 views today

Tags: , , , , , , , , , , , , , ,

Leave Comment

You must be logged in to post a comment.