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Chapter 11 Obtaining Commitment. Obtaining Commitment Today Closing- obtaining commitment by asking for a buyer’s business – necessary to get commitment.

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Presentation on theme: "Chapter 11 Obtaining Commitment. Obtaining Commitment Today Closing- obtaining commitment by asking for a buyer’s business – necessary to get commitment."— Presentation transcript:

1 Chapter 11 Obtaining Commitment

2 Obtaining Commitment Today Closing- obtaining commitment by asking for a buyer’s business – necessary to get commitment Closing techniques are viewed by many to devalue buyer perceptions of the company Major research, based on more than 35,000 sales calls over 12 years, has found that in a MAJOR sale, reliance on closing techniques actually reduces effectiveness See Exhibit 11.1 for examples

3 Closing the Sale Part Of The Process Obtaining commitment is more than just securing an order, it is a foundation for securing a long-term relationship The Importance Of Securing Commitment Gaining commitment tells the salesperson what to do next and defines the status of the client If salespeople fail to gain commitment it takes longer to obtain a potential sale The sooner a prospect buys, the sooner benefits are realized Company’s future success depends on goodwill and profit Financial rewards for the salesperson

4 Financial Terms and Conditions Price is the last, and often the most important step in the buying process Factor in discounts, credits, and shipping terms Figuring out the final actual price may be difficult with products which have many options and packages – software packages designed specifically for certain businesses help with calculations – NetSuite, Salesforce. com

5 Financial Terms and Conditions Discounts Quantity discounts- encourage large purchases by passing along savings resulting from reduced processing costs (most common) 2 Types of Quantity Discounts Single-order discount- percentage discount on a single order of a specified number of products Cumulative discount- quantity discount for purchases over a period of time (must meet minimum) May also use end of period rebate

6 Financial Terms and Conditions Credit Terms Cash discounts- price discounts for early repayment Calculated after quantity discounts are calculated Common discounts include 2/10 and n/30 Shipping Costs Free-on-board-(destination) seller agrees to load the goods; buyer takes responsibility for the goods once they reach the buyer’s location, and seller will pay freight – see examples in book FOB installed – know this! P.289 Shipping costs play important role in the purchase!

7 Price Presenting Price Price should be carefully analyzed, taking into account competitors’ offerings After careful consideration of price, determine the most effective way to present it to the buyer Present the price with confidence since the price is not the focus of the presentation

8 When To Attempt To Obtain Commitment Determine when the buyer appears ready Most buyers commit themselves only when they clearly understand the benefits and costs of such a system Buying signals (closing cues)- indications that the buyer is ready to buy Buying signals are evident in buyer’s comments and nonverbally

9 Buyer Comments Buyer Questions Signal the buyer’s degree of readiness (Ex. How soon would you be able to deliver the equipment?) Requirements -conditions that have to be satisfied before a purchase takes place (Ex. We need to get this in weekly shipments.) Benefit Statements Reflect strong feelings in support of the purchase (Ex. Good, that color will match our office décor.)

10 Continued Responses To Trial Closes Trial closes- questions regarding the prospect’s readiness to buy (Ex. How does this sound to you so far?) Provides guidance regarding when the salesperson should attempt to obtain commitment Nonverbal Cues Positive signals include eyes that are open and relaxed, face and mouth not covered with hands, a natural smile, and a relaxed forehead Indicates readiness to buy or make a commitment

11 How To Successfully Obtain Commitment Maintain A Positive Attitude Confidence is contagious Unnecessary fear can be a self-fulfilling prophecy Let The Customer Set The Pace Sales reps need to practice adaptive selling Buyer’s decision-making styles vary widely

12 Be Assertive, Not Aggressive Aggressive- salespeople control the sales interaction but often fail to gain commitment because they ignore the customer’s needs and fail to probe for information Submissive- salespeople are often excellent socializers and like to spend a lot of time talking about nonbusiness activities, usually reluctant to obtain commitment Assertive- responding to customer needs while remaining self-confident and positive

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14 Sell The Right Item At The Right Time Customers have long memories Salespeople should not rely solely on trial orders Likely to happen if salesperson keeps a service attitude

15 Effective Methods The salesperson’s purpose is to sell the right product in the right amounts The salesperson should sell in a consistent fashion Enables salespeople to help prospects buy a product or service they want or need

16 Direct Request The most straightforward, effective method of obtaining commitment is simply to ask for it Do not become overly aggressive Works best with decisive customers Ex. (Is it a deal? Or Can you call the meeting next week?)

17 Benefit Summary The salesperson simply reminds the prospect of the agreed-on benefits of the proposal Helps buyer to synthesize points covered in the presentation to make a wise decision The seller can help the buyer remember all the points discussed in the presentation

18 Balance Sheet Method Attempts to obtain commitment by asking buyers to think of the pros and cons of the various alternatives This method can insult a buyer’s intelligence if used inappropriately Can help hesitant buyers express their feelings about the decision, which gives the salesperson an opportunity to deal with those feelings

19 Probing Method The salesperson initially uses the direct-request method and, if unsuccessful, uses a series of probing questions designed to discover the reason for the hesitation Also the method used in a role-play for major sales Salespeople attempt to find all the issues of concern to the prospect; then resolve the issues as soon as possible Always keep in mind cultural differences

20 Alternative Choices/Other Methods Alternative Choices Keep options simple when presenting multiple options to a buyer Other Methods Hundreds of techniques have been tried; tend to be ineffective with sophisticated customers No method of obtaining commitment will work if the buyer does not trust the salesperson, the company, and the product

21 Trial Offers Sometimes called the “puppy dog” close Be careful – don’t always rely on this closing technique. If your product or service is simple, a trial offer can be effective. For more complicated products or services, the trial offer may backfire!

22 Other Closing Methods See Exhibit 11.3 Favorites: Minor point close Standing room only close Benefit-in-reserve close

23 If Commitment Is Obtained No Surprises Disclose any important information the customer will need to fully enjoy the benefits of the product or service Confirm The Customer’s Choice Assure the customer they have made an intelligent choice (Important to decrease or eliminate buyer remorse or post purchase dissonance) Get The Signature Make the actual signing an easy, routine procedure Fill out the order blank accurately and promptly Be careful not to look overly eager or excited prior to signing

24 Continued Show Appreciation Writing a letter or giving a small gift develops goodwill after large purchases and with new customers Cultivate For Future Calls Customers like doing business with salespeople who do not loose interest immediately after securing commitment Follow-up- what a salesperson does after achieving commitment Review The Actions To Be Taken Reviewing what needs to be done to build a partnership is important

25 If Commitment Is Not Obtained Some Reasons For Lost Opportunities Wrong Attitudes Keep a positive attitude Don’t fear making the sale Avoid being eager or overexcited Historical importance on obtaining a sale Poor Presentation Trial closes should be used; buyer must understand benefits A poor presentation can be caused by haste Lack of product knowledge Poor Habits and Skills Knowing when to quit talking is just as important as knowing what to say

26 Continued Discovering The Cause Reasons for not obtaining commitment must be understood to lift barriers Suggestions For Dealing With Rejection Maintain The Proper Perspective An answer of no should be a challenge When a buyer says no, it usually is because the buyer is not yet fully informed The salesperson should have a clear objective for each sales call

27 Continued Suggestions For Dealing With Rejection (Contd.) Recommend Other Sources When a salesperson cannot supply a product, volunteer the name of a competitor that can Then, the salesperson should ask the prospect for names of people who might be able to buy the seller’s product Good Manners Are Important Salespeople must accept no if they expect to call on prospects again Leave a business card

28 Bringing The Interview To A Close Keep the close simple and brief If sale isn’t complete, leave with a clear action plan for all parties Always make sure the next step is clear for both parties It is important to follow up promptly with a thank-you and a reminder note after the sales call

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