by: Neil Rackham
Neil Rackham is a best selling author. You can read more about him at his website linked to his name.
Obtaining Commitment: Closing the Sale
Huthwaite research shows that success in the major sale depends more on how the Investigating stage of the call is handled.
So why is everyone so enthralled with Closing?
In this chapter Rackham asks the following questions:
- How many of these closing techniques actually work?
- In larger sales, how do such factors as price and buyer sophistication influence the success of closing?
What is Closing?
Huthwaite’s definition of Closing:
A behavior used by the seller which implies or invites a commitment, so that the buyer’s next statement accepts or denies commitment.
The Consensus on Closing
The consensus among writers on selling seems to be this:
- Closing techniques are strongly related to success.
- You should use many types of closes.
- You should close frequently during the call.
Starting the Research
Rackham started his research into closing in the late 1960s.
Talking with Salespeople
Rackham found that salespeople
- Talked about closing on their own time.
- Could name four different closing techniques.
- Could give no more than one technique on opening the sale or handling objections.
- Less than half of the field in another study could specify a single technique for investigating customer needs beyond just asking questions.
Closing for Real
When Rackham first quit his University teaching job to found Huthwaite he enrolled in a sales training program and paid particular attention to the area of closing techniques. He had to sell his services to eat.
When he tried his first close, an Alternative Close, it worked. For a while he was a hard-close believer.
What changed his mind? Read on…
Huthwaite began their research fully believing they would find a strong positive link between the number of times a seller tried to close and the success of the sale. He believe the magic number of 5 closes would be found to hold true.
For the first small study, Huthwaite went out on 190 calls. They took for study the 30 calls in which the sellers had closed most often and compared them with the 30 calls in which the seller had closed the least.
11 of the high-close calls resulted in a sale.
21 of the low-close calls resulted in a sale.
They could not call this a resounding victory in the “close early, close hard, and close often” school of learning.
Rackham noticed in this first study an antagonism from the buyer anytime a closing technique other than asking for the order was used.
Rackham conducted research on attitude as it affects closing.
The results (though possibly skewed) showed that
- more favorable attitude towards closing = less sales
- less favorable attitude towards closing = more sales
This raised more doubt as to the effectiveness of closing. More research was needed.
The Effect of Training
More research was conducted on how training in closing affected sales success.
After training, on 86 calls, sellers used 2.4 more closing behaviors per call than before.
However, the overall effect of the training was a decrease in sales.
- Before training the success rate was over 60%.
- After training it was around 50%.
A possible flaw in this research was that the training caused the seller to feel ackward in his presentation, therefore causing a negative effect on the sales call success.
A Glimmer of Light
Rackham then came across a major training firm claiming that they could increase sales by 30%. After further investigation he came to theorize that
- closing techniques worked when the sale was small
- closing techniques failed when the size of the sale increased
Consider the pyschology:
Closing is, in effect, putting pressure on the customer to make a decision. As this decision increases in size, the pressure tends to have a negative affect.
Rackham highlights this by the classic example of a young man courting a young woman. The alternative close of “shall we sit here or shall we sit there?” works because the decision is small. However, the same young man may have a considerably lesser success rate with the alternative close of “my place or yours”. The decision this close implicates is a much larger one.
The Photo-Store Study
Huthwaite was to study whether a new training for the photo store would be effective.
This study would allow Huthwaite to observe sellers in rotating positions. One day they would be selling low priced items, the next they would be selling high priced items.
Closing and Decision Size
Before the training took place Huthwaite measured three things:
- Transaction time. How long did each sale or attempted sale take?
- Number of closes. How often did the seller use a closing behavior during the transaction?
- Percentage sale. What percentage of the transactions resulted in a purchase?
The effects of closing training:
- decreased the transaction time
- the number of closing behaviors increased
- the success rate increased
The effects of closing training:
- decreased the transaction time
- the number of closing behaviors increased
- the success rate decreased
By forcing the customer into a decision, closing techniques speed the sales transaction.
In small sales it’s generally desirable to keep transaction time short; in larger sales a shorter transaction time has fewer advantages and many penalties.
Closing techniques may increase the chances of making a sale with low-priced products. With expensive products or services, they reduce the chances of making a sale.
Closing techniques, like all forms of pressure, become less effective as decision size increases.
Closing and Client Sophistication
The few existing research studies all suggest that the more sophisticated buyers react negatively to the use of closing.
Closing and Post-Sale Satisfaction
Huthwaite performed a study on the satisfaction rate of customers. The idea was to find out if customer satisfaction was affected by the use of closing techniques.
The results showed that sellers who had been trained in closing had lower satisfaction rates.
Rackham’s states that the most likely interpretation of these results is that, in using closing techniques, the sellers put pressure on customers to make a decision. Most people are less satisfied with decisions that they feel they’ve been pressured to make than with those they feel they’ve made entirely on their own.
This is key when remembering one of the pyschologically important factors of a large sale:
The large sale is an ongoing relationship.
Why is the Rest of the Army out of Step?
Rackham was reluctant to present his findings. In the few instance when he did share, he was poorly received. He did not so much dislike the rejection as he was concerned that his research was wrong.
Why did so many people, successful industry people, believe and spend so much money on techniques that not only don’t work, but are counterproductive?
What Makes a Compulsive Closer?
Rackham, around this time, conducted a seminar with a California management consultant named Roger Harrison. Harrison suggested that there are only two reasons that people continue to behave in an unsuccessful way. Either they are crazy or there’s something in their environment that’s rewarding and encouraging the use of the ineffective behavior.
Closing behaviors are the only behaviors that are directly rewarded or reinforced by orders.
This insight helped Rackham realize that his work, thus far, was of value and that the rest of the world just might be out of step.
But You Must Close
An inexperienced salesperson is afraid to bring the call to a conclusion and, as a result, the customer gets impatient.
Some research shows that:
- a ‘no-close’ call is ineffective (22%)
- a ‘one-close’ call is most effective (61%)
- a call with more than two closing behaviors is least effective (<20%)
Where Do We Go from Here?
The seller must obtain some kind of commitment from the customer for a call to be a success. But how can you get a commitment from your customer without risking the penalties that come from using closing techniques?
Traditional closing techniques are ineffective or have a negative effect when:
- The sale is large, involving high-value goods.
- The customer is sophisticated: for example, a professional buyer.
- There is a continuing post-sale relationship with the customer.
What should you do?
Obtaining the Right Commitment
The first step in successful closing is to set the right objectives. Know what level of commitment makes the call a success.
Just getting an agreement to another meeting isn’t an adequate measure of whether you’ve closed successfully.
Defining Closing Success in Larger Sales
Four possible outcomes of a sales call:
Orders – Where the customer makes a firm commitment to buy.
Advances – Where an event takes place, either in the call or after it, that makes the sales move forward toward a decision. Typical Advances might include:
- A customer’s agreement to attend an off-site demonstration
- A clearance that will get you in front of higher level of decision maker
- An agreement to run a trial or test of your product
- Access to parts of the account that were previously inaccessible to you
Continuations – Where the sale will continue but where no specific action has been agreed upon by the customer to move it forward.
- “Thank you for coming. Why don’t you visit us again the next time you’re in the area?”
- “Fantastic presentation, we’re very impressed. Let’s meet again some time.”
- “We liked what we saw and we’ll be in touch if we need to take things further.”
Huthwaite classified those calls that closed with Continuations as unsuccessful.
No-sales – Where the customer actively refuses a commitment.
It is important to know these 4 possible outcomes in order to close calls more effectively by turning Continuations into Advances.
Know the difference between Continuations and Advances, then become dissatisfied with setting call objectives that result only in a Continuation.
Setting Call Objectives
The secret of strong closing in major-account call is to question your objectives ruthlessly.
In your call planning, always include objectives that result in specific actions from the customer.
Obtaining Commitment: Four Successful Actions
Huthwaite found that there are four clear actions that successful people tend to use to help them obtain commitment from their customers:
- Giving attention to Investigating and Demonstrating Capability.
- Successful salespeople give their primary attention to this action.
- Successful salespeople do an outstanding job of building needs during the Investigating stage.
- If you can convince customers that they need what you are offering, then they will often close the sale for you.
- Checking that key concerns are covered.
- Sellers who were most effective in obtaining commitment from their customers would invariably take the initiave and ask the buyer whether there were any further points or concerns that needed to be addressed.
- Summarizing the Benefits.
- In a larger sale, summary will almost always be a helpful way to bring key points into focus just before the decision.
- Proposing a commitment.
- Asking for the commitment is not what successful sellers do.
- In all ther other stages of the sale, asking behaviors are much more successful than giving behaviors.
- At the point of commitment, successful sellers don’t ask–they tell.
- Most natural and effective: Suggest an appropriate next step to the customer.
How do you know which commitment to propose? There are two characteristics of the commitments proposed by successful salespeople:
- The commitment advances the sale. As a result of the commitment the sales will move forward in some way.
- The commitment proposed is the highest realistic commitment that the customer is able to give. Successful sellers never push the customer beyond achievable limits.
Rackham’s old friend and colleague, Hans Stennek, is quoted as saying: “I’ve never been a believer in closing, because my objective is not to close the sale but to open a relationship.”
Remember- The work you’ve just read is Neil Rackham’s. I have simply outlined his book. Most of the words above are his own. At times I paraphrased.
Until next time…
a Student of Sales