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Thirty years ago, after speaking at a financial planning conference, an attendee approached me while I was signing books. He told me about his strategies and techniques for landing new clients – what is commonly referred to as “closing.” He was proud of what he called the “Ben Franklin” close. This is listing the pros and cons of a proposed solution while heavily weighting the pros.
Overhearing the same conversation, another attendee told me about an even more manipulative approach. He would tilt a folder toward the prospect and drop a pen down the slope to the prospect’s side. Catching the pen, the unsuspecting person would then be holding writing implement ready to sign any contract pulled out of the briefcase.
These tactics didn’t work 30 years ago, they certainly don’t work today. There is no place in our profession for biased analysis or manipulation.
Reasons why people don’t say “yes”
Why people won’t do business with you should not be a mystery. There are two big reasons:
1. They don’t understand your solution; or
2. They don’t trust you.
In all my years of speaking and coaching, I have yet to find a client who fully understood what you did for them. At best, they will remember three solutions. At worst, they remember only whether they can trust you. When they don’t understand your ideas, they want to gain more information until they get confused and, eventually paralyzed by over-analysis, do nothing.
Closing is the final step of a four-step process. It is also the least important part. The others are:
1. Approach (lead generation);
2. Probe (fact finding);
3. Presentation (solutions to needs); and
4. Close.
Closing is only the way to implement solutions so there isn’t procrastination or a stall. There are no magic closes. But a probe and solution without a close is just an educational experience. Nothing happens unless your prospect or client acts. Your ability to close impacts your income. Are you just an educator or can you motivate prospects to implement your ideas?
Trial close
If you overtly close by asking them to buy now, you are likely to produce a stall. But if you trial close, you can test the waters before you pull out the paperwork. Always trial close before you close. The ways to trial close are to ask:
“Am I on the right track?”
“Does this make sense?”
“Do you agree with this approach?”
“Do you think this can work for you?”
“How does this sound so far?”
There are three great ways to close. Which one to use depends on the level of sophistication of the prospect. One close is good for the less affluent and another for the high net worth. Your success in closing will depend on using the right close with the right demographic.
1. Implied consent/assumptive close
$75K to $100K income. Up to $250K net worth Lower level of sophistication
This style of close is best for low-information prospects. The process necessitates that you listen to their concerns, distill them to three needs through probing, and then present solutions. The reason this close works so well is that after the trial close, you produce the paperwork and ask questions to facilitate it. Don’t ask if they would like to buy, or if they would like to move forward. It is simply part of the discussion process. The de facto rule is if they don’t stop you, they made a purchase.
The reason the implied consent close works so well is that it minimizes the chances that an unsophisticated prospect becomes confused and then stalls.
2. “I recommend” close
$100K to $250K income. $200K to $500K net worth. Mid-level sophistication
Like the assumptive close above, this is a logical conclusion approach. It makes use of a great probing job. It is also the way most physicians produce sales (although they will always deny they are selling). As you probe, list their needs. Then produce solutions to their needs. After the solution say, “Based on these (needs), I recommend that we (state solution).” You are using the same Socratic method experts use to sell.
This is a very effective close for those who believe in your expertise. It doesn’t work when selling a commodity, because the sale doesn’t depend on your expertise. The “recommend close” depends on your knowledge and your ability. For example, a physician will show you the MRI results and tell you what they recommend. They often won’t give you a choice. They will tell you what they recommend you should do. Physicians have a high closing rate.
Alternative of choice close
$250K to $500K+ income. $500K+ plus net worth. High level of sophistication
This is the best close for the high-net-worth clients. There is a high likelihood the HNW have done some financial planning on their own. They may have a desire to make their own choices from the solutions you present. Present only three choices and put your recommendation in the middle.
In my book, Why Smart People Make Dumb Decisions with their Money, I talk about extremeness aversion. Everything being equal, people nearly always pick a middle option.
Mr. Prospect, based on what you said about your goals of retiring at 65, needing $25K a year per kid for college and your desire for $10K a month income at retirement, there are three ways to go. First, a 529 plan for college, diversifying your portfolio in a more aggressive growth position and fixed investments for the cash you will need in three years.
The second option is to overfund a life insurance policy and take the cash value out or, better yet, borrow from it tax free. The third approach is to borrow $30K from a low interest rate program for college, putting 50% of the portfolio into a more stable value fund and contributing $5,000 a month into outside investments using a “dollar cost averaging” strategy. Which one seems like a better plan to you?
This close works very well because 64% of the HNW are business owners. They are comfortable making decisions. If you suggest only one, they may become suspicious. This close works well because it involves the prospect more in the formulation of the decision without telling them what to do. It also creates the sense that the solution is the one they helped formulate.
All these closes are effective depending on the demographic and sophistication level of the client. Your closing ratio should be 85-90%. If it’s not, you should review your process. The biggest advisors I work with never manipulate. They never pitch. They always first gain trust and present in an understandable way. But they always close depending on who the client is, not on what the product is.
I would love to send you a free video of “Closing Techniques of Top Producers.” Write me at [email protected] or call 714-368-3650. We will spend a few minutes talking about your goals for increasing your business this year.
Dr. Kerry Johnson is “America’s Business Psychologist.” He is the best-selling author of 17 books including the recently released, How to Recruit, Hire and Retain Great People. He is also a frequent speaker at financial conferences around the world. Peak Performance Coaching, his one-on-one coaching program, promises to increase your business by 80% in 8 weeks. To see if you are a candidate for this fast-track system, click on www.KerryJohnson.com/coaching and take a free evaluation test. You will learn about your strengths and what is holding you back. Or call, 714-368-3650 for more information.
Read more articles by Kerry Johnson
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
