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A Word About Collecting Payment and Closing Deals

Posted on August 27, 2023 by Jason Kanigan

If You Aren't Collecting Payment at the Time of Order, You're More Likely to "Lose the Sale"

Inside an agency owners group I saw a sales discussion in which a number of people said they had problems collecting payment and closing deals. They would think they had “closed the sale” and gotten the order, but when they later sent an invoice, the buyer would ghost them.

Here’s my question in response: Do you have your screen for collecting payment ready when the buyer is ready to buy?

A major block to selling that I see with newer agency founders is that they don’t present this attitude: “It’s normal to buy.”

They’re busy being afraid. They’re afraid this person won’t buy. And the actions they take demonstrate it’s weird, unusual, wrong for someone to buy.

When You Act Like No One Has Been Here Before, They Won't Buy

When you don’t have your method of collecting payment ready, you’re telling your prospect, “Oh, wow—nobody ever got here before! This is strange!” And what do you think the prospect’s emotional reaction to that is? (“Yikes, I’m outta here!”)

My hardcore close, based on 25+ years of experience, is, “So, what do you want to do next?”

When I feel all questions have been taken care of, the prospect has a need for what I offer, a problem large enough to warrant my involvement, and a personality I and my team can work with…then it is natural for them to say something like, “I’d like to buy. How do we get started?” How do I pay you?

And then, instantly, I bring up the payment processing page. It is normal to buy. I have been here a zillion times before. I have been here earlier today. It is normal to buy. Here is the process. People do this. Many people have done it before you.

Make It Normal to Buy

Make this change. If there is a gap between you and collecting the money, get rid of that gap. Collect the money.

I was a credit manager for a national electrical wholesaler for four years around the time I was 30. I collected $2 million a month and got very good at talking to people about the very touchy subject of money. I learned that you must ask for the money, you must be ready to collect the money, and it must feel normal to everyone involved that you are collecting the money.

Are You Presenting Yourself As Someone People Regularly Buy Things From?

Observe how you present yourself and your content on sales calls. Are you nervous? unprepared? unsure?

Everything about what you do needs to express “I have been here before. Many buyers have been here with me before. This is normal. It is normal to buy.”

What changes will you put into action to make this happen?

When I originally posted this in the agency group, fellow member Boyd Trimmell commented: “Failure to collect payment immediately is why so many small service businesses struggle with cash flow.” He is dead right.

The accounting maxim goes: A dollar today is worth more than a dollar tomorrow. The interest rate aka inflation, creating the Time Value of Money concept, makes it so. Add to that if you aren’t collecting payment now it’s less likely that you ever will, and you’ll see the problem clearly: you’re delaying or completely denying that cash your business needs. Cash is the lifeblood of business. If you’re an employee and not an owner, understand this…you are paid by money collected. If you don’t collect, the business will soon run out of cash and you won’t be paid at all. As Stuart Wilde said: “When they show up, bill ’em”.

>> Jason Kanigan is a strategist who works with agency owners to increase the profitabilty and effectiveness of their organizations. Book a consultation with Jason here <<

Buyer and Seller Money Tolerance: What Kills Sales Before They Start

Posted on August 6, 2022 by Jason Kanigan

Buyer and seller Money Tolerance differences can kill the sale.

This is a relatively advanced and powerful concept you're unlikely to hear about from other sales experts.

Money Tolerance, as we’ve discussed before, is your personal answer to, “How much is ‘a lot of money’?” This is a sort of thermometer we use all the time in our daily lives, though we are not aware of it.

Everyone is walking around with this number in their heads. The chief problem with it is that they believe this limiting belief, which they are typically not conscious of but heavily impacted in life by, is the same for everyone else.

Not so.

My money tolerance is almost assuredly different from yours.

money tolerance money comparison dollar bills buyer seller sales tactics

Photo by Karolina Grabowska

How Buyer and Seller Money Tolerance Impacts The Sale

In my observational experience over the past decade, for people in North American countries like the United States and Canada, the money tolerance level you’ll usually encounter is $500 - $2500. Anything over that number is “too much money” for the average individual. Translate that into Euros or Pounds and we have something similar for European residents. Now consider:

A woman who works at Walmart and makes $15 per hour walks into a cell phone store. The salesperson knows the latest phone model is $999. The retailer and manufacturer know this, too, so they break the investment down into “Just $33 per month.” This is well within the buyer’s money tolerance, and in fact is such a swallowable amount that she is delighted to be getting the new toy for “such a deal”. Never mind that she’ll be paying this thing off for the next three years—that doesn’t enter into her head.

Buyer Money Tolerance Up Against A Higher Value Offer

This same woman later looks at an advertisement for a Mercedes-Benz SUV. It’s a beautiful car. She loves the ad. But she also knows the price is going to be over $100,000. And her gut tells her the monthly payment is going to be over $2,000. She instantly knows, with a quick sad feeling, that this will never work. She closes the ad and wistfully moves on with her life.

Take a careful look with me at what happened with this second example. Her money tolerance could not allow her to entertain the possibility of getting the Mercedes-Benz. The idea collapsed. She withdrew. She could not even consider the idea of going to the dealership. Consider this deeply.

What "Just Looking" Can Show Us About Buyer and Seller Money Tolerance

In situations where the buyer is “just looking” and not aware of what the price really is, but did manage to get themselves into the showroom…

…you can imagine the seller has the money tolerance required to be comfortable selling $100,000 automobiles. They would be ejected quickly from the organization if not. But the buyer? As soon as they find out the price, they will “pull a fade”. Their money tolerance does not match the situation. They will collapse and withdraw. The buyer physically cannot stay in that location.

As a salesperson, observe your prospects. Whether it’s over the phone or in person, you can witness this behavior. Call up a prospect who was expecting the investment in the offer to be free, for example. You don't even have to see or be in the same room with them. As soon as they find out there is a monetary investment required, observe what happens. They’ll be off the phone with you so fast you’ll be wondering what happened. It is this money tolerance of theirs leading to collapse and withdrawal that takes them away.

In general, you will not hear the words, "just looking," from a qualified, offer-matching money tolerance prospect. Those people are always ready to buy—when the offer makes sense to them. I have to say, I have not said, "I'm just looking," to ward off a salesperson in over a decade. It doesn't match who I am. (I might say, "Leave me alone to look around for a bit," with a smile, which every salesperson understands without hurt feelings).

As a seller, you will become more effective by understanding your own money tolerance and that of your prospect. This is a key qualifying factor. The faster you can identify the prospect’s money tolerance, and see if it is a match for your offer, the better.

How To Uncover The Buyer's Money Tolerance

Some ways of accomplishing this are:

Be direct. Ask the question outright: “Before we go any further, Ms. Prospect, I’d like to share that the investment level in our services ranges between $10,000 and $20,000. How do you feel about that?” This is suitable early on in conversations where you have many leads and must filter quickly, or wish to cherry pick and the lead flow can handle doing so. Employ when you suspect their money tolerance may be far lower than your investment requires
Use a parallel question. “Mr. Prospect, what’s the most you’ve ever invested in” something similar—a coaching program, agency monthly fee, consulting package etc. Ask follow up questions about the reasons why, and whether that amount was capped artificially, say by the seller’s pricing level, ie. the buyer would have spent more, but that was all the seller asked for (oh look, there's money tolerance again). Utilize in the mid of the conversation, after you've developed some rapport
Asking about investments in their personal life during the rapport phase. Examples: skydiving experiences, boat or RV purchases, event facility rentals (they had to have their 20th wedding anniversary hosted somewhere), art investments and the like. By demonstrating their interest in investing over there, they show you their money tolerance and that they could invest similarly in this area of their lives. Best done when the typical prospect you attract is involved in such activities, and you want to know, "Are they one of us?"

As the seller, as always, it is your responsibility to run the process, guide the prospect, qualify the buyer, and manage the sale. Do not blame prospects for having too-low money tolerance to take advantage of your opportunity: they simply do not qualify at this time. It is usually quite clear to both of you when money tolerance is identified. There are no hard feelings. The prospect knows they do not have enough going on to be a fit for your offer. And they will collapse and withdraw.

I share this concept with you so you will understand what is happening. In understanding, you will not become confused, frustrated or disappointed. You will get a sense of how good the marketing is in attracting qualified vs unqualified prospects, and after awhile you can take quantitative not just qualitative evidence back to marketing as feedback. They will appreciate this—if not immediately, after awhile as they too wish to hone in on their message-to-market match.

On Talking About Money Tolerance In Public

One final word of advice: do not use the phrase “money tolerance” in your sales conversations. This is a technical term and useful for us. To the prospect, just as calling them a prospect to their face, it will seem weird. Use it as the tool it is but do not refer directly to it in discussion. Understanding buyer and seller money tolerance and the differences or similarities is a powerful qualifying and selling tool.

You can use it today to filter who should hear about your offer and who should not…and who is likely to be a straightforward buyer who “gets it” without convincing, arm-twisting, or pushing. Of course we do not want to do any of those things, as they often lead to buyers remorse, so understanding money tolerance helps us again by keeping us away from situations where as the seller we might feel like doing so.

>> Jason Kanigan is a business development expert who can dramatically accelerate your sales effectiveness. To book a time with Jason, click here. <<

Tell Me Your Price: How To Stop People from Asking and Disappearing

Posted on August 18, 2021 by Jason Kanigan

Tell me your price! Perhaps the most common question salespeople get from prospects. And why? The answer is simple: the prospect does not know what else to ask.

What often happens in the real world is this: people ask, "So, what's your price?" If you tell them, the conversation is frequently over, isn't it. They disappear. They got what they thought they were looking for, and went away with your information. You never hear from them again.

Afraid to raise prices tell me your price

What were they doing? Every buyer, whether they consciously, deliberately do this or not, is making a spreadsheet. This spreadsheet is to compare the various options and see what the buyer can get for the lowest price.

Sounds okay, doesn't it? Where's the problem?

Tell Me Your Price and the Vanishing Prospect

In this video, I explain what the critical problem is with the all-too-common "Tell me your price" buying method:

Especially in RFP (Request for Proposal) situations, where there's zero dialogue between buyer and seller, and the seller has to respond to RFP documents with bid documents of their own, there's a lot of guessing going on.

Early in my career I worked for a firm in the power generation field that made control panels. RFPs would arrive and I, in my sales engineer role, would respond by preparing a bid document. The RFP would say something like, "The panel shall measure voltage." Okay. I can do that in several ways, each with its own plusses and minuses. An analog dial will do the job: it's cheap, but it is not incredibly accurate. A digital readout on a PLC unit (kind of a precursor to the computers we're familiar with today) could also do the job: more expensive, but more accurate. Those are just two of the options, and it's up to me as the salesperson to figure out which is best for that client. And maybe best for my bid! Maybe I want to position us as the lowest cost provider, and to accomplish that I pick all the cheapest ways to meet the feature requirements.

Sounds good, right up to the point where the buyer engineer reads my bid documents and says to themselves, "Aww what a bunch of junk! I don't want analog gauges! I want a high level of accuracy in our readouts."

But that is something I will never hear.

The RFP process is the same thing as a caller asking, "So, what's your price?" and then vanishing.

Without dialogue between buyer and seller you never get a clear idea of what everyone wants out of the transaction. You never hear preferences. You never get the chance to discover how you as the seller could really delight the buyer, with some feature they didn't know you had and you didn't think was important enough to mention.

2021 Update:

Thanks to the global situation over the past year or so, buyers are more willing to invest time and energy getting on a phone or video call to share their requirements. This is your opportunity to learn directly from the customer what their actual needs are...instead of guessing. Take advantage of it.

Go out of your way to make use of this renewed interest in personal contact, and use the opportunity to not only develop trust but also discover what your potential customer really wants and means. Ask them, "Would you like to get on a quick call to discuss, so I can be clear and make sure I'm offering you on the right things?" Respect their time. Keep the discussion to 20-30 minutes maximum—you can always have another call later when they find they enjoy speaking with you.

Don't let these easy opportunities slip by, and don't quote based on guesswork.

>> To book a call with Jason Kanigan and change your sales process to give you the edge in price-sensitive situations, click here. <<