End of quarter negotiations.
The techniques used most pervasively to create end-of-funnel urgency are ironically, in most cases, doing the exact opposite.
What are these techniques so many continue to use, where did they come from, and how should we think about this instead?
As far back as in 1937’s Successful Salesmanship by Paul W. Ivey, there’s a chapter dedicated to “Appeal to Buying Motives”. As Ivey describes it, “they are inherited tendencies to perform a specific action in a specific way”, “certain natural impulses or instincts”, “involuntary or unreasoning promptings to action”
The sales profession has been using psychological discoveries to create “unreasoned impulses” for probably 100+ years.
Essentially and almost unknowingly, these psychological principles are used by sellers (and marketers, by the way) as mind tricks, overtly used to push buyers over the line by attempting to create a false sense of urgency.
And your buyers know it.
So, ironically, the sense or urgency you are attempting to create is doing the opposite. It's creating hesitation - right at the goalline of your deal!
The two most common? The concept of “scarcity”, and the concept of the “expiring discount”.
As we approach the end of another quarter for many, I would encourage you to make yourself aware of their usage, hopefully discourage you from engaging in the practice, and think about gaining alignment around a transaction's timing mutually as the alternative.
The concept of scarcity is most evident in marketing. It’s traditionally a highly effective approach that, when used honestly and on a resource that has a finite supply, can push a buyer to purchase during their own “Why now?” phase in their journey.
Essentially, scarcity in marketing means to use the “fear of running out” to sell more. You see a lot of this on travel sites, where a price or room type is offered, and a warning is associated with it like this one pictured below….”We have 1 left at $179”.
It can also increase the perception of the value of what you’re selling - being “in demand”. Our brains love it when someone else’s brain has already done the homework. “If it’s good enough for others, it’s good enough for me.”
However, this concept is used in the sales profession to drive artificial urgency. It’s most often used in a dishonest way from the perception of the buyer, when what you’re selling is NOT a limited resource - or when you're referring to the resources meant to implement it, it's calling into question your ability to execute.
Scarcity in negotiations is when a salesperson uses the “fear of running out” of resources to drive urgency.
“It would be to your advantage to sign more quickly. It’s the end of our quarter, and we’re having a great one! The problem, though, is resources. If we bring in all of contracts we expect to in the next two weeks, you’ll have to get in line behind them, which may delay your kickoff! First come, first serve!”
This may work once.
That one time? When a client has never been exposed to it. However, your buyers see through it, and when they hear it, their bullcrap alert goes off in their minds, eroding trust - right at the goalline.
Why it's a bad idea? Here's two reasons:
1) You are introducing expectation risk right at the goalline.
Your prospect doesn’t care about when the contract is executed. Your prospect cares about the outcome. Is it the right solution to the right problem with the right investment at the right time? Now, one of those elements is in question. You’re telling the client that the timeline is now at risk - right as they’re about to sign - as an attempt to alter their own timeline. That'll make your head spin, right? It does for the client, too.
Read reviews for popular restaurants. What do you often see? “We went on a Friday night, and the service sucked. We couldn’t get anyone to wait on us, and the food took forever to come out of the kitchen.” Introducing the idea of resource constraints and unexpectedly high demand associated with your own business right at the goal line is not a positive...it’s a negative! A hotel can get away with it...they have a finite capacity limit. They can’t add rooms to their facility. Unless you have a defined and finite transparent capacity limit, you’re telling the client that your organization is concerned about its ability to execute, right as they’re about to sign.
2) You are eroding trust - again, right at the goalline.
See this situation from a buyer's perspective. Buying from you involves risk. They're utilizing budget that is not their own...it's the budget of their business, of their department, of someone else. The result of which will reflect in their own perception at work, their own ability to receive rewards both professionally and personally, their own time, their own security.
When a salesperson is making this claim, unless you’re sitting on a long term foundation of trust, if this is a new business opportunity, your buyers have heard this story before. In other words, any buyer who’s bought something of substance before in a B2B environment, does NOT believe you. You’re calling into question everything you’ve communicated, right as they’re about to sign.
Have you ever bought anything from Banana Republic? Or Eddie Bauer?
Every single week, they promote massive expiring discounts. Every week! Meaning, as a customer, they’ve conditioned me.
"Final Hours" = "Final for today...it'll be back next week"
This approach in B2C has been adopted across the B2B landscape for many years. As a result...
...it’s a false expiring discount.
Once the discount expectation has been communicated, a buyer knows that the discount is not likely to go away if they do not meet the deadline. Or, in the off chance that the discount does actually 'expire", they are conditioned to wait for it to return. The longer they wait, the more likely you are to use it as a concession when they are ready to pull the trigger on a purchase later on. In other words...ironically, it conditions a buyer to wait!
...it opens the treasure box to more free stuff.
Similar to stumbling over a rock and finding a $20 bill hiding under it, the charity of free dollars creates a perception that there is more free stuff available, and slows down the path to the finish line. The regular price is no longer perceived as the price to be paid, and you’ve played your cards in a way that creates a sense of desperation. That desperation tells the buyer to ask for more.
In all cases, you are...
Eroding deal value,
Eroding perceived solution value,
And...you’re rarely improving your forecast accuracy.
As you're discussing your pricing and close plan, instead of unsolicitedly throwing a false expiring discount in at the end, or trying to create urgency using the false resource scarcity technique, say this,
"There's value in our ability to predict our business. That prediction drives our forecasts, which impact our investments, and our ability to assign and reserve resources."
"If you are willing to help us with our forecast, we're willing to pay you in the form of a discount to stick to it."
Then, have the prospect tell you what's reasonable. Give them some leeway on it. Then, instead of discount giveaways at the goalline, they now have skin in the game.
Mutual alignment. Instead of you telling them when they need to be ready to buy, have them tell you. Use it as a qualifier. Use it as a reason to align around a close plan.
Customer: "Well, at this point, our internal processes take anywhere from 3-4 weeks to push through."
You: "Cool. Seeing as it's mid June, would end of July be reasonable?"
Customer: "If we start now, that should be easy...I'd guess mid July."
You've got to lay the foundation. With less than two weeks left in the month, your ship may have already sailed. However, asking the question now - "How long would you expect this process to take?", then allowing the customer to get value in return for driving that process in their own organization is better than eroding trust through false scarcity and expiration techniques - which drive the opposite outcome.
Mutual alignment. Remember that word..."mutual". It's the key to more accurate forecasting, avoiding the risk of trust erosion during the "Why Now?" stage of your cycle, and is considerably more motivating for a buyer.