Will it close this year?

As we approach the final days of 2008, you are probably working on a number of transactions with the hope of exceeding your sales quota or target.  If you are counting on a year-end close, we are offering two questions and a tip for your consideration.  These can shape your actions over the next couple of weeks, and affect your revenue and profit.

The questions:

1.    What happens to the buyer if they don’t sign before year-end? If your answer is that they won’t get this good a deal in January, you are dealing in pretty weak leverage.  The persuasion that is missing from this argument is business value. Buyers know that an offer made once can often be made (or closely approached) again. If they don’t have a business reason to act now – a reward that accrues or a risk that they take – they will often wait, and can afford to.  If you can’t link the sale you want to make to a real business risk or reward, you may close, but at a higher discount level than you would like.  Why?  Because the buyer knows that they can afford to wait while the seller gets nervous and discounts… again.

2. Why haven’t they signed yet? If you are near the end of the year, then the reason is unlikely to be price.  And, if the reason is not price, then changing the price probably won’t change your odds of closing.  Some studies have shown that in cases where Procurement is involved, the final buying decisions are made in late November.  They are just waiting to sign until seller nerves drive the prices to lower, late-December levels.

The tip: Stay calm. The more nervous you look, the more incentive you give the buyer to wait for a better offer.  It isn’t just a game for them.  They need to have confidence that they are making a good decision.  When sellers are nervous and discounting, the only way to get that confidence is if the seller is calm and reassuring, or if the buyer waits to the last instant to sign.

If you are a seller, think like a buyer at year-end.  Why should I do this?  Is pricing affecting my decision to sign? When you have the answers, stay calm, and give the buyer confidence that they are making a good decision for a good reason.  (td)