The Art of the WordPress Startup: Part 12

How to Close a Sale

This post is part 12 of a series on how to launch your startup on WordPress. Last time I talked about how too many people get caught up in trying to capture the entire market, rather than a profitable niche or subset. Today’s post is about how to close a sale once you’ve decided on which market you’re targeting. Most people think they’re good at sales but actually suck at it. They say “sales is easy… anyone can do it” but in reality convincing people to do something (e.g. buy your product, fund your company, join your team) is one of the hardest things in life. Think about it. People are lazy and like to “stick with what they’ve got”. In addition you might be in a market like we are (hosting) where there are lots of choices you’re competing against. If there are 10 players in your space, statistically you’ve only got a 10% chance of getting their business.

Not an Expert, But I’m Better Than Most

I don’t have a PhD in sales. I never wrote a book about sales, and I don’t fly around the country calling myself a sales expert and selling tickets to seminars. But I’m fairly confident I know how to close. How do I know know? Because I’ve been selling since the day I left undergrad and I’d be living in a trash can if I wasn’t at least pretty good at it. Why? Because I’ve founded and run a number of businesses that ended up doing fairly well and succeeded against very steep odds. Eight out of ten entrepreneurs will fail. Think venture funded ones do much better? According to Harvard Business School senior lecturer Shikhar Ghosh, three out of four VC backed companies fail.

Aside from that, I’ve convinced publications to write about myself or my companies. Try getting to be part of a cover story for Entrepreneur or convincing Inc magazine to cover you in a photo spread. It’s extremely difficult. When I was in the “Elevator Pitch” column for Inc the writer told me point blank… “we do this column 12 times per year and get thousands of submissions annually, I’m counting on you”. Yikes, those aren’t very good odds either. So how did I convince them? I didn’t major in psychology but I understand how the human brain works thanks to good ole’ Robert Cialdini.

Best Sales Book Ever

Robert Cialdini wrote Influence: The Psychology of Persuasion in 1984. This is before anyone knew what a CRM or even the internet was. It has sold over 2 million copies and Fortune called it one of the “75 Smartest Business Books” of all time. Last year Harvard Business Review interviewed him, because they wondered if he gave away too much information on how to hack the human brain. So yeah, the book is legit and worth reading. That is not an affiliate link, I’m just saying it’s worth the few bucks. Help Robert take another vacation. He deserves it. Anyways, the book talks about 6 key principles of influence and here I’ll relate each of those to sales.

1. Reciprocity

Give something to get something in return. In other words, the human brain is wired to return favors. Humans hate to feel indebted to others. Every wonder why it seems Macy’s has a sale every other week, why companies do free trials, or why companies spend all that time creating whitepapers and infographics? Now you know. They’re giving you something to get something in return. Your business. One great way to incorporate this into your business is to be generally helpful to your community. If you’re in WordPress, answer questions on Quora or in forums and become known as a great resource. If you’ve answered a question for someone and they’re thinking about using your services, they’ll be more likely to pick you than someone who wasn’t willing to offer advice for free.

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2. Commitment

Most human beings like to be seen as being consistent. So if we publicly commit to something, we’re much more likely to follow through, even if you remove the original incentive or motivation after we have agreed. People view this type of commitment as part of their reflective self image. If you’ve recently seen The Wolf of Wall Street or the movie Boiler Room way back when, then you probably remember how most of the stock brokers opened up their pitch. They’d say something like “How about I start you off with a small investment, just 50 shares and we’ll see how things go”, and that was their way of getting a small form of commitment which makes it much easier to get larger investments later on.

Both of those movies were about scamming people so I’m not advocating that, but you get the idea. Another example would be how many companies push hard to get you to “commit” to a demo or webinar of their product. They know this will increase the likelihood you think of yourself as a customer and hence will be more likely to end up being one.

3. Social Proof

This is one of the most used in terms of web startups. Most human beings feel validated based on what others are doing. In other words, safety in numbers, humans like to do what they see other people doing. People who move to California somehow end up driving a hybrid. People who move to Texas somehow end up driving a pickup, even if they never would have dreamed of it before moving there. I’ve seen this first hand with a number of my friends. I’ll say to them… “you bought a Prius?” and they’ll reply “it’s considered cool here in California, everyone has one”. Makes sense right, most people like to fit in.

So how are web startups using this? Visit the homepage of most hot tech startups and you’ll typically see a section allocated for logos of prominent clients. That’s because they understand the value of social proof. If they show 50 of the Fortune 100 companies on there, they know customers will think “gosh, they’re all using XYZ, maybe I should too”, and so forth. Another example is how nightclubs line people up at a velvet rope in Las Vegas even if the 60,000 square foot club is completely empty, which seems to make no sense from a profit maximization standpoint. I mean they could be selling drinks to those people they have lined up by I don’t know… letting them inside? But they know people will see the line and say “hey, I want to go there” and they might end up with a larger head count in the end and are thinking beyond the first 30 minutes of lost revenue.

4. Authority

Another principle deals with authority and obedience. Sounds strange but let me explain. Psychologists have done experiments where they have figures of authority ask people to do objectionable things, and more often than not, they do them, even if they know they are objectionable. NYPD officer rolls up on your car and says “block this alley” and most people will do it, even if it’s allowing the cop to rob a store, because chances are they won’t question someone of authority. We see this used in movies all the time. Criminals dress as the Brinks employees and get people to do ridiculous stuff to help them rob the bank. It’s happened in real life.

Some of the best ways to convey authority are with titles and uniforms. Why do you think dentists like to be called “doctor” so much? It conveys greater authority. We’re taught as kids… “you better listen to your doctor” and so forth. If the “doctor” says you need a $5000 root canal, your response will probably be “where do I sign?” even if you don’t need one. Pharmaceutical and supplement companies do this in their TV ads. Some of those people wearing white coats are actors!

What is the best way to take advantage of this if you don’t plan on being a doctor or wearing a uniform? One great example is by having a prominent spokesperson. Starbucks recently hired Oprah to create and endorse one of their teas. Oprah did her “favorite things” lists which everyone loved, so she must know a great tea right? When LegalZoom first started out they used Robert Shapiro’s face on their homepage and in their ads. Brilliant. People thought to themselves… “hey a prominent lawyer founded this, all these services are good enough for me”.

5. Liking

People are more likely to be persuaded by people that they like. For example, if a straight guy goes into Hooters or Twin Peaks and the waitress tells him he should really try the daily special at market rate, then he’s fairly likely to bite. In a regular restaurant, probably less likely. But attractiveness is just one of the biases discussed.

One way this is used in the startup world is on the “About Us” page. If you view a company’s “About Us” page and like the people you see and the way they carry themselves, then you’re more likely to buy from them. So if your page is goofy and you don’t take yourselves too seriously, then you’ll appeal to those types. However it may backfire and if the majority of your audience is more serious in nature, then those customers might shop elsewhere. CEOs are another example. If a CEO is well liked then their company will have an easier time converting customers. Part of the reason people buy Teslas is because their CEO is a modern day Tony Stark. If he was controversial and had a rough edge, they wouldn’t be as successful. Never forget that people buy from who they like.

6. Scarcity

Perceived scarcity leads to increased demand. Ever wonder why every other commercial says “limited time only” or something along those lines? It’s because they’re using this principle. Flash sales sites are a great example of this. They force you to signup with an email address to “get access to limited quantity deals” and then have a countdown showing the quantity remaining. Visitors think to themselves “i better get that pair of shoes before it sells out” and bam, another sale is made.

Another example of this is gym memberships. If you’ve ever toured a retail gym you’ve most likely been told by the person giving you the tour that if you “signup today”, they’ll waive the enrollment fee. But the truth is that sign at the front is there pretty much every day. But they know that if they pitch you that way, you’re more likely to sign right then and there. The reality is your best chance of getting the best deal is to leave that day and call them on the phone when you’re the one in control. Suddenly that enrollment fee will be gone and they’ll be trimming the monthly fee as well.

Full Series — Click here to see all articles in this series.

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