Business Psychology

Article No. 353
Customer Psychology Findings, by James Larsen, Ph.D.

Closing, Closing, and Closing

Research offers new guidance for an old sales technique.

There is a moment of choice in retail sales when customers stand on the brink of action, and they pause. Their next action will be to either commit to a purchase or to walk away. Everyone in retailing, even online retailing, can testify to the maddening feelings engendered by customers when they walk away. Retailers watch backs leaving their stores empty-handed, and online retailers count abandoned shopping baskets on their websites. These customers didn't come to this point by accident. They were considering an action that would enrich their lives, but releasing their tight grip on their dollars was too difficult, and this reluctance convinced them to abandon the purchase. It is not a new problem in retailing.

Professional sales people employ closing techniques when they encounter customers at the point of purchase which help them release their grip on their dollars and enrich their lives. Closing is very useful in retailing, and whole books have been written on the subject, but there are problems. Inexperienced sales people are often reluctant to attempt to close, and even when they try, they may do it poorly or at the wrong time and actually drive customers away. Experienced, skillful sales people try to help them, but it's difficult. Closing is part intuition, and that's hard to teach. Fortunately, researchers also study the psychology of purchasing and occasionally make contributions that can help, and that's exactly what Ofer Mintz recently did at Louisiana State University.

Mintz studied the actions of 895 shoppers on an online retail site and looked at three factors. The first was simple. Did they complete the purchase? The second was also easy. Did they select higher price choices or lower price choices to explore (price category)? The third factor is more difficult to explain. It was the thinking strategy the shoppers employed. Mintz looked for evidence of two thinking strategies employed by the shoppers. The first was an alternate-based strategy. The second was an attribute-based strategy. Of 895 shoppers, 878 used one of these two thinking patterns as they reached the point of purchase.

With alternate thinking, shoppers consider specific choices, i.e. brand A or brand B. With attribute thinking, shoppers examine attributes of several brands (or models within one brand) for specific features, i.e. performance, color, price, and so on. When Mintz examined purchase, price category, and thinking strategy simultaneously, he found two clear patterns. First, shoppers are more likely to actually buy a product when they are using alternative thinking strategies, and second, shoppers who choose the lower-priced category are more likely to use alternative thinking strategies and to actually complete the purchase.

In the past, we've told our sales people to probe for objections. All of a customer's reasons not to buy a product must be satisfactorily answered before an attempt is made to close the sale. Now, we can add two more things. Notice what price category the customer is exploring (low or high), and notice the thinking strategy the customer is using (alternate or attribute).

Probing questions about expected use of the product give sales people a window into the experience of the shopper. They allow sales people to be present as customers approach that pause in the purchasing process that closing helps to overcome. Mintz's work suggests that when we find shoppers using alternate thinking strategies, they are nearing a purchasing decision, and a trial close may be appropriate, especially if they are in the lower price category of the product. If shoppers are using attribute thinking strategies, then asking expected-use questions and making suggestions to the customer should aim to move customers' thinking processes beyond attribute thinking to consider specific alternatives that will fill their needs. That's when probing for objections and movement toward a trial close will be likely to succeed.

Reference: Mintz, Ofer, Imran Currim, and Ivban Jeliazkov (2013) Information Processing Pattern and Propensity to Buy: An Investigation of Online Point-of-Purchase Behavior. Marketing Science, 32 (5), September-October:716-732.

© Management Resources

See Also:
The Language of Buyers
In the Aid of Empathy
Prized Possessions
The Dirty House Problem

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