CLOSING ON MAJOR GIFTS: Classic Sales Training Techniques Applied (or not) to Nonprofit Solicitations
Very few set out with the career goal of becoming fundraisers. Historically, nonprofit executives (including fundraisers) emerged from the ranks of financial professionals, business leaders, academic faculty, or the nonprofit’s most experienced program staff. In the last twenty years, however, the nonprofit world has grown to the extent that most liberal arts colleges now offer majors in nonprofit leadership.
In contrast, a relatively small number of successful account executives make the transition from direct sales to fundraising. That’s both good and bad. It’s good because many of the best salesmen don’t make great fundraisers. It’s bad because fundraisers coming from other professions, or from nonprofit leadership programs, don’t have the background to determine if and when traditional sales tactics are appropriate.
This month’s post contains a few observations about traditional sales training, closing techniques, and major-gift solicitations.
SMALL SALE / LARGE SALE
The Huthwaite corporation spent twelve years researching presentation strategies and their correlation to sales performance. They observed over 35,000 sales presentations, which was by far the most extensive study up to that time. Neil Rackham, President and Founder of Huthwaite, first published the results in 1988 under the title SPIN Selling.
Traditional sales training, which was developed for small consumer sales, just didn’t work for large sales.
In the initial stages of the research, increased training and use of traditional closing techniques improved sales in some cases, while in other cases actually hindered sales. Results continued to be mixed until researchers began to factor in the size of the sale. The result was that the data confirmed over and over that traditional sales training, which was developed for small consumer sales, just didn’t work for large sales.
“Smaller sales” were defined as those with:
- Low cost and low risk of a decision to purchase
- Short selling cycle (requiring only a point of purchase decision)
- No long-term commitment to a relationship with salesman or company
- Independent decision requiring no additional consultations
“Large sales” were characterized as:
- Higher cost (a complex computer system, not a Girl Scout selling cookies)
- Higher risk (buyer might be reprimanded or even fired for a wrong decision)
- Sales that would require multiple visits (buyers needed to think through such a large purchase)
- Purchasing decisions discussed with other individuals when the salesman was not present (need to consult with others)
- Purchase would require ongoing relationship with a salesman or company
When performance results were separated based on the size of the sale, the results became very consistent and significant — significant both statistically and operationally. In smaller sales, as the number of attempts to close increased, so did the number of actual orders. However, as the size of the sale increased, the less closing tactics were effective. Not only that, in larger sales the number of attempts to “close the deal” during a presentation actually reduced the likelihood of a sale.
The conclusions of Rackham’s studies were controversial to say the least because they contradicted the sales training assumptions of almost every major corporation in America at the time. Salesmen were universally trained to use multiple closing tactics and were evaluated by the number of attempts-to-close used in each sales presentation — no matter the size of the sale.
APPLICATIONS TO FUNDRAISING
This is just common sense. If you press people like a used car salesmen to make big decisions on the spot without deliberation or consulting with colleagues, you’re going to quickly alienate potential donors. Though many corporate executives have come around to the Huthwaite research, the ABC approach (Always-Be-Closing) still persists with some executives — hanging onto the strategy as if it were the cardinal doctrine in all sales.
In larger sales the number of attempts to “close the deal” during a presentation actually reduced the likelihood of a sale.
It persists among many fundraisers and nonprofit executives too. In fact, it’s often harder for nonprofit leaders without sophisticated sales and customer-relations experience to understand how presentation dynamics change with the size of a donation. So, here are a few takeways that are applicable to the nonprofit world.
1. The Always-Be-Closing approach persists among sales managers for a simple reason. Without a sophisticated understanding of client relations, sales managers pressure their salespersons to make certain quotas by increasing their use of closing tactics. This is no different than fundraisers being pressured to raise immediate cash. There are a lot of reasons why an organization would benefit from a long-term cultivation-based approach rather than a hunter-gatherer approach. However, for the individual fundraiser trying to meet his/her quota, “a bird in the hand is better than two in the bush.” See INSTITUTIONAL SUSTAINABILITY: Transitioning from “Hunter Gatherer” to a Cultivation-Based Fund Development Strategy
2. What you measure and monitor tends to improve. How you measure overall fundraising performance will gradually shape the overall character and approach of your entire development department. We can’t expect long-term cultivation if we only reward short-term results. So, be careful for what you wish (and reward) because you just might just get it. See WHAT’S ON YOUR DASHBOARD? Identifying Your Key Performance Indicators.
3. With major gifts or planned gifts, the longer you give a person(s) to decide, the larger and more likely the gift. This has limits of course. There’s a point in time when the likelihood tends to diminish. But even more important than a set amount of time for a donor to think or plan is the manner and frequency with which a fundraiser continues to cultivate that gift. The largest single gift I ever secured took eight years of cultivation and conversations; the second largest required to six years. Regarding the timing and season of soliciting the gift proposal and closing on the gift, see CULTIVATION STRATEGY: Fundraising for Your First Quarter
4. Closing techniques definitely have their place. If telephone solicitors asking for a $20 donation are not proficient in a variety of closing techniques, they’re not going to be very productive. At some point, you have to close, regardless of the size of the gift. Some have a hard time, like a pilot on his first solo continually circling the field trying to decide how to land. See THE EFFECTIVE ASK: Sticking to a Script or Flying by the Seat of Your Pants
5. Every gift appeal has its own unique timing. Not giving time for large gifts to be cultivated will cause you to lose the gift. A donor might think or say, “Well, if you insist on an answer right now, the answer is NO.” Conversely, on a small gift, being longwinded, delaying the decision, or failing to close will cause you to lose that gift too.
6. What would be considered a token gift to one donor would be considered a major gift to another. If you don’t have a relationship with a particular donor, be careful about making assumptions about how easily they arrive at a giving decision. A consumptive lifestyle is not a sure indicator of a potential donor’s assets or giving capacity.
7. Just because a fundraiser is successful with annual gifts, doesn’t mean he/she will do well as a major gift or planned gift representative. Unless they adapt to the long-term strategy of the cultivation of large gifts, relying on what made them successful with smaller annual gifts will work against them as a major gift fundraiser.
SOME OF THE BEST major-gift fundraisers I’ve ever known were not the greatest closers. But all of them were great gift cultivators and knew when to close.
Eddie Thompson, Ed.D.
Copyright 2015, R. Edward Thompson