I use an approach I call ‘Approval Tiers’ whenever I have any reason to think that I may have difficulty getting detailed credit information or even a personal guarantee. I want to deal with the issue before it comes up so I get to frame it myself. It’s my experience that many customers’ sense of pride causes them to resent us needing to ask for detailed information in order to approve their requests. Sometimes, it’s almost a ‘well I’m me and that’s all you need to know’ kind of attitude.
I’m sure it’s just because so much consumer credit is so easy to get. Therefore, to him, I’ve singled him out and it’s something more, or extra, that I’m ‘requiring’ and in that context my requiring it of him is judgmental and maybe even offensive.
So how I want to frame the issue is that I don’t ‘require’ much at all but at the same time open a door for him to volunteer more in return for more favorable terms or treatment. I do this by introducing approval tiers. Of course, tiered pricing is implied in it automatically. Now I have these prepared for a variety of situations and customer types but they all go basically like this.
Just based on the little I already know about your business, Mr. Prospect, I don’t anticipate any problem getting this done for you very quickly and probably will get it done with no additional information for a ‘Level 3’ approval. Or… Mr. Prospect, you probably don’t want to go through submitting complete financial statements and I don’t think I’ll need them for a level 3 approval. Or, I may be talking to someone other than the owner who doesn’t want to go to the owner to ask for a guarantee. We probably don’t need to go to the owner for his guarantee, we’ll just ask for a Level 3 approval.
You can call it what ever you want but here’s the interesting thing. I’ve been doing this for a lot of years and I can tell you that virtually everyone will ask what ‘Level 3’ means. Here’s your chance to trade better pricing for better information.
How you describe the levels, when they do ask, is important because the associations are what makes people want to change levels. For example, “Level 3 approvals, Mr. Prospect, are used when we have limited information, for example, when the owners don’t care to divulge certain information or for new businesses or for businesses that are rebuilding after prior credit problems.
No successful business wants to be treated as a start up or grouped with businesses with credit problems, so, again, virtually everyone will ask what a ‘Level 2 approval’ needs. Now you’ve got them thinking with you; not against you. You haven’t judged them or ‘required’ anything. What you have done, in fact, is, in a very positive light, given them a good, true, look at how the world of business credit really works.
If you publish payments or do quotes on the web, you can use this very effectively. For example, a web calculator might include an intro that asks what information will be provided, (and list things you need: bank history, ownership, personal guarantees; whatever ---just make it work so that the calculator doesn’t calculate unless those fields are checked. Based on those answers, have it say something like ‘use column one’ or ‘use numbers in blue.’ Then have your calculator display a range of payments, with anything less than complete application information showing the same rates you’d quote to a start-up business.
There’s neither magic nor subterfuge at work here. And please don’t call or write me to tell me why it won’t work because I don’t want to have to give back all the money I’ve made handling it like this over so many years. It’s just good selling. It’s anticipating potential objections and dealing with them in advance by presenting them in a positive light.
I said it’s not magic, but there is a kind of secret key. You have to have a solid, well prepared and well practiced array of scripts to use so that you can explain this quickly, easily and naturally. The more practiced you are with it, the more likely you are to use it and the more naturally it will come across to your prospect. When it comes across naturally to your prospect that reinforces to him that it applies to everyone and he no longer feels ‘singled out’ by being asked for normally required credit information.