Sales Strategy: Never Let Them See You Sweat?

What’s your favorite sales movie? Glengarry Glen Ross? Wall Street? Jerry Maguire?

Here’s one that might not have made your top ten list for sales, but that may help you take a fresh look nonetheless.

September 1961 saw the release of the classic The Hustler. Starring Paul Newman as “Fast Eddie” Felson and Jackie Gleason as Minnesota Fats (with great performances by Piper Laurie and George C. Scott), it portrays what happens when great talent meets self-destructive impulsivity.

Small-time pool hustler Felson takes on the legendary pool shark Minnesota Fats in an epic all-night duel of young talent vs. old savvy. As the game continues into the early daylight hours, they take a break. Felson, nearly exhausted, collapses sweaty and drained into a chair with yet another pack of cigarettes.

Fats, meanwhile, goes into the men’s room and emerges minutes later freshly shaved, wearing a newly laundered tux. Felson’s confidence is shattered by this show of confidence, and he goes on to lose disastrously.

Never let them see you sweat. That’s the wisdom Minnesota Fats employed, and in a game that’s intensely mental (what games aren’t?), it gave him a decisive edge. A great pool strategy, to be sure.

And a terrible sales strategy.

Unless you’re selling widgets B2C at $19.99, there are three principles that we don’t talk enough about in sales: your objective, your character, and your relationship to the customer. Never letting them see you sweat violates all three. Here’s how.

  1. Your Objective

A game of pool is a zero-sum game, pure and simple. There is a winner, and there is a loser. There is no win-win, and there is no synergy outside the game itself. Within the boundaries of the rules, psych-out strategies to beat the opposing player are fair game. And if that’s how you view sales, you’ll be seduced by Minnesota Fats’ clever stratagem.

But that also means you think of your customer as the enemy. You think your entire customer relationship is a series of one-off unrelated transactions, all win-lose, so there can be no accrued trust or synergy. You will also, quite naturally, seek out more ways to put one past your customer.

What’s the alternative? Think of your customer as your partner. Think every transaction is connected to every other transaction, past and future, in an ongoing narrative of relationship. There are economies of scale and levels of relationship, each adding more and more financial and psychic value at every step.

In this view, your objective is to help your customer, long-term. Period. All else follows.

  1. Your Character

If you believe “never let them see you sweat” is a great strategy, then you have adopted duplicity as a core value. That can be a treacherous decision.

It means you can’t be authentic. It means you can’t relax and let down your guard, lest the customer see your true motives or objectives. It means there is a limit to how much trust, information sharing and collaboration can go on between you and your customer.

Our beliefs drive our actions, and our character drives our beliefs. If you continue to hold a duplicitous perspective in all your customer relationships, you will behave duplicitously and be seen as a duplicitous person. And in a world that is increasingly online, transparent, and available to all, it’s more and more likely that duplicitous behavior will be exposed.

  1. Your Relationship

If you believe “never let them see you sweat,” then you’ll never have a rich relationship with “them” no matter who “they” might be. All human relationships are characterized by a degree of shared risk and vulnerability. There is a reason why in all cultures there is a set of rituals we go through in business before “getting down to business.” They may be as short and simple as, “How ’bout them Bulls,” and “I see you went to State also,” or they may be as complex as late night drinking bouts on successive visits, but they are there for a reason.

The reason: we do not trust people who never let us see them sweat. We interpret their guardedness as secretive, threatening, fearful, and unfriendly, masking motives about which we know nothing but which are suspect. If you don’t let me see you sweat, I conclude you’re probably hiding something, and you’re not the type I can trust. That’s no way to win a sale.

Never let them see you sweat? Au contraire. In Finland, they literally invite customers into the sauna to sweat together! Other cultures have their own approaches, but the aim is the same. Good selling means customer-focused objectives, a habit of transparency, and a commitment to relationship.

If you get those right, you won’t have to sweat in the first place.

 

 

 

 

 

 

Why Listening to Sales Experts May Be Hazardous to Your Sales

A sales expert, I’m not. A trust expert, I think I’ve become. And it turns out, there’s a big overlap.

One of the interesting points in Neil Rackham’s classic SPIN Selling is that certain techniques developed for small-item selling – notably closing – actually backfire when applied to larger, more complex sales. In other words, “sales expertise” of a certain kind may actually be hazardous to your sales health.

That may not seem like much of an insight more than 25 years after the book’s publication. Since then, we have seen major growth in thinking about B2B sales, as well as the transformative impact of the internet on the sales function. Nowadays no one would be caught dead trying an “assumptive close” in a modern B2B sales interaction.

But does that mean all sales expertise these days works more or less? I don’t think so. In fact, there’s a glaring assumption at the heart of almost all sales systems, which, if not properly understood, will actually decrease your sales effectiveness just as much as improper closing techniques.

It is the assumption that the point of selling is to get the sale.

What Is the Point of Selling?

That may seem like a stupid question, with an obvious answer. What else could the point of selling be except to get the sale? And I’m not talking about the difference between single transactions and repeat business either. I’m talking about the very purpose, the underlying goal, aim, and objective of the salesperson, sales process, and sales function. What else could the purpose be except to get the sale?

The alternative purpose, may I suggest, is to help the customer. That is not a trivial distinction; it’s a meaningful one. It’s also a powerful distinction, and it’s one easy to achieve. But if you do achieve it, you’ll do better on many dimensions – including sales.

To see why, let’s first explore what it would mean to have a different purpose for sales – a purpose other than to get the sale.

Design Implications of Helping the Customer as a Goal

Suppose your primary purpose was to help a customer.  Just suppose, just for a minute. What exactly would you do differently?

You’d be less concerned about whether you won or lost the sale. You’d spend a little more time on situations where you thought you could help – and a little less time where you thought you couldn’t. You’d take more time with leads to help them determine the best way for them to get help. You would often end up referring them out to other related-service providers where you thought they might get better help.

You’d seek out slightly different leads and targets than if you focused solely on where you thought you could sell. You’d view your competitors differently – as alternative offerings to help your customers get what they need. You’d give up your time and expertise on occasion if you felt it would help your customers advance a key cause. Conversely, you might be quicker to embrace value-billing in cases where you clearly bring value to the table.

You’d talk less about your own capabilities, and more about what would be good for your customer. You’d be naturally curious about what your customer needed and what would make their business better. Your curiosity would extend outside and beyond your company’s service offering to include those of other firms.

If your organization similarly supported a goal of helping the customer, then the metrics you operate under would be changed as well. Instead of an emphasis on quarterly sales results, progress against closing, and forecasted probabilized backlog rates, you’d see consumer-focused metrics that speak to customer performance and result of that performance. Noticeably absent would be much of the fine-toothed combing by lawyers enumerating the thou-shalt-nots of the relationship.

Operationalizing a Customer-Helping Goal

Looking at the above statements, you’re probably having one of three thoughts:

  • “Those aren’t that bad, actually. We could do with a bit more focus like that.”
  • “Yes, but you have to make money.”
  • “Yes, but you can’t let customers just take advantage of you.”

Note that thoughts two and three have an implicit assumption: that if you don’t focus on getting the sale, you probably won’t get the sale. And that’s where the miracle happens.  Because precisely the opposite is true.

People don’t like to be told what to do. People don’t like to feel controlled. People respond positively to a sense that they are being listened to, and to people whom they feel have their best interests at heart. We respond positively to generosity, and we respond negatively to greed. We tend to return favors and avoid those who have burned us.

In short, we reciprocate. The lessons of game theory, marriage therapy, and political organization all point in one direction: favors done, attention paid, and interest shown all beget the same in return. This simple truth is deeply embedded in our simplest human interactions (think handshakes and smiles) and our most complex ones as well (cultural affinities and political alliances).

The main result of reciprocation is – more reciprocation. If you listen to me, I will listen to you. If you treat me well, I will keep coming back. If I buy from you and you respond well, I’m likely to keep buying from you.

Unless, that is, the seller gets selfish. All bets are off to the extent that we perceive the seller as self-oriented, selfish, manipulative, and driven only by his own needs. If we as buyers feel objectified, treated solely as walking wallets by the seller, then we reciprocate. We coldly calculate the value of the seller to us and become willing to walk partly because we also feel insulted by such behavior.

The Paradox at the Heart of Great Selling

The best sales come from interactions where the sale is not the goal, but a byproduct – where the sale is a natural outcome of an attitude of other-focus, genuine concern, and focus on the other. Where the attitude is long-term, not transactional, and built on an assumption of win-win rather than of scarcity.

There’s a paradox here. You do your best selling when you stop trying to sell, when you simply focus on doing right by the customer. That doesn’t mean you turn into a non-profit charity. There is still a role for profitability metrics, CRM systems, and funnel statistics. But they must become subordinate to the broader goal: helping your customer. Dial them back 90%, lengthen their timeframe, and don’t think of them while interacting with customers.

Are there customers who’ll take advantage of you? Sure, though not nearly as many as you think. And those who act that way are the ones you gift to your competitors.

If you help your customers, they’ll help you. That’s a rule that doesn’t need your thumb on the scale to work. Don’t force it. Make customer help your goal.

 

Don’t Focus Just on Skillsets

It’s become a truism: you can’t manage what you can’t measure. (Actually, it’s quite a debatable proposition.) A corollary is that therefore what matters are observable behaviors, hence the essence of training is to develop skills that generate those behaviors. We’ve all seen, in the opening page of nearly every corporate training session’s objectives statement, “Participants will learn the skills associated with the behaviors of…”

But focusing on skills alone produces dangerously myopic results.  Let me use a sports analogy here – let’s go with golf.

Whether you’re stroking a 3-foot putt or hitting a long drive, two kinds of things can go wrong:

  • You may do something incorrectly, e.g. swing in a bad plane or aim the club face wrong. This will result in the ball going other than where you intended.
  • You may think incorrectly, e.g. correct some last-minute perceived error or try to set a course record. This too will result in the ball going other than where you intended.

If the results are the same, which error do you fix? Does it matter? Remember that mental errors manifest in physical ways. A desire to “kill the ball” may result in swinging in a wrong plane. Worrying about missing the putt is likely to cause you to over-control and flinch, thus aiming the club face wrongly at point of impact.

Fixing the “doing” is improving our skillsets. It includes things such as altering the grip or moving the ball forward in our stance. Fixing the “thinking” is improving our mindsets. It includes advice such as “swing through the ball” or “trust your swing.”

Mindsets and Skillsets

The metaphor for sales is clear, I hope, though it applies equally to other fields of advisory business relationships. Sometimes we do or say the wrong thing. More typically, we don’t do or say the right thing. But how do we know which issue-set to focus on in sales? Does the golf metaphor give us guidance, or does it just help define the problem?

It’s been my experience that when it comes to sales – here comes a gross generalization – we put too much emphasis on skillsets and not enough on mindsets. A couple of qualifications: my experience is mainly built around B2B sales, with a heavy focus on complex and/or intangible products or services, and a concentration in professional services. So, I have my biases, just to be clear, in what follows.

We Live In a Skillset World

In the Western world of business, the sub-world of sales has not been immune to some larger trends. Those include, first and foremost, a recent massive trend toward quantification.

Cloud computing is relatively new. iPhones are only 10 years old. Computer laptops are only a few decades old. The web didn’t exist before the 90s. The spreadsheet was invented only in the late 70s. And the 1981 IBM PC had one (big) floppy disc that held 64K (another optional drive doubled capacity all the way to 128K).

Two other phenomena are worth mentioning: the creation of Michael Hammer’s Business Process Re-engineering strategy and the invention (courtesy of the Boston Consulting Group and Michael Porter) of the quantitative approach to competitive strategy.

These big three—computing power, process perspective, and competitive calculation—changed the way business is done. In a nutshell, we began hearing that mantra about “If you can’t measure it, you can’t manage it” and “You get what you measure.” Business began to view organizations as processes, not hierarchies, with all the data that come with processes (not to mentions manuals and procedures). All this happened within recent times for Gen X managers (but feels ancient to millennials).

Sales Skillsets

These trends greatly influenced (led to?) CRM systems. Sales trainers (influenced by behaviorally trained organization trainers) began to phrase training in terms of measurable behaviors. And after all, isn’t sales the ultimately quantifiable function?

In a skillset world, two assumptions keep popping up: one is a linear approach to cause and effect, and the other is a belief in breaking things down into pieces. The first belief views sales as “a sale, repeated over and over.” You’ve all seen depictions of sales processes, typically rightward-moving arrow diagrams. They all boil down to, “If you do X, you’ll get Y.”

The second assumption is that we gain greater control over a process by breaking it down into finer and finer pieces. This assumption has been greatly enabled by the availability of data. (It’s also been only a few years since the word “analytic” was turned from an adjective to a plural noun).

Sales Mindsets

Of course, with data and behavioral skillsets come many advantages. But there are two advantages to focusing more on mindsets.

First is that the more complex the situation, the more difficult it is to map out all the appropriate skillsets. A level of generalization, an ability to deduce specifics from the general, allows not only more customization, but more speed. With skillsets alone, all we can generate is practiced behavior. With mindsets, we gain the ability to improvise.

Put another way – mindset scales; skillsets don’t.

The second benefit of mindsets is that the more human the buyer, the less likely they are to respond to mechanistic behaviors (or the perception thereof). Sometimes we just want to interact with a chatbot, and we want it to just plain work. But other times, we want to interact with a human. And when we do, we want the person to do more than just recite rules, try to manipulate us, or emulate a robot.

Mindsets don’t guarantee behavior. No golfer ever succeeded by simply envisioning a swing and never practicing.

But if all you do is increase your repertoire of behaviors, your customers won’t be able to tell you from an automaton. The really effective salespeople have internalized mindsets, and they can generate the appropriate behaviors “on demand.”

 

 

 

 

 

 

 

 

 

 

Wants vs Needs? Dylan and the Stones Weigh in on Sales

Should you sell to someone’s wants, or to someone’s needs?

It’s a much-discussed topic in sales. Some say you should sell to wants, not needs.  Others say exactly the opposite. And some say you should sell to both.

 

Clearly the case cries out for a good definition. I checked in with the well-known sales consulting firm of Jagger, Richards & Dylan.

You Can’t Always Get What You Want

Never mind Maslow’s hierarchy of needs, let’s talk about Mick Jagger’s. After all, this was the 100th greatest song of all time; whereas Maslow, as far as I know, never even made the Billboard Charts.

The tagline is “but if you try sometimes you might find you get what you need.” In other words, wants are higher, deeper and often more unattainable than needs.

There’s more than one way to define the difference between wants and needs, but I’ll settle for the definition used by the Greatest Rock ‘n Roll Band in history. But if that’s not good enough for you – wait, there’s more!

Robert Zimmerman, Salesman

Bob Dylan, from Blonde on Blonde, also wrote about sales:

An’ she says, ‘Your debutante just knows what you need; but I know what you want!

Stuck Inside of Mobile, with the Memphis Blues Again

Dylan and Jagger are pouring from the same bottle of wine. Here too, the idea of one’s wants transcend that of one’s needs.

Needs are tangible things we’ve got to have, necessary conditions: toothpaste, bicycles, audits, CRM systems. Wants are aspirational: hopes, wishes, dreams, desires, visions.

The Roles of Wants and Needs

Which should you sell to? What do buyers relate to? The right answer (it’s remarkable how often this is the right answer to seeming quandaries) is “both, at different points.”

Here are a few hints.

1.    People buy with the heart, then rationalize it with the brain.

In other words, sell the wants and let everyone talk about the needs they resolved by making that decision. The wants are dealt with more personally, arm-around-shoulder; the needs are what you tell the purchasing committee after the fact about why you did the deal.

2.    People prefer to buy what they need from those who understand what they want.

In other words, if you’re going to sell stuff that people need, first tap into their wants. You don’t even have to give them what they want, you just have to be someone who can tap into it. That makes you a seller someone wants to buy from.  The greatest exponent of this idea, I find, was Bill Brooks (see my interview with his son Jeb).

Basically, you need to touch people on both fronts.

  • If you only sell to needs, you’re a features-only kind of person limited to competing on price.
  • If you sell only based on wants, you might do well in designer bricks or perfume, but forget about selling complex systems.

Be well-rounded. Listen to both the Stones and Dylan.  Until you do, you’re just Blowin’ in the Wind, and will get No Satisfaction in sales.

Sometimes the Best Marketing Looks Like Sales

I got an email. It was from a 50-ish owner of a small CPA firm – call him “Jose” – with three competing offers to buy his practice, and a few complicating life factors. He wanted advice, and wondered if we could talk.

I don’t do much coaching or consulting, and he almost surely couldn’t afford my rates. Nor am I an expert in life planning, or in valuations.

But I said sure, call me in the morning, we’ll talk – no charge.

We had a very good chat for about 45 minutes.

I think I helped him. I know it was useful for him to talk to a third party able to comprehend his situation. I believe he’ll make a better decision, and I’m sure he’ll feel better about it. Value was created for him in our talk.

But what about me? I knew going in there was no chance of a sale from him – not now, not in the future, not anytime. And my rate was zero. Was this a foolish, impetuous, soft-hearted, flakey thing to do?

No. I like doing nice things, but I’m not a saint. Nor did I consider Jose a pro bono case.

Yes, it was a nice thing to do. But, I would argue – it was also good business.

Sometimes a sales lead that we would otherwise screen out can be a good marketing investment. Sometimes you can do well by doing good. Sometimes we need to let sales leads bleed into marketing budgets.

“Jose” will never buy from me (though other Jose’s might). But he will remember what I did for him; even more, that I was willing to help.

Jose is someone who cared enough to identify alternatives, choose me, and seek me out. He spent time to find out who I was, what I did, whether and how I might be useful to him. He was probably willing to pay for consulting. He was an educated, willing buyer, a near-client with influence on other potential clients.

For me, he was not a qualified sales lead. But – he was one helluva marketing resource.

He now knows me – the sound of my voice, how well I think on the spot, the way I interact, my sense of humor. He knows me better than one of 200 people in an audience for a speech; much better than 500 people reading this blog, or an article of mine.

Total investment: 45 minutes. Most sales people will tell you that’s an extravagant waste of sales time, an inefficiency that is off-scale. Just think of the waste in extrapolating such activities to scale!

But most salespeople would be wrong. This is not about efficiency in selling: this is about effectiveness in marketing.

The return is that Jose will tell X people about our discussion. That’s X people who will hear first-hand about a 1-to1 interaction. That’s a powerful testimonial.

The choice is not between being “good” or making money; they often go together.

Try, for just a few hours per month, shifting your sales practices to subsidize your marketing by investing in a lead.

Don’t get lost in charge-back accounting. The benefits will eventually accrue to your firm, and to you personally. Both.

 

The Traveling Salesman? Or the Prisoner’s Dilemma?

The Prisoner’s Dilemma is a classic conundrum in game theory. It purports to explain why two people might not cooperate, even if it is in both their best interests to do so.

It turns out that the solution to The Prisoner’s Dilemma is also the solution to a great many sales problems—those in which your customer doesn’t trust you. Are you living in the Dilemma? Or are you living in the solution?

The Dilemma of the Prisoner

Here is a classic version of The Prisoner’s Dilemma:

Two suspects are arrested by the police. The police have insufficient evidence for a conviction and, having separated the prisoners, visit each of them to offer the same deal:

  • If one testifies for the prosecution against the other (defects) and the other remains silent (cooperates), the defector goes free and the silent accomplice receives the full 10-year sentence.
  • If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge.
  • If each betrays the other, each receives a five-year sentence.

Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act?

What’s a poor prisoner to do?

If you analyze the situation rationally (the way a game theorist or economist defines that term), your odds are a lot worse if you remain silent – either you get 10 years or six months. But if you rat on your partner, you either get out free or, at worst, five years.

So, reasons the economist, Option A’s average “value” is five years and three months in prison. Option B’s average is two and a half years. “Ah ha,” says the economist’s rational player, “I’ll go for Option B.”

Of course, the other player does the same math and comes to the same conclusion. As a result, each gets five years in prison—a total of 10 prison-years between them.

The dilemma is that – if only the prisoners had cooperated with each other, they could have each gotten out with just six months in prison – a total of one prison-year between them.

The question is: why don’t they cooperate?

At least, that’s the economists’ question. In the real world, cooperation is quite common.

So the real question is: why do so many people listen to economists?

The Dilemma of the Salesperson

Before answering the Prisoner’s Dilemma, let’s note the similarity with The Salesperson’s Dilemma.

The salesperson has a similar series of trade-offs. For example:

  • “I could take some extra time to study up on tomorrow’s sales call, getting to know more about the prospect. That would improve the odds of my getting a sale tomorrow.”
  • “On the other hand, I could make another cold call with the time saved if I don’t spend it studying up for tomorrow’s call.”

Or, another example:

  • “I could tell them we have very little experience in this area, which would increase their sense of my honesty, which would help me in the long run.”
  • “On the other hand, experience might be the key in getting this job, so perhaps I should make the best case I can and fudge the rest.”

Still another:

  • “I could share a lot of my knowledge with them, which would really impress them and make them grateful to me.”
  • “On the other hand, if I give it all away in the sales call, they might just steal my knowledge and not pay me for it – perhaps I should wait until after we have a signed contract.”

And one more:

  • “I could go out on a limb and make some really far-sighted observations that would help them—it would go way beyond what they asked for.”
  • “On the other hand, we don’t have much trust built up yet. They might see that as presumptuous or unprofessional; I’ll just answer the questions they asked.”

Just as with The Prisoner’s Dilemma, if the salespersons continually choose Option B, they will sub-optimize. They will do cold calls, leading with no relationship, taking no risks, treating the customer like a competitive enemy, and offering no great help.

In other words, they’ll lose. Just like the prisoners.

In theory, the prisoners are identical, whereas the salesperson and the customer are distinct. But that’s theory. In the real world, sellers somehow tend to find buyers who are similar to them. Sellers who are fear-driven and guarded somehow often find buyers who justify their worst fears. (Or, what amounts to the same, sellers project fear, and buyers reciprocally return the same – as humans are wont to do).

Both seller and buyer often operate from the Prisoner’s script. And the result is just as sub-optimal.

The Prisoner’s Solution

As postulated by economists and game theorists, The Prisoner’s Dilemma is usually presented with two key assumptions:

  1. The game is played only once
  2. The players do not know each other

The solution lies in changing each of those assumptions. If you tell the players the game will be played 10 times, cooperative patterns begin to emerge. If it’s played 100 times, cooperative strategies take over.

If the players are given information about each other, they become less abstract to each other. If the information is personal, then the relationship changes tone as well.

These two dimensions – time and relationship – are critical. Without a sense of continuity over time, and without a sense of personal relationship, those playing the game will opt to “rat out” each other – even knowing that the result, system-wide, is negative for them on average. But given time and relationships—the optimal solution emerges. Everyone is better off.

In other words, the solution to behaving stupidly is to develop personal relationships over time. Now let’s see how that insight applies to selling.

The Sales Solution

The sales solution should look pretty obvious now. Suboptimal behavior is the result of short timeframes and shallow relationships. In a Prisoner’s Dilemma world, both buyer and seller fear each other, suspect the worst, don’t have relationships beyond the transaction, and are interested primarily in their own self-aggrandizement, without regard to cost to the other party.

If that sounds familiar, just look at what sales topics are hot these days: sales automation, lead screening, CRM, social media lead generation, predictive analytics, search-based prospecting, multi-channel messaging. Think about the last step in nearly every sales process model you’ve seen—closing.

What all these subjects have in common is a view of selling that is a) transactional and b) impersonal. In other words, they have short timeframes and weak relationships—two things sure to hurt sales.

Selling benefits from longer timeframes and better personal relationships. If you can stop thinking like an economist and work to eliminate the fear you and your buyers have, you’ll benefit from the long-lasting trustworthy relationships that develop as a result.

When to Offer a Lower Price

Few decisions in business have such dramatic effects on customer perception as how you handle your pricing – in particular, when and how you offer discounts.

People may evaluate your products, or your service offerings, by averaging out multiple experiences. But drop your price just once, and see how hard it is to recover. For a large-scale example, recall Bill Ackman’s painful failure to revamp the image of JC Penney—away from frequent discounts to everyday low prices as a strategy. For a more personal example, just ask yourself – how often are you able to recover your normal pricing rates after having given an initial discount?

Yet in professional services and complex businesses, we play with offering discounts all the time. We tell ourselves, ‘The client wants it.’  ‘We might lose without it.’  ‘The competitor is cutting rates.’ ‘We can’t look inflexible.’  ‘What’s the big deal, how often do we get full rate anyway?’

Yet you’re right to be suspicious about the effectiveness of random hip-shooting when it comes to offering a lower price.  Shouldn’t we have some kind of strategy?

Don’t Just Stand There: Stand for Something

There is no one “right” approach to offering discounts. Your approach will vary with your business, your objectives, and your markets. But there are some things every approach should do:

  • You should have a rule for when to discount
  • That rule should be easily explainable to clients
  • You should be willing to live by the rule.

That may sound obvious. But how often have you heard things like, “Don’t tell Bill that we gave XYZ got that price; it’ll only encourage him to want it,” or “Those guys’ll do anything to get the business.” Those statements indicate a lack of policy – which is death on your reputation.

What to Stand For

Again, your business will vary. Here’s what I decided for mine. I run a high-end professional services business, offering speaking, training, coaching, and related services. I want to be known for solid relationships, high quality, professionalism, and subject matter expertise. And in my case, because the subject matter is trust, I also need to be seen as completely above suspicion.

It’s clear, then, that I need to articulate and live by some rules about when to discount. Here’s what I came up with over the years.

1. Frequency. I want to be at the opposite end of the spectrum from a JC Penney strategy of frequent discounting. I don’t want clients looking for bargains. If they’re looking to price shop, I want to send a not-so-subtle message that they’re in the wrong place.

2. Exceptions. To help that message, I need to be very clear about when and where discounts are appropriate. In my business, I can clearly state three such situations:

Volume. In my business, perhaps the biggest cost is cost of sales (the time, expense, and investment it takes to generate professional fees). It stands to reason that if someone can reduce my cost of sales, I have room to pass some of those savings along in lower prices.

The biggest example of that is simply a volume discount. The economics of selling one training session to 10 clients vs. selling 10 training sessions to one client are pretty clear. I am happy to receive multiple orders, and I’m happy to offer volume discounts to reflect it.

For me, volume discounts are easy to explain and easy to justify.

Special SituationsFor Me. Sometimes I want to work in a new industry or with a novel offering.

Those situations are as important for me as they are for the client. In those cases, I will offer a significant discount. I don’t want to shave nickels; I want to send a message about what is important and what isn’t. And in those cases, it’s about the learning. Those kinds of discounts rarely happen.

Special Situations—For the Client. Non-profits never have the kind of money that corporations do; most associations are limited as well. I don’t say yes to all those requests, but when I do, it’s only reasonable to price “off-label.” (Government is a special case, and one I won’t go into here.) And yes, there are a few ‘friends’ discounts from time to time.

3. Non-Exceptions. That’s about it. That leaves a lot of other situations where I choose not to discount. It’s worth pointing them out:

Pleas for budget. Sorry, I have a list of charities I contribute to: corporations with a squeezed budget are not on the list. Make that ‘never on the list’ if you’re in the pharmaceutical or financial services industries, or if you have office space in midtown Manhattan.

Bargaining. I have a simple way of declaring that this is not a bazaar: transparency. I explain my business model, explain when and how I give discounts, and – that’s it. I recall one client who, after our initial phone call, said, “I assume that if we go ahead, you’ll grant us our customary 20% discount.” He assumed wrongly.

The Positive Alternative. “Just say no” may (or may not) be a good strategy for drug usage, but it’s not a satisfactory answer to a client on the receiving end. None of us like to be told no, even with a great explanation.

Over the years, I developed another business practice that turns out to have a great side benefit: making people appreciate my saying “no” to discount requests. That practice is to simply take a few minutes extra to talk with them about their situation and refer them to someone else who can help them.

I am a very small player in all the markets I play in. I am far from the only one providing great service. If someone doesn’t happen to fit my business model, they may be caviar and champagne for someone else’s model.

It costs nothing to spend a little time thinking about alternatives for clients who don’t quite fit with my needs, and it generates huge amounts of goodwill. It’s a small investment with a big marketing return: they may come back when they have a need that is a fit with me, and they may speak well of me to others. Not to mention, they’re no longer complaining about how I don’t discount.

Again, my model is not the only one. You have to decide what’s right for you. But whatever it is, it should be clear, it has to be explainable, and you should be willing to live by it.

The Biggest Trust Myth of All Time

A lot of casual bloggers out there – and a few not-so-casual writers, even some famous people – are fond of quipping about trust in ways that at first blush sound wise. 

But often, these aphoristic musings turn out on closer inspection to be untrue.  They are pop wisdom, bubble gum sayings, reflecting a failure to apply critical thinking to the subject of trust.  They belong more to the genre of inspirational wallpaper postings on Pinterest

Case in point: the common claim that “trust takes years to build, and only minutes to destroy.”  It may be the Biggest Trust Myth of All Time. 

First, let’s point out some of the myth-purveyors – then we’ll get to why it’s a myth. 

The Ubiquity of the Biggest Trust Myth

A simple Google search finds the following:

“It can take years to create trust and only a day to lose it.”Angus Jenkinson,  From Stress to Serenity: Gaining Strength in the Trials of Life    

“It’s [sic] takes years to build trust and minutes to lose it.” @Relationsmentor, with 66,000 Twitter followers

“Trust takes years to build, seconds to break, and forever to repair.”Amy Rees Anderson, Balancing Work and Family Life Blog

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”Warren Buffett, America’s favorite billionaire

“Trust is not something you can take for granted. It takes months – sometimes years – to build. Unfortunately, you can lose it overnight.”...Michael Hyatt, author, virtual mentor, online leadership platforms

“Although [trust] takes a long time to develop, it can be destroyed by a single action.”…Frank Sonnenberg, author, leadership expert

“It takes time to build trust and just seconds to blow it away.”Dunham+Company, strategic marketing and fundraising services provider

“It takes years to build trust and minutes to lose it.”Vontae Davis, 2X Pro Bowl cornerback for the Indianapolis Colts

“It takes time to earn [trust in leadership] but it takes no time to lose it.”Building Blocks of Agency Development: a Handbook of Life Insurance

“It takes years to build trust and a single moment to lose it.”Steve Adams, Children’s Ministry on Purpose: a Purpose-driven Approach to Lead Kids Towards Spiritual Health

All right, you get the idea. Note there are a few respected names on there, along with all the casual opiners. Now let’s see what’s wrong with it. 

Myth Busting: The Relationship of Trust and Time

Let’s chip away at this myth a piece at a time.

First, a lot of trust doesn’t take time at all. Most trust gets created in step-functions, in moments-that-matter, in our instantaneous reactions to what someone says or how they comport themselves. We humans are exquisitely tuned relationship detectors, finely honed over eons of evolution to rapidly assess a host of factors revealing others’ good or bad intentions toward us. We make snap judgments because we’re built to do so (and we generally do them well).

Second, the kind of trust that does take time is just one very particular subset of trust: the kind of trust that depends on reliability, dependability, predictability. Almost by definition, the assessment of reliability requires the passage of time, because it requires repetition – and repetition only happens in time. 

But reliability is far from the only, or even most powerful, form of trustworthiness. There is credibility, the sense that the other party is smart, capable, expert, competent – an expert. There is intimacy, the sense that the other party understands us deeply, respects our innermost feelings, and is a safe haven for personal issues. There is other-orientation, the sense that the other party has our best interests at heart, rather than just being focused on themselves. 

When time-based trust is up against the other types of trust, it is a weak force. When Bernie Madoff’s clients saw a brief hiccup in results, they didn’t lose all trust in him: after all, he had credentials. He understood them (or so they felt). And he donated to their charities. What’s a little blip in his track record, with all that to  fall back on?

When a West Virginia lab reported that Volkswagen’s on-the-road emissions results varied massively from those in the lab, Volkswagen didn’t “lose trust in an instant.” On the contrary: the Great Volkswagen successfully denied the obvious (credibility), and had a long-standing positive consumer image. It took years for that fatal data to be acknowledged. 

Third, time-based trust is relatively thin trust. I trust Amazon in large part because they have a great track record of delivering my packages correctly and on time. But if my trust is solely based on reliability, it can be overwhelmed – one way or the other – by other factors.  Suppose I have a wonderful customer service experience with Amazon: I’m likely to trust them even more, even if they miss a few deliveries. Suppose I have a terrible customer experience with Amazon: my trust will go way down, even if they continue excellent delivery. Time is not the factor it’s cracked up to be.

The Heart of the Matter: It’s Not Time, It’s Quality

The heart of the matter is this: comparing trust gained and lost isn’t a function of time, it’s a function of quality. 

If I have a deep level of trust in you, and you screw up a little bit – I’m likely to forgive you, give you another chance, cut you a break. Of course, if you screw up a lot – enough to use up the reservoir of trust we’ve developed – then that’s another matter entirely. 

Think about your friends. If you screw up a little bit – forget to bring the salad for the picnic, show up late for the movies, do that annoying thing they asked you not to – do you instantly lose all their trust? Of course not. Only if you betray a deep confidence, or gossip about them behind their back, or conspire to keep them from getting that promotion, will you lose their trust in an instant.  

Because it’s the quality of trust gained and trust lost that matters – not the passage of time.

Think Volkswagen; BP; Wells Fargo. Was trust lost “in an instant?”  First of all, the ‘instant’ was more like months or longer, but never mind – that’s a pretty short time if you’d previously had years of good reputation. So how do we describe that?

First of all, reputation is not trust. Having a “good reputation” doesn’t say much about trust. For most of us, ‘trusting’ a company just means we like their products, or ‘trust’ them not to violate laws. That’s a pretty low bar. 

When a scandal emerges, we lose trust in those companies quickly – not because trust loss is quick, but because there wasn’t much trust there to begin with. 

• If I trust you deeply, you’re going to have to do a lot to lose my trust. 

• If I trust you shallowly, you can easily lose my trust. 

• Whether trust loss happens quickly or slowly is a function of how much trust we had, and how bad was the violation: it is not a function of the calendar. 

The next time someone tosses that platitude about ‘trust takes a long time…” at you, try this:

Tell them they’re dead wrong – but that you still trust them. It’s a great counter-example: because if they’re so wrong about trust itself, then shouldn’t their error mean you’d instantly lose trust in them? 

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By the way, Barbara Kimmel has a similar take on this issue: see The Quote that Does Trust a Disservice.

Are You Selling to Vulcans?

Nowhere am I so desperately needed as among a shipload of illogical humans.

Mr. Spock in ‘I, Mudd’

The iconic Mr. Spock from Star Trek was half-Vulcan, half-human. It’s the former we first notice in Spock – Vulcans are governed entirely by logic and rationality, unencumbered by emotions.

But it’s his human heritage that takes Spock from caricature to character. Spock mirrors our own schizophrenic, rational / emotional natures. He is the sock puppet for humanity, allowing us to look at ourselves afresh.

That much is evident to the casual sci-fi viewer, or any fan of The Big Bang Theory. But you wouldn’t know that from looking at economists, strategy consultants – or much of the B2B sales literature. They suggest that people – particularly smart business people – are mostly rational decision makers, persuaded by well-established rules of scientific evidence, logic, and the inexorable rules of mathematics.

In other words – they treat buyers like Vulcans. Only trouble is, at most, they’re like Spock – half-human. And truth be told, most B2B buyers are even less Vulcan and more human than Spock.

My Brain’s Bigger than Yours

I’ve now spent four decades working with B2B sales organizations.  Lately, I’m reminded even more of how much businesspeople have bought – hook, line and sinker – the idea that customers buy through rational decision-making. The economists’ models are live and well in sales training programs.

Feeding the ratiocinating Vulcan side of buyers is necessary. But it is almost never sufficient. The true role of the intellect in B2B buying is as follows: Buyers scan options rationally, but they make their final selection with their emotions – then rationalize that decision with their brains. In other words, buying is a sandwich – rationality is the bread, but the meaty filling is a rich, emotive set of feelings, finely honed over eons of civilization.

The cognitive role in buying is vastly over-stated. Brains don’t rule. Spock is not 100% Vulcan. Neither is your customer. Not even by half.

Your Customer is Not a Vulcan

Question: What do the following things have in common? Value propositions; challenger selling; strategic fit; problem definition; pricing; negotiation; objection-handling.

Answer: In B2B sales, they usually center around analytical economic value, assuming that the rational resolution of each issue is the key to helping a buyer achieve a decision. Look for these buzz-phrases; clients buy results, show the bottom line, demonstrate value, value proposition, business case, and so forth.

Nothing wrong with that list – it’s all necessary. But it’s not sufficient. What’s missing are the things that actually trigger a buyer’s decision – not just justify it. Those include, for starters:

  • confidence that the seller can deliver what (s)he promises, and
  • the resulting ability to sleep through the night
  • integrity
  • belief that the seller will adjust their commitment to accommodate changing circumstances
  • character
  • commitment to principle
  • a long-term relationship focus
  • a sense that the seller has the buyer’s interest at heart
  • the seller’s ability and willingness to defer gratification
  • vulnerability of the seller
  • a set of values beyond the purely economic
  • a sense that the seller is a safe haven for conversation.

In short – trust in the seller.

Your customer is not a Vulcan. Your customer is barely even Spock.

The Cognitive/Emotive Disconnect

I spend my time with smart, complex-business, B2B professionals. Every single one of them will acknowledge the importance of the above list. Yet every one of them lives in an organization where 90% of attention is focused on the buyer’s Vulcan side, doing slide decks, spreadsheets, valuations and scenario0

Buyers often (rationally) screen sellers. But they quickly form favorites, unconsciously, and usually before the sellers have even had a chance to address the issue. All the Vulcan-targeted approaches are aimed either at forming a buyer’s opinion (too late, already done), or changing a buyer’s preformed opinion (already set in concrete).  It rarely works.

Proof? Ask yourself how many times your customers failed to see the brilliant case you had made, because they were somehow biased against you. You tried to sell to the Vulcan in your Spock-customer; but that human side kept rearing its ugly head.

How Complex B2B Buying Really Works

Very few buyers will tell their boss, “Gee, I guess I bought from those guys because, you know, I really trust them.” That’s career suicide. Buyers need the air-cover (and, to be fair, the reality check) of a rationality-based argument. It’s our job as sellers to deliver that rationale to them, bullet-proof and logic-tight as it can be.

Because in business, we all need to pretend we’re Vulcans.

But deep down, we all know what’s really going on. People buy with the heart, and rationalize with the mind. Brains are a necessary but not a sufficient condition. Being right, by itself, is a vastly over-rated proposition. Being right too soon just pisses people off. All else equal, a trust-based sell will always beat a rationality-based sell.

The truth is, our emotional instincts are extremely powerful (not to mention frequently accurate). We make our decisions first based on those emotions, and then struggle to justify them according to the rules of the game.  Unlike Spock, we lead with the human, and bring in our Vulcan sides as a check.

Many, many of my clients say: “That may be true for lots of people, but not for my [boss] [client] [customer]. They’re completely Vulcan, data-based, just-give-me-the-facts people. You’ve got to treat them like Vulcans, because they demand it.”  But the fact that they demand to be treated like Vulcans is 95% about ego – and that’s their human side.

Ironically, all this is especially true for those who believe the world works on brains. They are prone to buy even more emotionally, because their self-worth is tied up in thinking that emotions don’t matter – which renders them oblivious to their own human decision-making process.

Even if your customer thinks they’re a Vulcan – treat them at least like Spock. Address the human side – then give them Vulcan-food to justify their feelings.

It is curious how often you humans manage to obtain that which you do not want.

– Mr. Spock in ‘Errand of Mercy’

When the Client Demands Price Cuts

We’ve all been faced with that dreaded moment when a potential client – or even an existing one – demands a price cut. While some basics about price cutting are the same, there are unique versions of this problem facing those of us in advisory, services businesses.

Does this one sound familiar to you?

———–

“A long-standing client came to us and said our price was too high for a job we quoted. They said one competitor was priced 20% below us, and another 30% below. We’re seeing this a lot; word is we’re the high-priced firm in this market, and we’ve lost a few big jobs. It seems to be pretty much a question of price. This business is getting commoditized. Particularly in this economy, we need to seriously consider cutting prices. But our margins are already low.”

Have you heard those words lately? Perhaps spoken them? Before you act, make sure you investigate the situation. This article gives you a structured approach to doing so—looking at causes, solutions, and handling discussions.

CAUSES: WHAT DRIVES CLIENT DEMANDS

Before you respond to demands for price, it is useful to understand what lies below such demands. Three things drive the vast majority of client demands:

  • Fear—the simple fear of being taken advantageof. If clients perceive that someone else is getting a better “deal,” they can quickly feel abused, and may react very negatively. Clients who feel abused become very creative about attributing causes—your rates, your profits, your margins, and so forth.
  • Miscommunication—usually around scope and design issues. The “apples and oranges” problem can arise from many project design issues, including the scope of issues addressed, the leverage of your team, the depth to which issues are explored, timing, and choices about staffing. If the client orders an apple and you price out an apple pie, the client may think you are charging absurd margins on fruit.
  • Quality—misaligned assumptions about quality required. Many service providers make an implicit assumption about the quality required for a certain kind of work. Often the client doesn’t perceive the need for the Cadillac/Mercedes solution—they think a Chevrolet/Volkswagen will do just fine. And often, it will.

Clients demanding price concessions don’t present the issue in these neat terms. They simply say, “your price is too high, and you need to cut it.” Listen carefully – this does not mean that your price is too high. Nor does it mean you need to take drastic action. But you’d better investigate what’s going on.

SOLUTIONS: FIX THE RIGHT PROBLEM

When your client demands a price concession, she usually assumes that rates, costs and profit margins are the problem. Few clients (or providers) challenge this assumption. The client thinks she is being taken advantage of by a voracious provider. The provider feels pressured by a callous client playing him off against others. Both then cast the issue in terms of greed and motives, and dig in for tough price negotiations.

But rates and margins are almost never the real problem. The real problems lie in design issues and in misunderstandings. The worst thing to do is negotiate on a total price alone – it makes the client think you’ve been hiding something, and wonder if he should ask for even more. Too often both parties try to negotiate price—when they should be discussing design. To see why rates are not the issue, consider your economic model. The building blocks of a project bid boil down to:

  • The firm’s costs—i.e. compensation levels
  • Rates—a function of cost, utilization and margins
  • Project design scope
  • Project design leverage
  • Project design quality

Now ask yourself—how does my competitor’s model differ from mine, and what is he cutting to get his prices 30% below mine?

Compensation costs vary hardly at all. The salary market is extremely competitive. Nor do firms vary much on billing rates, utilization and models. None of it is enough to explain a competitor’s 30% discount. That leaves two explanations: either the projects being discussed are just not comparable – or your competitor will lose money on this bid. The discussion you need to have with your client explores both options – in that order.

HANDLING THE PRICING DISCUSSION

Above all, clients want to know they are being treated fairly. Doing so starts with a fair price for work done, and the willingness to be open about how you arrive at that price. Very few clients actually want to pay an unfair price to a provider who has dealt fairly with them. Here’s how to have that discussion. 1. Commit to resolution. Make sure you spend enough time understanding and empathizing with the client’s concerns. Say you’re committed to finding a mutually acceptable resolution—and mean it. 2. Suggest a series of price drivers—from scope and quality concerns to economic drivers—and commit to exploring each in turn.

  • Start with scope and design issues. Ask the client to compare in detail your project design with the competitor’s. That means nailing down modules, scope of research, staffing levels—everything that might be different. Then compare. More than half the time, discussion will stop right here. Most fears are simply misunderstandings of design.
  • Move on to quality issues. Determine whether quality in your proposal is higher than that proposed by a competitor. If so, then ask whether the client is willing to pay for extra quality—or not. If the answer is “not,” be ready to scale back or walk. Your “standards” may be costing you business.
  • If the issue is not yet settled, then put your structural economic cards on the table. Tell the client your billing rate structure, base compensation structure, leverage model and utilization rates. Explain why these numbers add up to a fair profit model for you, and why they probably don’t vary much by competitor—certainly not 30%.

Now you can face the competitor 30% discount head on. Confirm the project design is comparable. Say to the client, “I believe their economic model is similar to ours – and we could not sustain a 30% discount. How long do you believe you will continue to get that discount? And are you willing to switch again if and when they move to sustainable prices?”

If the client would be willing to switch yet again to find yet another discounter, then you should probably walk away and find a relationship buyer. If so, walk away smiling – your competitor just lost money, and you didn’t. Price negotiations don’t have to be about power and control; trust and openness go a very long way. Most clients are happy to pay a fair price to a provider they trust. Just give them the information with which to trust you.

Should you ever cut price? Yes, in two cases. The first is for a volume discount, including existing-client discounts. In these situations, your cost of sales is genuinely reduced; that’s real money, and can be shared. The second reason is to buy your way into a new business or client. Don’t do it lightly. Eventually you will have to raise rates to sustainable levels; and a client who switched to you on price is prone to switch again.