Buddhist Capitalism: Why Trust and Collaboration Outperform Competitive Selling

When we think of capitalism, we typically think of competition as a central, driving force. At a macro-level, we have enshrined the value of competition in our antitrust laws. We think of competition between providers as a way to increase innovation and reduce costs. Adam Smith is frequently (and somewhat inaccurately) cited as the prophet of competition in his concept of the “invisible hand.”

At a micro-level, we have also glorified competition. Athletic competition is seen as a metaphor, as well as a proving ground, for competition in business. Businesses line up to sponsor major athletic events and athletes. And nowhere in business is competition more revered than in sales.

The truth is much of what we think about competition is dysfunctional, suboptimal, and actually destroys value. By contrast, what I’ll whimsically call Buddhist Capitalism shows another way that adds more value. I’ll explore this theme first at the business world level, then at the sales level.

Business Competition in the Real World

In the real world, pure competition leads directly to monopoly. Competition is inherently unstable, resolving to dominance of one more powerful firm over all the others. What we call “competition” in the modern Western world is a finely tuned mix of rules and regulations, as well as a few customs, that serve to keep behavior within socially acceptable bounds.

If you doubt this, think of what the U.S. economy would look like in the absence of the FTA, the FDA, the FAA, the SEC, or the FDIC. Or just look back a few decades in the history books. Maintenance of a state of competition depends enormously on the power of the referees.

Pure competition, even where regulatory regimes are strict, rarely exists. There are imbalances of labor, education, geography, and a hundred other variables. The point is in nearly every industry, there is an imbalance of power, exploited by one party at the expense of the weaker parties. “Competition” in the real world is more or less about zero-sum games, with one party holding the stronger hand.

The definitions of “capitalism” have been hijacked by extremist theoreticians in recent years: people such as Milton Friedman, Ayn Rand, and Alan Greenspan, who believe in a moral purity produced by competition. (Never mind that an ethics built on selfishness isn’t worthy of being called ethics in the first place.)

Buddhist Capitalism

By contrast: imagine an economy relatively unencumbered by laws and regulations, but where trust and custom abounded. An economy with not nearly as many lawyers, but with fewer legal battles. An economy where the frictional costs of competition (and the regulation of competition) are lower, and innovation is higher.

You get such an economy when you introduce the concept of trust and collaboration. Zero-sum games shift to 1+1=3 games. Stephen MR Covey Jr.’s book The Speed of Trust is all about this: when trust is present, speed goes up and cost goes down.

If my Buddhist friends will forgive me the crude colloquial language, I’ll call this Buddhist Capitalism. What I mean is that it focuses on collaboration, not competition; on getting along harmoniously rather than vanquishing; on letting go attachment to outcome rather than obsessing over goal achievement.

It’s far from crazy. The lesson of the Prisoner’s Dilemma work in game theory is that a collaborative strategy always, always beats a competitive strategy if played long term. Research shows that collaboration produces more innovation than solitary introversion. Collaboration and trust build on each other, increasing knowledge of both parties to the point where they can jointly add value, cut costs, and reduce risks.

It may sound like a Beatles song—the more you give, the more you get—but it’s true.

Buddhist Selling

What does all this have to do with sales? Selling is just the micro-version of the same thing. We as human beings have a primal desire for survival, which can easily revert to competition. But we have an equally strong desire for connection, collaboration, and cohesion.

Except for pure commodities (and not even water or electricity is a pure commodity), buyers prefer to buy from sellers they trust. Trusted sellers have their customers’ interests at heart, ahead of their own. They play the long game because they know that the best way to long-term success is through their customers’ success, and, therefore, no particular sale is worth sacrificing the long-term relationship.

Trusted sellers are also not attached to a particular outcome. They don’t keep meticulous score at a detailed level, and they are willing to let their agenda be influenced by client needs. Finally, they keep no secrets from their customers because they see their interests and their customers’ interests as one and the same, and the value of shared information to both parties exceeds the value of secret information privy to just one party.

Of course, these attitudes are hard to come by in a world that prizes competition. Sellers everywhere are taught to compete not only with their competitors, but also with their own customers. Not getting a sale is considered bad form, if not unacceptable. Metrics in sales are short-term, incentives are largely extrinsic, and motivation basically consists of war chants.

But a seller who can “think Buddhist” will outperform a competitive seller over time because customers prefer to deal with sellers they trust. And they do not trust people who are in it for themselves.

The ultimate irony: by being willing to forego a sale and do the right thing, the “Buddhist seller” will end up selling more than the competitive seller.

 

 

 

 

 

 

Trust and Selling to the C-Suite: Interview with Ken Roller

Ken Roller is an experienced B2B salesperson; he spent the past 35 years in Corporate America working for 2 industry leaders (including 21 years at Intel), serving Global 1000 customers.

Ken’s classic sales credentials are impeccable: he exceeded his quarterly sales quota for over 20 years straight – 83 quarters in a row – in a time and in industries that faced brutal competition and roller-coaster global economic conditions.

I came to know Ken during his tenure at Intel; he was extremely helpful to me at a time I was writing Trust-based Selling. We’ve stayed in touch; I asked Ken to share with us some hard-earned wisdom from his career.
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Charlie: Ken, it’s great to have you ‘here’ on Trust Matters. I’ve always thought you embodied many of the things I write about.

Ken: Thank you. I’ve always thought that we’re kindred spirits in our concepts and feelings on how we work and relate to customers and people. One of the inflection points in my professional career was when I read “The Trusted Advisor.” It succinctly captured the essence of selling with integrity, something that is paramount to my being and who I am.

Charlie: Well then, you’re a great person of whom to ask this question: How do you establish trust with “C” level execs at some of the biggest companies in the world?

Ken: First, I’ve always taken seriously my counsel with my customers and would never jeopardize their livelihood, career and their family’s future with my guidance. That’s not pablum, that’s truth; it is the root of my answer to your question.

It’s easy to tell somebody about your experience and the benefits of your products and services. It’s harder to demonstrate that you “truly care.” That has always been a differentiator for me. You quote the late great George Burns as saying, “you can’t fake sincerity.” He’s right, and the continued attempt to do so is why there’s a pervasive view of salespeople being the proverbial “used car salesperson,” with their only concern being themselves and their company.

Charlie: Now, let me just get this straight. I ask you about selling to the C-suite, and your answer is “you have to care?” I don’t think that’s the typical canned response from most sales ‘experts,’ is it? Maybe you can give an example of how you showed a customer “you cared” in this manner?

Ken: Sure. I was blessed that the companies I worked for had world-class products. Even so, the reality is that not all products are always great – or even good.

I was working closely with the CTO and his staff at one of the largest Financial Services companies in the world. Our competitor’s product was 78% faster than our comparable product out of the box! That was the context in which I put together a several day meeting at our facility in Ireland, and had this company’s entire senior staff fly in from Europe and the US for a strategic update.

During the meeting, I asked them if our technical team could work with them to ensure that they implemented our solution properly so we could have a fair bake-off – and, I told them, if our competitor were to beat us, they should purchase their product and shame on us.

When I said that, you could hear an audible gasp come from my company’s execs. They had a look on their face of “Did Ken really just say what I think he said”?
The thought that my career was over suddenly crossed my mind.

However, my customer’s CTO noticed the ruckus I caused and immediately stood up. He said, “Thanks, Ken, for putting together this wonderful 3-day gathering; you’re a breath of fresh air in an industry that is polluted with unscrupulous salespeople.”

“You educated us to the fact that your next generation product, coming out in a few quarters, will have a new micro-architecture that will enable you to leap-frog the performance of your competitors. We believe you, and trust you, and are looking forward to testing your new platform ASAP. We want to work with you Ken.”

He basically told my executive management that my candor and “caring” should be applauded; and if anything were to happen to me, my company would lose their future business.

And…our next generation product did perform as promised, and has been the industry leader ever since.

Charlie: What I called the Acid Test of trust is whether you’re willing to recommend a competitor to a client. In effect, that’s what you did here.

Ken: It’s not that hard if you have a long-term perspective. If you want to build a long-term strategic relationship, and have faith that the next iteration of your product will fix your issues, you’d do what I did. If not, you might sell them your current product, but your reputation will be ruined forever.
Be honest and live to sell another day!

Charlie: Switching gears: I think when a lot of people find themselves in the C-suite, they get tongue-tied. Their pulse rate goes up, they get flustered, and they end up making any number of rookie mistakes. Advice?

Ken: Senior executives have no time for those who are in “awe” of whom they’re meeting.
Confidence – especially, confidence in yourself – is critical. You don’t have to be an expert in everything – but you’d better be expert in something, very clear about the boundary lines – and just as forthright about what you don’t know. Be prepared, and do your homework: then tell the truth. Honesty trumps ignorance.

You have to have great respect for them – but also remember they’re your equal! Deal with your insecurities and don’t psyche yourself out.

Talk about what’s important to the executive. Being STRATEGIC and not tactical is critical. Don’t discuss problems, just solutions. The higher up you go, the more you’ll find people who are surgically focused on growing revenue, innovation, and garnering a competitive advantage.

Charlie: Any additional tips?

Ken: Creating long-term relationships with senior executives is like shooting a good game of pool – you’re always shooting for the next shot!

As we discussed earlier, listen more than you talk, but be prepared based on your research to share some 30-second “nuggets” that will be of interest to them that also demonstrates your reputation as a known expert in your specialty.

Ultimately, if you want a trusted advisor relationship with executives, you have to make sure they see you as a “Player” that a) constantly educates them to things that they and their staff don’t know, and b) does so respectfully but in an insightful, direct manner that clearly shows you have the customer’s interest at heart.

Charlie: In your experience, what’s the single biggest obstacle to a salesperson building trust with their customers?

Ken: That’s an easy one! Sorry for my politically incorrect answer, but it’s imperative that salespeople learn to STFU and LISTEN!

So many salespeople are myopic – enamored with themselves and their voice when the conversation is not about them; it should be about their customers and helping them solve their business / OPEX problems and issues.

That’s why I feel the “Trust Equation” is the single most important sales theory ever created. With Self-Orientation in the denominator, the more you talk about yourself, the less trust you build! So in the words of the Kevin Spacey character from “Swimming with Sharks”, Shut-up, Listen and Learn!

Charlie: Thanks Ken for sharing with us your thoughts and ideas.

Ken: Thank you, as always, it’s been a pleasure!

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.

 

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? 

——-

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

Bleeding Trust from Every Sales Interaction

Last week saw an impressive uptick in conversations about trust in companies. While United may be the strongest case for bleeding trust today, it’s not limited to them. It’s the massive PR mishaps that grab our attention – but that’s misleading. Trust can affect every business – including yours.

It’s not just about the big, egregious faux pas that loses our customers’ trust in an instant. It’s much more about the myriad little, every-day, seemingly trivial ways that add up – ending in a virtual hemorrhage of trust. In no particular order, let me identify a few.

Customer Tales of Woe

In Goodbye Avis, Hello Uber, danah boyd chronicled death by a thousand cuts at the hand of Avis Car Rental. Her rental car got a flat tire at 10 p.m. in Los Angeles, just seven miles from Los Angeles International Airport (LAX). A customer service phone rep said he didn’t know how long it would take to get an exchange. He said he’d text her. An hour later, she had not received a text, so she called again. They said it would take four hours. Outraged, she pushed back. OK, they said, 90 minutes.

They then suggested she leave the car with the keys in it and get a taxi. She left the car but got a ride from friends to her destination. Avis texted that they’d arrive at 4 a.m. They didn’t. She called again, and Avis blamed the towing company. They said it would take 30 minutes. Ninety minutes later a tow truck arrived.

At 4 p.m. the following day she called to make sure Avis had gotten the car. Nope. They said she was still liable. Roadside assistance told her to call customer service, who said to call the LAX counter directly, who passed her call on to the manager, whose call went to voice mail. He didn’t return the call. And, it went on.

The Avis tale may sound exceptional. But I bet you have your own horror stories to relate that are just as bad. And you probably reacted the same way danah did – by changing suppliers, even though she’d been a loyal customer for years.

One Cut at a Time

Not all customer horror stories have 15 fails in a row in a 24-hour period. But it doesn’t matter. Like little cuts, they can add up, and each one adds its own traumatic toll.

  • I went to trade in a car. We had a deal until the salesman noted a discrepancy on the CarFax report. I said I’d fix it. It took six weeks to fix, but I did get it fixed. However, the salesman never called to ask how things were coming along. Result: I bought my new car elsewhere.
  • A friend went to a store at 5:55 p.m. The manager was inside, locking up for the evening. When my friend pointed to the “Hours: 8AM – 6PM” stenciled on the door and pointed to her watch, the manager shrugged his shoulders and turned away.
  • At my daughter’s wedding, I asked if we could borrow a golf cart for 20 minutes to ferry the bride and groom across the wet lawn for photos so as not to get her wedding dress wet. “Sorry, we can’t afford the liability,” was the answer we received.
  • A friend who does small group communication training sessions is routinely asked by large companies to purchase liability insurance to indemnify MegaCo Inc. against any possible harm or claim of harm from anyone for any reason arising out of his delivering a half-day communication training session. (Many of you face the same exact extortionate policy of your customers offloading “risk” to you and having you pay for the privilege.)
  • Some years ago I had a great first sales discussion with a client about doing training to increase trust in their sales process. At the end of the call, he said, “This is great, we have a deal. Now, I presume you’ll grant us our customary 15% discount?” This after having discussed how to help his salespeople to stop cutting prices.
  • I’ll never forget the brokerage office head who, on hearing about my upcoming talk on being a trusted advisor, said, “Hey, anything that’ll increase my share of wallet, I’m all for it!”
  • I constantly receive offers to write articles for my blog in return for links. Ninety-nine percent of the time, they show no awareness of the subject matter of my blog, much less a sense for what quality levels of content might be expected.
  • Customer service scripts are increasingly being loaded with fake empathy and inappropriate apologies: “Oh, I know you feel,” “Oh, I do apologize for the power outage you experienced. …” No. Don’t pretend-feel. An acknowledgement is critical, but apologizing for things you didn’t do is phony.
  • A corporate online feedback site was generating error messages, sending me “not-deliverable” emails. Acting the good business citizen, I called the corporate 800 customer service number to tell them. The customer service rep told me, “The feedback page is not our department.” When at my suggestion she connected me to that department, they insisted on giving me an incident number so I could track my concern going forward. Wait – my concern?
  • On a United Airlines flight from Chicago to Charlotte, North Carolina, two aircraft were taken off the gate due to equipment problems. The third aircraft finally left three hours late. I emailed the airline. I got back a generic apology and a voucher redeemable against future miles—no acknowledgement of the particular issue, much less suggestions about dealing with it. (That reminds me of my cable company: after showing up three hours late, they’re trained to quickly offer you a $20 rebate – a fair deal only if your time is worth less than $7 per hour).

I could go on and on. And so could you. The cut-cut, drip-drip of such low-level, tedious violations of basic customer relationships adds up. It results in listless relationships at best and cynicism, surliness, and passive-aggressive hostility at worst. Finally, we customers jump ship when the opportunity presents itself.

This isn’t “just” about customer service. There is a steel cable linking all customer experiences – sales, service, whatever – with future sales. How everyone treats customers in all ways at all times is a big driver of trust and thus of revenue.

But you already get that point. The more urgent point is this: how can you be sure you’re not imposing such semi-conscious bloodletting on your customers? Here are two ideas.

1. Follow the 10% rule. At every customer interaction point, take 10% more time to close out the interaction in a trust-creating way.

  • If you couldn’t help someone after a five-minute call, then take 30 seconds to suggest an alternate vendor.
  • If you’re going to spend 15 minutes writing an exploratory letter, then spend another two minutes to find some value-add to include in it.
  • If a potential customer walks out the door after an inconclusive interaction, take a note about a content-specific way to follow up in two weeks with an email or phone call.

You think you don’t have 10% more time? Please. Consider how much you put at risk the other 90% of time you did spend by failing to leave a trust-based impression.

2. Personalize responses in some way. Buying is emotionally triggered, and that’s as true for B2B sales as it is for B2C. Don’t let your last impression be the customer seeing dollar signs in your eyeballs.

  • Responding immediately, or in some hugely fast way, is a powerful tool for showing you’re paying attention when someone reaches out to you. Just don’t automate the response. Fast and customized is a powerful combination.
  • If you are responding to an error, don’t minimize it – but also don’t over-accept responsibility for things beyond your control. Acknowledge, explain what must have happened, and – most important – say what you are going to do on your own to ensure it doesn’t happen again.

Sales don’t just happen during selling. They’re a predictable result of your entire mode of relationship with your customers at all times.