Trust Primer Volume 11

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Our goal at Trusted Advisor Associates is to help people and their organizations become more trustworthy and trust-enhancing. It’s always exciting when we meet people who believe as we do. It’s even more exciting to talk to those who have found success by applying the same principles we talk about.

This month we place a spotlight on real trusted advisors, success stories of real professionals who make trust part of the foundation of their business strategies.

The Trust Primer Volume 11 features three powerful interviews: Chip Grizzard, CEO of Grizzard Communications; Jeb Brooks, son of author Bill Brooks and Executive Vice President of the Brooks Group; and Mahan Khalsa, partner of Ninety-five-5 and author of Let’s Get Real Or Let’s Not Play.

Each of these three demonstrate in their own unique ways how concepts of trust have played out for them in sales and leadership careers.

Get the Trust Primer volume 11 here

If you enjoy this ebook, you can email it to friends by following this link. Better yet, stop by the blog and join in the conversation. If you received this from a friend or colleague and would like to subscribe to the series, click here.

Three Strategies to Increase Business’s Trust

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This article was first published in Raintoday.com

How do you think your business rates when it comes to trust?

It’s not an idle question. Many surveys indicate a decline in levels of trust in business, society and government. But how do you go about raising your business’s trust scores? In fact—what in the world would a “trust score” look like—and just what would do you do to raise it?

It is an answerable question, and the answer comes in three parts. Let’s take an example—the trust scandal du jour a while back, Bernie Madoff.

Bernie Madoff himself is a classic example of an untrustworthy person. The SEC became known as an untrustworthy organization for its failure to investigate him. And some of his investors—Elie Wiesel, Kevin Bacon, for example—did a poor job of trusting.

Those are the three dimensions by which you should measure your business’s performance on trust. Are your people trustworthy? Does your organization promote trustworthiness? And do you trust others appropriately?

Answering those three questions provides a baseline for assessing your trust needs, and performance going forward. To increase your trust scores, you need a strategy for all three.

1. Strategies for Building Trustworthy People

It may seem obvious that you should hire trustworthy people. But how trustworthy do you consider your competitors’ people to be? How trustworthy do your clients consider your people to be? Such thoughts should lead you quickly to ask: how do I define ‘trustworthy’ in the first place?

Trust is a notoriously situational term to begin with; consider, “I trust my dog with my life—but not with my ham sandwich.” However, one simple model combines most of what we think of when we say ‘trustworthy.’ That model is the Trust Equation:

where:

C = Credibility (what we say)

R = Reliability (what we do)

I = Intimacy (how safe we are with information)

S = Self-orientation (whether we’re focused on ourselves or others)

You can quickly construct assessment instruments and ways of measuring trustworthiness through such a definition (find an online version here.)

A model like the trust equation lets you have a definable, measurable, teachable approach to the first of the three strategies: having trustworthy people.

2. Strategies for Trust-Enhancing Organizations

If the first strategy is about people, the second strategy is about organizations. Even highly trustworthy people, if stuck in a trust-destroying organization, will not be trust-proof. And a highly trust-creating organization can actually support increased trustworthiness at the personal level, by example, motivation and incentive.

But how can we define organizational trust? Here the definitional issues are even harder. How can you compare trust at Apple Computer vs. trust at the IRS? Trust at Boeing vs. trust at Pepsi? It seems like an impossible case of apples and oranges (no pun intended).

The solution is to agree on one-order-deeper drivers of organizational trust. Having studied this issue for some time, I suggest there are four principles that drive high-trust organizations. If organizations follow these principles, they are more likely to generate trust within their organizations, and to be trusted by stakeholders like shareholders, employees and customers.

Those principles are:

  • To be truly client-focused—for the sake of the client, not for the sake of your own revenue;
  • To instinctively behave in a collaborative manner;
  • To view nearly all interactions in a long-term, relationship context—rather than a short-term, transactional context;
  • To treat transparency as the default position, except when illegal or injurious to others.

I mentioned the SEC of a few years ago as an example of organizational trust-weakness. Hardly anyone thinks that individual employees at the SEC were immoral, or personally untrustworthy. Yet the SEC scores poorly when assessed against the four Trust Principles.

The SEC was not client-focused; if anything, it lost its focus on its key clients—investors and capital markets;

The organization was criticized frequently for not collaborating internally—not sharing information between offices and departments—and for not collaborating sufficiently with outside sources that had, in retrospect, critical information;

It appears that the organization fell into a transactional manner of oversight—checking boxes rather than looking for longer-term, underlying patterns (the industry it regulated was steeped in this issue itself);

As an organization, the SEC didn’t succeed in raising issues sharply enough to higher levels internally, or to its own overseers in Congress.

The result was an organization which did not foster trust, did not help build trustworthy people, and which itself quickly came not to be trusted by its own stakeholders.

Are there approaches other than these principles to defining and measuring organizational trust? Certainly there are, though this one comes with behavioral markers that can be surveyed or measured (more information on this approach here.)

3. Strategies for Appropriate Trusting

We often forget that trust is a result—an outcome of an interaction between one who is trusted, and one who is trusting. And while we focus mostly on trustworthiness, it turns out that trusting plays a big role too in determining trust, at both personal and organizational levels.

Most of the time, we think the problem is excessive trusting—as with Elie Wiesel and Kevin Bacon, who unfortunately put excessive trust in Bernie Madoff. They paid dearly in personal financial terms, not to mention angst.

But the bigger problem is usually the opposite—not trusting enough. People and businesses alike commit far greater value destruction, and leave more money on the table by not being trusting enough, than they do by trusting the Madoffs of the world.

Many years ago, I had a consulting client in the convenience store business. Their annual store manager turnover was 150%. They were convinced they needed a new hiring profile.

It turned out, they had a habit of giving all store managers a lie detector test every month, to make sure no one was getting away with theft. After successive months of being given lie detector tests, the average store manager began to think, “Hmmm, someone must be getting away with this for there to be so much emphasis on it; and clearly they don’t trust me. Maybe I’ll see if I can get away with something.”

The lack of ability to trust created a decline in trustworthiness in the store managers, and thus in the organization. Perhaps you know the old saying, “the fastest way to make a man trustworthy is to trust him.” It’s true.

Of course, this raises the same measurement questions: how does one measure the propensity to trust? Here’s one example, an online assessment by Martha Beck, highlighted by Oprah.

More importantly, what do you do to improve one’s propensity to trust? Here part of the answer is hiring; experts, e.g. Dr. Eric Uslaner, suggest that propensity-to-trust is instilled in us early in life.

But all is not lost. If we improve organizational trust climates (strategy 2), we can improve trusting-ness as well. And finally, we can get better at identifying and taking personal risks.

There is no trust without risk. But people as a rule overly avoid Type 1 error (doing the wrong thing), while incurring excessive Type 2 error (not doing the right thing). By learning to acknowledge errors, put more truth on the table, be more candid, and become more comfortable with transparency and collaboration, individual people can actually improve their ability to trust.

The three strategies for increasing trust are not mutually exclusive: in fact, they are complementary. You cannot diligently pursue one without bumping up against the other two. Trust is both personal and organizational; and requires both trusting and being trusted.

May you trust, and be trusted—individually and institutionally.

Three Strategies for Creating Customer Trust

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This article was first published in Customer Collective

You’d probably agree that if your customers trust you, they’re more likely to buy from you. The proposition is not the problem. The problem comes with execution—how do you do it? How can you create trust?

Are there generic strategies to create trust with customers? An optional set of tactics you can choose from? Some kind of guidelines you can point to?

In fact, there are three strategies you can choose from. All of them will increase trust, though in somewhat different ways. They are not mutually exclusive; but you may find one much easier or more compatible with your particular organization.

The three strategies are:

  1. Becoming more trustworthy
  2. Becoming better at trusting
  3. Practicing four principles

Becoming More Trustworthy

There’s a formula for trustworthiness, called the Trust Equation. It suggests that customers will trust you if you do a decent job at each of four components:

  • being credible—customers can believe the things you say
  • being reliable—customers can depend on you to behave consistently and as promised
  • being intimate—meaning customers can share information with you, feeling secure about how you’ll handle it
  • having low self-orientation—meaning your attention and focus, as well as your intentions, are about them, not just about yourself.

The main advantage of the trustworthiness strategy is that it’s low risk. At the same time, it may take longer than the other two to show results.

Becoming Better at Trusting

The essence of trusting is the yin to trustworthiness’s yang. The trustworthiness strategy is a strategy of attraction; the trusting strategy is a strategy of action.

The truth is, trust is created when one party takes a risk, and the other responds. The trustworthiness strategy invites the customer to take the first risk; in the trusting strategy, the seller takes the lead.

Henry Stimson said, “The only way to make a man trustworthy is to trust him.” I don’t agree that it’s the only way, but it surely does work fast and well.

Typical sales applications of the trusting strategy include selling by doing, sample selling, service guarantees, handshake deals, and the corporate equivalent of honor boxes by sharing intellectual property, just to pick a few.

The main advantage of the trusting strategy is its speed and relatively good odds. In trusting, everyone focuses on the risk taken; we forget to notice that the principle of reciprocity in trusting is very apparent. If we trust someone by taking a risk, the normal human response is to return the trust, rather than to take advantage of a well-intentioned gesture. You can depend on this human reaction with high levels of confidence.

Working from Trust Principles

The third strategy is to subject all your actions to a set of four big-picture trust principles. Those principles are:

  • lead with the customer’s interest, not your own
  • make collaboration, not separation, your default approach to relationships
  • focus on the medium- to long-term; on relationships, not one-off transactions
  • default to transparency, not opacity, except where illegal or hurtful.

What does it mean to act from such principles? Above all, it means noticing their presence or absence in the range of daily affairs. How do they apply in meetings? Agendas? Pricing? Staffing? Public relations and advertising? Recruiting? Are you, or are you not, working from these principles in all these situations?

The advantage of a principles-based approach to trust is its scalability from individual to organizational trust. While trust is primarily personal in application, the principles help engineer an environment that fosters that trust.

Which Strategy Is Right for You

The three strategies are not exclusive; ideally, your organization would use all three. But as a practical matter, you may find one easiest to explore as a starter. For most organizations, that ends up being the first strategy, trustworthiness. But your mileage may vary. Trust is one of those things that, no matter where your starting point is, you’ll end up traversing the whole territory eventually.

You Can Sell to the Purchasing Agent

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This article was first published in Entrepreneur.com

If you sell a product, it probably happened to you long ago. If you sell services, it’s probably happened to you more recently. And if it hasn’t happened to you yet, just wait—it’s coming to a customer or client near you.

I’m talking about having to sell to the purchasing department.

It’s tempting to see this as a pure negative, particularly for those selling professional services. It represents the death of relationships, the triumph of price over quality, a barrier erected between you and your client—you’ve heard all these complaints, maybe even made them yourself. But there’s another way to look at the situation, and it’s this: The purchasing agent is your new client.

Your New Client Is Just Like the Old Client

Against the grain of commonly held truths, purchasing agents aren’t all that different from the old clients we know and love. For example, despite their reputation, they aren’t all about squeezing the lowest price out of you. If anything, purchasing agents are more motivated to get the right provider for their clients than they are to save a few nickels getting the wrong provider.

There are more similarities. If all you can do is cite features and benefits and argue over price, you’re not going to have any better results with a professional buyer than you did with a “regular” client. While you may not be able to schmooze with a professional buyer, you’d still better figure out some ways to establish a relationship.

Don’t Attempt the End-Run

When first directed to go through the purchasing department, a common reaction of B2B sellers is to do an end-run—going around purchasing and getting back to the good old client, so they can put pressure on the purchasing agent.

You already know how politically dangerous it is to end-run a gatekeeper to get to a friendlier, higher-up decision-maker. You’re better off helping the gatekeeper get something he or she needs and keeping the game aboveboard. That’s clearly true for “line” clients. Yet somehow we have no compunction about trying to end-run the purchasing department.

Now put yourself in the shoes of the purchasing agent; are you any less displeased by that tactic than is a “line” client? I didn’t think so.

Worse, if you do try the end-run, you may find your client is not as predisposed to helping you as you thought. To talk to you, they probably have to go against the new policy. Few clients really want to do this; they prefer you work it out yourself with purchasing.

And worse still, they may find that they actually prefer letting someone else do the haggling; they’d never say so to your face, but frankly, it’s a relief not to have to bargain with you. Ultimately, you’re asking quite a lot of your client by asking them to intercede with purchasing, and they’re not likely to appreciate it.

Quick Dos and Don’ts:

  • Resolve to go through the purchasing agent.
  • Don’t complain unnecessarily—you’re not likely to win every sale, so deal with it.
  • Don’t offer to do special services unless you suggest the agent seek the same services from all your competitors.
  • Don’t obsess over the confidentiality of your materials—assume the agent is a professional and let them know you assume it—once.
  • Don’t ask what the agent can do for you; ask what you can do for them.
  • Be open, available and transparent. If you don’t know something, say so.

The purchasing function in modern business is becoming more, not less, important. It’s one of the faster-growing professions, and it’s more central to corporate strategies now. The idea that people buy from those they trust—those who pay attention to them and care about them—extends to the purchasing department. Purchasing agents are people. It’s important to treat them well. They are your new clients.

Deliver the Perfect Pitch

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This article was first published in Raintoday.com

The dog and pony show; the beauty contest; the shoot-out. You may just call it ‘ the pitch.’ The term is especially common in some industries—advertising, executive recruiting, some law firms—but we all know it.

Typically we think of it as an event—a rather formal presentation by several professionals, made to several (or more) members of the client organization, lasting from maybe 30 to 90 minutes. Secondary characteristics of a pitch often include Powerpoint, and a timeslot among a few other competitors pitching on the same day.

Let’s be clear: there is no single perfect pitch, since the winning pitch is situational to you and your client. Still, there are some guidelines that hold true. Here are Nine Rules For Perfecting Your Pitch.

1. When the Best Pitch Is no Pitch

Sometimes the best pitch is one that never happens, because both parties choose an alternative.

Think of a pitch as a blind date where each party is cautious. The quietly cautious buyer wants control, and seeks it in an impersonal, formal event. The seller also wants control, but expresses it by being assertive. One fears being ‘sold’; the other fears losing. When both parties are fearful, decisions get made on process, features and price.

Both parties are often better off starting from a strong relationship. Though both know this, they don’t admit it. Sellers may try to go around pitch events, buyers to resist pre-meetings. The “trick”—not really a trick at all—is to explore the possibility of meetings before the pitch in which personal relationships can be established. It’s critical that this be done from a position of respect, and honest concern for what’s right for the client.

Sometimes, the client then abandons the pitch idea altogether, because they find one competitor that seems to understand them uniquely. That’s generally a good outcome for both parties. Do NOT try to force this outcome—you’ll jinx if it you do.

2. The Pre-Pitch Warm-Up

Your objective shouldn’t be to avoid the pitch, but to produce a good outcome for both parties. Any pitch will be improved by prior conversations with as many client people as possible.

If you are literally meeting the client representatives for the first time at the pitch, your odds are even less than one divided by the number of competitors. Less, because with total strangers meeting each other, the “none of the above” option frequently appears on the table.

Of course, not every client wants to meet you in advance. Often the intent of the pitch is to prevent such meetings in the first place, in pursuit of an “independent, fair” competition. Pushing too hard for meetings can appear distasteful, disregarding the client’s desire for fairness.

How do you know how far to push the suggestion for prior meetings? Simple—ask the client. Point out advantages of offering all competitors a chance to talk with them in advance; then gracefully yield if the resistance is too strong. You get a few points for offering, if you do it respectfully—just don’t push your luck.

If you can talk to people in advance of a pitch, you’ll improve the quality of the pitch itself—for both you and client. Of course, you learn valuable information, and you get to call people by name. But it goes much further than that. Because the next key to a great pitch is interaction.

3. Interact in the Pitch

Nearly always, the client asks you to “tell us about yourselves.” And nearly all sellers assume that’s what the client wants—after all, they said so!

But the truth is, listening to someone—anyone!—talk about themselves for 30 minutes is incredibly boring. Even more importantly, listening to others does not persuade human beings—they become persuaded by listening to others who have previously listened to themf.

Letting clients be heard is critical to successful pitches; if you can’t do it before the pitch, then dare to be great—engineer listening into the pitch itself. Here are several approaches:

  • tell the client ahead of time you’d like to ask for reactions
  • build in “and what about you?” questions into your pitch
  • offer data about similar situations and ask for comment
  • ask the client if they’d consider a ‘first-meeting’ approach: instead of a standard pitch, offer to treat the pitch like a first meeting, as if you’d already been hired—with 5 minutes at the end to talk about how it felt. (This is not a crazy idea; I know of two success stories using it.)

If you’ve had them, refer to prior-to-pitch conversations.

Remember: what you say in the pitch matters less than whether you have listened to them first.

Have a Point of View

Your qualifications, credentials and references are worth absolutely nothing if you can’t show relevance to the client. To walk in without a point of view on the client and the issues facing them is arrogant, disrespectful, and selfish. Those are strong words: let me back them up.

If you want this job, you’ve (hopefully) thought about what you’d do if you got it. If so, why wouldn’t you share it? The probable answer is, because you’re afraid you might have gotten it wrong.

But that fear is all about you. Now is the time when not to take a risk is risky. The client wants to see if you’ll do some homework on spec, and if you’re willing to engage in real-time thinking about it. They want some sample selling. Showing up with nothing but a track record is like going on a blind date with just a list of past dates. It’s no better as pitch strategy than as dating strategy.

Collaborate on Talking Price

Conventional wisdom says don’t quote price until the client has heard benefits, so they can properly calculate value. This makes theoretical sense, but it ignores human psychology; price is the elephant in the room during the pitch.

While everyone listens (or pretends to listen) to your pitch, they are all mildly pre-occupied with what your price is going to be. That pre-occupation is death to their ability to listen to you. So—air it.

When you walk in, place a 5-page pile of paper on the table, saying, “This is the price part of our proposal—the bottom line, and 4 pages of backup explaining it. We don’t to overly focus on it, nor do we want to keep it from you. At any point in the conversation today, you can ask us to turn the page over, and we’ll talk about it. Whenever you want.”

The point is not when you talk price: it’s about who makes that decision.

Powerpoint Pointers

There seems to be an emerging consensus among presentation pros, that looks like this:

Most presentations are written as leave-behinds; build your pitch on the presentation, not the leave-behind

  • Less is more: limit yourself to several bullets
  • Don’t read aloud what’s written: get a picture, and talk from that
  • Visuals are great, great, great—photos, not clipart
  • Except for the title page, lose the logos and backgrounds

Handling Qualifications

Most big sales these days follow a two-step process: screening, and selection. Most screening is done on credentials. Which means if you’re in the pitch, your credentials got you there. The pitch is the sale you already got; stop selling it.

If the client specifically requested a section on credentials, don’t embarrass them by fighting it. But you can touch briefly on credentials, with a large leave-behind set of documents. Go through them only if the client insists.

Dissing the Competition

This is an easy one. Don’t. Don’t do it, don’t go there, don’t even think about it. If asked, demur, with, “We respect our competitors. You should talk with them. But they can speak well enough for themselves without our help.” Taking the high road never hurts, and usually helps.

When to Ditch the Pitch

Imagine a pitch where an obstreperous client takes you off-script, away from the powerpoint, or raises a point well in advance of when you had intended.

Disaster? Not at all. In fact, quite the opposite. This is client engagement—exactly what you want—cleverly disguised as an objection. Greet it with open arms. Ask the client for permission to go off-script, and deal directly with the issue raised, for as long as the client wants.

Remember: despite what the client said, it’s not your powerpoint they want to see—they want to feel how it will be for you to interact with them. If you respect their wishes, move your agenda to fit theirs, and respond directly with relevant content, you will address precisely that desire. And you will more likely win the pitch than someone who stayed on (power)point.

Sales Lessons for Professionals from the Ballroom Dance

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This article was first published in Customer Collective

How I got involved in the ballroom dance business is a long story; let’s just say I came to it via marriage.

You may wonder what ballroom dancing has to do with my normal clientele: lawyers, accountants, consultants, salespeople, bankers, systems engineers. As it turns out, quite a bit.

Ballroom dancing is an intangible service. For the average retail customer, it is a high price point. The sale is intensely personal, and the economics of the business depends on a combination of high sales hit rates and high utilization. Sounding familiar yet?

At least way back then, the sale was usually very formulaic. There were teachers for “front department,” and “back department,” terms which correspond to new clients and existing clients.

When a new potential client came in the door for the first time, the front department teacher launched into a scripted sales routine. In the hands of a week or unconfident salesperson, it felt very phony. But, in the hands of a good salesperson, the script made a lot of good sense.

One portion of the script has stuck with me for many years. Having bought a package of lessons, there was a procedure every teacher was supposed to follow at the beginning and end of each lesson. It went something like this:

“Hi, (student), you’ll recall last time we were working on step three of the waltz at the bronze level. Now, remember, by the time you complete the bronze program, you will be comfortable in nearly all social situations for the dances in which you have had instruction. Last time on step three, we focused on footwork.

“Today, we will introduce step four of bronze level waltz, and also introduce step three of the tango.”

The teacher and student would then go off and conduct the lesson. At the end of the lesson, the script would pick up again, and the teacher would say:

“Okay, (student), today we have introduced you to two new steps, step four in bronze level waltz, and step three in bronze level tango. We are about one third of the way through the bronze program, and again when you complete bronze level, you will be comfortable in nearly all social situations for the dances in which you have had instruction. Next week, let’s explore upper body motion in the waltz, and introduce step four in the foxtrot. Have a great week.”

Done with the appropriate level of personalization—which most teachers did–this is a powerful technique. Twice per meeting–once at the beginning, and once at the end–the instructor makes a point of anchoring where the meeting fits in the context of a broader program, and reiterates the objective (benefits, pay off) of the meeting.

That may sound to you mechanical, canned, and insincere, and perhaps overdone as well. Let me beg to differ.

One of the biggest problems in highly complex and technical services is that, once the sale is made, the professional does a deep dive into the weeds, never again to surface for air until the project ends, and/or arguments commence about scope creep. What is missing is an ongoing, naturally reinforced emphasis on “why we are doing this in the first place.”

What if the rest of us built this simple approach into our own meetings? Let’s count some of the benefits of regularly reinforcing the high ground in the big picture:

  1. Reminds everyone of the links to a larger strategy
  2. Reminds everyone of the benefits of the work at hand
  3. Reminds everyone of the goals they share in common
  4. Forces a justification of each point by linking it to the larger whole
  5. Makes it a habit to integrate big picture and little picture.
  6. Makes it easy to raise any concerns or questions about the larger initiative–early on, and in a comfortable manner.

(Learning tango is an optional benefit).

Shut Up and Sell

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This article was first published in Entrepreneur.com

The truism “people don’t care what you know until they know that you care” is profoundly true. If you try move a conversation straight from “how ’bout them Saints” into your pitch, you’re dead.

First, you have to do some serious listening.

And I don’t mean listening to identify needs. I mean the act of listening itself—not just waiting for data you may extract to justify the pitch you’re waiting to deliver. Great listening is not about fixing customers’ problems; it’s about the respect the customer feels when you’re paying attention to them.

The sad news is that the act of listening—an important part of any sale—is sorely lacking. The worse news is that this goes double for men.

Let me give a relationship example.

If you type the phrase “men do not listen” into Google, you get about 600,000 results, about twice as many results as you get for the search “women do not listen.” And a quick perusal of the women’s results show many are couched in the predicate. Woman do not listen—to their inner voice enough, or to their instincts—basically anything other than “to the person speaking to them.”

If you are like me, you’ve been told “you don’t listen” before (and it most likely came from a woman). In this case, take the blunt criticism to heart. Your customers may be saying it on the inside, too.

Men, when we are accused us of wanting to solve the problem rather than listening, it is almost certainly accurate. We all learned early on that the game is to get the right answer. First. He who gets the right answer first gets the blue ribbon, the gold sticker, the teacher’s praise and our fellows’ envy.

For men, unfortunately, this is where our competitive instincts shoot us in the foot. Because when it comes to selling, nobody wants to hear you tell them what they need—until you have first listened to them.

Yes, I know the customer said, “Tell me about yourself.” He didn’t mean it. I know the customer asked, “Why should I buy from you?” She really couldn’t care less. In this one respect, the phrase “buyers are liars” is true. Or, if you prefer, they’re just being polite.

It’s not that customers mean to lie—it’s just that they never went to buyer school. They don’t know what to ask you, and they’re afraid of getting ripped off. So they dump the problem on you—”Tell me about your product.” And we, poor fools that we are, think they want to hear our answer.

If you went out on a blind date, you wouldn’t want to hear the other person tell you about their last 17 dates. It’s no different with sales. The only person that customer really would like to talk about is himself.

This is a deep truism about people. Humans simply don’t listen to others tell us what we need unless a certain ritual has taken place first. That ritual is being listened to.

The customer knows you’re selling something; they’ll get to that in their own time. In the meantime, you will not be listened to seriously until you have done some serious listening yourself.

People don’t buy based on price—unless you have failed to offer anything else. They don’t even buy based on features (though they won’t admit it)—not if something more powerful is available.

If you have a decent product at a fair price and you know how to listen while your competitor doesn’t, you will win every time. Buyers don’t just want a product or feature, or even a benefit. What they really want is to feel great about having made a purchase. And that feeling comes from being treated very, very well by the person they bought from.

That means respect. It means actually caring enough to listen—for real, not just to identify problems and offer solutions. It means real empathy—not canned phrases.

The best way to sell is to care. People judge caring by how well they feel listened to. So stop solving the problem—and don’t start again until the customer feels truly heard.

Metrics: Overmeasuring Our Way to Management

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This article was first published in Businessweek.com

Business has caught a terrible case of the measurement flu. Companies seem more focused on performance indicators than on the actual health of what they are trying to measure. Beyond this confusion of measurement, there are side effects: depersonalization, a decrease in trust, and a false sense that costs and risks are actually being managed. All three are evident in business in the last decade, and not just on Wall Street.

Imagine you’re at lunch with a very good customer. You tell him or her: “You know, we’ve been thinking. The relationship between our companies is very good. But I wonder if we could work together to make things even better than they are.”

So far, so good. Most customers will respond positively. So you up the ante. “Perhaps we should start by agreeing on where we stand now. So tell me: On a scale of 1 to 10, how would you rate our relationship?”

With some hemming and hawing, most people will serve up some kind of response. Let’s say your customer says, “Well, I’d give it a 7.8 on a scale of 10.”

Fast-forward a week. Same customer, a fresh lunch. And you say: “Remember our conversation last week? You rated our business relationship a 7.8. It’s been a good week, so how would you score us today? Are we over 8.0 yet?”

Heisenberg Principle of Human Affairs

I’m going to guess that at this point your score is about to dip precipitously. Not because of anything you did during the week, but from your overemphasis on measurement. The act of measurement itself, when overused, snarls what is being measured. Your customer decides that you’re more in love with your performance indicators than with the actual business relationship they’re supposed to describe. Your customer would be right.

At the subatomic level, the Heisenberg Principle of Uncertainty says, you can’t simultaneously measure both position and velocity; the act of measuring one renders inaccurate the measurement of the other. With apologies to Heisenberg, I’d like to suggest a Heisenberg Principle of Human Affairs: If you overmeasure a relationship, you alter the nature of the relationship itself—the very thing you’re trying to measure.

Einstein supposedly said: “Not everything that can be counted counts, and not everything that counts can be counted.” (If he didn’t say it, he should have.) Measurement has its place. Problems arise when we overdo it. There are four problems with overemphasizing measurement’s role in management.

1. Degradation by over-measurement.

When the concept of customer loyalty was first popularized in the late 1980s, the term had deep emotional connotations: it conjured up such phrases as “semper fi,” or “till death do us part.”

After two decades of overmeasurement, the term is effectively synonymous with price-based promotions to encourage repeat business. Corporate customer-loyalty programs have become all about the metrics.

The financial meltdown of recent years was in part due to overconfidence in the power of measurements. Derivatives—metrics of metrics—and ratings agencies—overseers of metrics—are two examples that turned out badly. The thing itself was obscured by fancy measurement.

The net result? In my experience—and I bet I’m not alone—loyalty itself has declined, the victim of degradation by over-measurement.

2. Dehumanization.

The term “human capital” is common these days. Note that “human” is the adjective; the modified noun is both financial and measurable. The human resources community is itself leading the charge for measurable return on human capital. The danger is that repeated references to people as financial assets risks dehumanizing them.

3. A false sense of trust.

Today’s business world depends more and more on relationships between parties. Contracts, markets, and incentives are often the preferred method for managing those relationships.

But reducing relationships to the common currency of behavioral indicators and money has a way of reducing intrinsic motivations such as obligation or ethics.

When the numbers are all that matter, we hear: “It’s not personal, it’s business.” Trust is based only in small part on numbers; in large part, it is based on personal interrelationships that get replaced by overmeasurement.

4. Increased Cost and Risk.

To a point, measurement helps. When Robert McNamara first joined Ford’s (F) finance department, he reported that payables were estimated literally by weighing the paper receipts. In such cases, a little improvement in metrics goes a long way.

But after a point, the return diminishes. Trust relationships can be less costly and time-consuming than complex legal and accounting systems—not to mention more effective. Trust is often the low-cost solution. Numbers can also give a false sense of security. Quantification looks precise; but as the securitization debacle on Wall Street showed, precision can give a false sense of security by masking greater risk.

How did we get this way? Technology has been seductive; think of the power of the spreadsheet, not to mention Moore’s Law. Consider also the recent celebration of the “hard” sciences over those such as psychology or economics. Too often this thinking has implied that lack of measurement implies irrelevance. It doesn’t. Einstein (or at least his attributed statement) was right.

Some solutions seem evident. Even if we believe that everything in principle is measurable, sometimes it’s just silly to do it.

  • If you want to improve your customer relationships, metrics should not be your only choice. To borrow from Shakespeare, if you want to tell someone how much you love them, don’t count the ways. Just say them. Better yet, act them.
  • If you want to improve customer and supplier relations, listening over dinner and a handshake can sometimes be more powerful than relying on the legal department.
  • If you want to motivate your sales force to create deep relationships, don’t lead by putting a price and a stopwatch on every customer’s head. Emphasize intrinsic rewards as well as extrinsic ones.

Both measurement and management will be improved if we can rediscover how to think about each of them independently. Financial performance will improve, too. Another plus is the reintroduction of the human element into business. You can’t measure it, but you can’t deny its impact.

When Customer Focus Becomes Predatory

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This article was first published in Entrepreneur.com

Customer focus is a good thing. We all know that. Give the customer what they want, sell based on needs, not products, and offer benefits, not features. Baseball and apple pie are good, too. Yawn.

But wait. Is it possible that you can be too customer-focused? Yes, it’s possible, and I’m not talking about unintentionally turning yourself into a nonprofit by being too good to your customers.

I’m talking about your motives. Why is customer focus supposed to be such a good thing? When you talk about customer focus, how do you talk about it? Above all, ask yourself this: Whom is customer focus intended to benefit?

Pick your favorite search engine and enter “customer focus.” Scan the results thoroughly. You’ll find that at least half of the entries describe the benefits of customer focus as accruing to the seller. Most tend to skip over the part about the benefits to the buyer—it’s all about how customer focus helps your sales.

Let me phrase this in a more provocative way: The more you think about how customer focus benefits you, the seller, the more you come to resemble a vulture. A vulture is very focused on its prey; in fact, it’s extremely sensitive to the needs and environment of its prey. But its motives are entirely self-serving. The customer focus of a vulture is not about the customer—it’s about the vulture.

“But that’s not me!” you protest. “It’s just understood that by serving customer needs I end up doing well. In fact, the only way I do well is if I do a great job of identifying and serving my customer’s needs. That’s not being a vulture, that’s the beauty of capitalism—it works for both of us.”

Unfortunately, motives have a funny way of distorting things. We live in a time when ROI and other measurements of success are revered; if a little measurement is good, then a lot must be better. And motives have a way of getting twisted when we’re hyper-focused on these measurements.

Suppose I said to my wife, “Dear, I’d like to make our marriage even better. For a baseline, how would you rate us now on a scale of one to 10?”

My wife might reply, “Well, that’s nice of you! What a great idea. I guess for a baseline, I’d rate us a 7.8. Let’s see if we can improve it.”

Well and good, plus I probably get a lot of credit for this idea, unless the following week, I said, “Dear, I took out the garbage and did the dishes twice without being asked. Do you think our marriage has hit 8.0 yet?”

At that point, my ratings would drop precipitously, because I just revealed whom all this was about. I wasn’t focused on my marriage or my wife. I was just focused on improving my ratings—and the sooner the better.

That’s the trouble with mixing bad motives and short-term metrics. They interact in a volatile way to make you look like a vulture. Worst of all, it doesn’t even work. Customers can spot you for a phony a mile away; you know that because you can spot one, too.

So is customer focus bad? Not at all; it depends on your motives and your execution. The best customer focus aims at truly benefiting the customer—first, last and period. Couple that with a faith that, if you do a great job, you too will benefit—through loyalty, customer retention and relationships.

Do you benefit? Absolutely. As long as you don’t focus on your benefit like a vulture.