How to Answer the Toughest Sales Question

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This article was first published in Entrepreneur.com

It was a moment most salespeople could appreciate. On April 13, 2004, President George W. Bush held a press conference at which he was asked, “What would you say your biggest mistakes have been and what have you learned from them?”

The question left the President a bit tongue-tied and he finally left the question up to historians to decide.

I’m confident Bush knew the features and benefits, so to speak, of his presidency by rote. He likely had answers for a wide variety of specific questions that could be asked. But when faced with a large, open-ended question, he froze. A seemingly simple question became the toughest.

If I asked, “Which sales question would you say is the toughest one to answer?” Different people may have different candidates, but I suspect we’d all rate this one pretty high: “Why should we buy from you?”

It is this large, open-ended query that generally produces a poor answer.

Most of us end up fumbling through some rehashed version of our elevator speech, or website, or brochure. Those answers often end up sounding hollow and canned.

And no wonder! The question itself is a setup. The customer doesn’t always mean it as a setup—but it is nonetheless.

Here’s why. The question almost certainly demands an answer based on you—your services, your product, your business. But any answer that’s all about you is simply not going to fly. People buy for their own particular reasons—not yours.

And yet, you probably can’t give a customer-based answer either. This isn’t a question that comes up after a long relationship, this is a question for the courtship, and at that stage the truth is you honestly don’t know enough about the customer to give a credible answer.

So there you are, set up like a bowling pin; precluded from giving a good answer, just waiting to get knocked down. Is there no hope?

Yes, there is hope, and it’s very simple. Tell the truth.

The truth is, only a deeply customer-based answer is going to work, and you don’t know the customer well enough to know what that answer is. So that question needs reframing. Here’s what it might sound like.

Customer: So, tell us this. Why should we buy from you?

You: Honestly, it would be arrogant of me at this point to say why you should buy from us. I’m not even sure you should buy from us, much less why.

What I can tell you right now is why certain people buy from us, and why certain people don’t buy from us. I can also give you an idea of why others buy from our competitors, and why some don’t.

That’s not bluster. Some customers put a great deal of emphasis on flexibility, others value clarity of contracts. I don’t know which you value more. And that’s just one small component; I’d be happy to list the issues we need to talk about in order to learn who you should buy from.

Nobody is better than everyone else across every single dimension—including us. So it’s critical we talk about your various needs to determine who your best supplier is. If we sit down and talk honestly about what’s important to you, together we’ll learn whether my company is your the best supplier.

So let’s get to work. Let’s start working to figure out who you should buy from.

Some salespeople will applaud this example and some may deride the answer. But clients will find the thorough and honest examination refreshing.

Selling From Principle

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How do you cope with complexity in your sales life?

It’s tempting to respond to complexity with more complexity: throw more time management tools at it, break it down into pieces and manage the processes, use more CRM.

The other approach is to respond to complexity with less complexity: move “upstream” and deal with general principles that can be interpreted so as to give general guidance to specific situations.

Salespeople and business developers show a preference for the former, I think. We also, as a rule, are focused on tactics more than strategies; tips and tricks more than insights; action steps more than plans. (Think of the proportion of the articles in this and other selling sites that start with “Top 7 Tips for xxxx.” I know, I’ve written my share of them).

When we focus on process-mapped complexity and tips and tricks, we miss several things. A strategic perspective. A reminder of what’s important. The opportunity to re-invent, re-apply and re-affirm the basics of the business.

And that’s not all. Principles-based selling creates trust. Buyers trust people who appear consistent in their approach. Thinking from principles means that employees are internalizing what’s important to the company. And if principles are constantly being tested in the real world, then you’ll find out far sooner if there are market-meets-principles problems.

Selling by principles affects the customer’s experience. If you’re trying to remember 100 different techniques for 200 different situations, you cannot help but appear inwardly focused, preoccupied, and—worst of all—manipulative. How can you appear otherwise if you’re responding to every client comment with a mental download of your playbook?

Selling from principles lets you respond to thousands of situations—without the cost of mentally withdrawing while you process your client’s comments. That raises two questions: What do these ‘principles’ look like? And how do you sell from principles?

What do Principles Look Like?

Here are my own four principles. You should pick your own. I have evolved mine over the years, and written about them (see Trust-based Selling). They work very well for me; I can’t guarantee they’ll work for you. But here they are as an example.

  1. Start with client focus—for the sake of the client. That’s not the same as client focus for your sake; that’s the client focus of a vulture. And I don’t mean that you should throw away all thoughts of what’s good for you. I just mean start with, lead with, begin with, what’s important to the client—for the sake of the client.
  2. Practice collaboration. Treat the client like a collaborator: not a ‘buyer,’ not the enemy, and not even the ‘client’ (as in separate because of ‘professionalism.’) As a stretch goal, consider writing your next proposal together with the client—seated on the same side of the table.
  3. Have a medium-to-long term perspective, not a short-term perspective. Another way to put this is: never think transaction, always think relationship. Never allow yourself to think of a deal, a discount, a favor, an agreement, without thinking whether you’d do that same deal 20 more times—and without having that discussion with the client. In meetings, make sure to talk about what the meeting means for the relationship.
  4. Default to transparency, unless to do otherwise is illegal or injurious to others. Don’t ask ‘why share this,’ ask ‘why not share it?’ Open up your cost structure, your internal processes, your likely decisions; even your inner thoughts. Nothing builds trust faster than transparency—it screams ‘I have no secrets from you.’

Those may sound like motherhood and apple pie to you, and there’s no question they are abstract: that’s why they call them principles. The trick lies only partly in the choice of principles: it lies mainly in where you apply them. And the right answer is: nearly everywhere.

How Do You Sell from Principles?

The way you sell from principles is to notice your responses to situations—and increasingly base those responses on your principles. Again, I’ll draw from my own four principles as a source of situations and responses.

  1. Client asks you how much experience you have in XYZ area. Your first words should be a direct answer: “6 years, three clients, for myself; the team of four have 1, 7, 0 and 0 years respectively. Would you like more detail, or not?”
    • Client focus (respect the client; answer the question asked, don’t spin it; and respect the client’s time, don’t hijack it for long answers)
    • Transparency (tell the truth, don’t withhold. Straight up).
  2. Client insists on influencing your choice of project staff. Your response should be to understand why, and then to suggest joint approaches to the issue going forward.
    • Client focus (respect their reasons, and their reasoning. Ask about it.
    • Medium-to-long term (this is not a one-off bargaining; it’s an opportunity to jointly forge new joint processes for future sales).
  3. Client forces you to deal with 3rd party buyers, purchasing, and RFPs<. Resist the temptation to go around the purchasing people; treat them as the new client (because they are).
    • Client focus (the organization made this process; your old client doesn’t want to choose between you and his employer; and your new client doesn’t want to be disrespected)
    • Transparency: say that you’ll not say anything to the end client you wouldn’t say to purchasing—then deliver on your promise.
  4. Client asks you, ‘Why should we buy from you?’ Your first words should be, “I don’t know that you should! So it would be arrogant of me to say so. Let’s talk about what would be right for you to do, and then we’ll see who you should buy from.”
    • Client focus: (this is a setup for you to talk about yourself; surprise them by not doing so—talk about them.
    • Collaboration: Offer to work with them to figure out what’s right for them. Then do just that. And be willing to walk away if that’s the right thing for the client.
    • Transparency: share the reasons why most clients who buy from you do in fact buy from you; give the client objective evaluative criteria from which to make meaningful selection choices between firms.
  5. Client says, ‘Your price is out of line.” Your answer: “There are four things people mean when they say that: help me understand which you mean.” (The four meanings are: not enough budget, more than I thought, I need a ‘win,’ and more than competition).
    • Client focus: take the question seriously; show that you can stay client-focused when others might feel threatened.
  6. Collaboration: show you’re willing to work together; it’s not an ‘objection,’ it’s an inquiry.
  7. Medium-to-long term: show it’s not about this deal, it’s about assuming a longer term relationship, which frees you up to talk about this as just a possible deal you may or may not engage in.

Working Out Your Own Principles

Being about principles-based selling, it would be inappropriate to have ‘tips and tricks’ about developing principles. But fear not � it doesn’t have to be hard.

Sit down at a quiet place with two blank sheets of paper and a pencil. Think about the principles of business you believe in. Not me, you. Write them down.

On the second sheet, write down the 7 toughest questions or situations you encounter with clients. (It’s OK to go to 9 or 10).

Now, over the next few days, connect the dots. What do your principles tell you about how to respond to your toughest client questions?

Sorry, it’s not a quick-hit, tip-trick, drive-by process. It takes a while. Most good things do, though. But the process will produce a lot more value than most tips—I’d be willing to bet.

What to Say When the Client Says Your Price Is Too High

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This article was first published in Raintoday.com

If you’re like most professionals, you’re not too comfortable with selling in the first place. It’s not easy fighting that feeling that hyping yourself feels somehow inappropriate. And it’s worse having to deal with objection-handling, doing presentations, and getting rejections. Or waiting for the phone to ring. But little can compete for sheer discombobulation with the plain old, “We think your prices are too high.” What do you say to that?

Listen to Your Gut

When you hear those words—“your prices are too high”—you probably have one reaction in your mind. “What? How can (s)he possibly think our prices are too high? What are they talking about? We’ve trimmed them already; I know they’re not too high, other firms have got to be that high, and our costs are barely covered here, we’re absorbing a lot—how can they say our prices are too high?” In other words—you really do not understand what they mean. Go with that instinct. Ask your self seriously, objectively, curiously—just what exactly is it that they mean when they say your prices are too high. And stay there for a minute. Do not pass Go, do not jump to “how could they?” Because until you know what they mean, you are simply having an argument with yourself. You are presuming to know what they mean, and are starting to answer the presumed objections you have invented in your own mind. Think there’s only one possible meaning? Think again. Let’s go through some of those answers you so quickly provided in your own mind, and explore just what questions those answers might be responsive to—and not responsive to.

  1. Sticker Shock. Sometimes, a client simply is not up to date on the cost of what you have proposed (which hopefully bears some resemblance to what they had asked for). Maybe they’ve never bought this service, or not bought it lately. In any case, they may feel embarrassed by their ignorance. Not wanting to appear at fault for not being current, they may react with some aggression, masking their defensiveness. “You’re just quite a bit too high,” they say, hoping to bluster their way out of the difficult situation.
  2. Budget Busting. Sometimes a client simply hasn’t thought through the combined costs, or the timing of costs, and the total picture ends up being out of sync with the reality of the their budget. In this case, they may not be embarrassed so much as disappointed. But it may be heard to tell the difference from their tone.
  3. Bazaar Bargaining. Some clients simply prefer to use the approach of a bazaar: to assume that they buying process is one of back and forth negotiation, that they stated price is simply an ‘opening gambit’ in an exciting game. In such a case, the client is neither embarrassed nor disappointed—rather, somewhat excited by the process. But their stern countenance will suggest anything but that.
  4. Sucker-Punched. If you get a particularly aggressive pushback from a client, suggesting strongly (even literally) that a competitor has deeply undercut you, you may have been sucker-punched by a low-balling competitor. It happens. If you’re honest, you may admit you’ve done it once or twice yourself. Therefore their furrowed brows reflect a genuine belief that you’re trying something shady.

Here’s the key point. If you try to guess which one of these scenarios is operating behind the curtain of your client’s eyes, you have maybe one chance in four of getting it right. But far, far worse—if you choose to guess, without confirming your guess with the client, you will lose—even if you guessed right. Therefore the worst thing to do is start defending against the attack you are imagining in your own head. And the best thing to do is exactly what you don’t want to do—to ask the client, simply, “Can you help me understand just what you mean by that?”

Asking the Help Me Understand Question

You’re probably afraid of your mind’s version of the client’s answer in your head: it probably sounds something like, “What part of ‘too high’ didn’t you understand, you fool! Like, way high. Like costs too much, out of the realm, not going to win, out of line. Too high! What is it you think you need explained?” But the clients in our mind are far worse than clients in the real world. When you say, “help me understand,” real clients will react one of two ways. Either they’ll begin to explain (“well, we just haven’t got that kind of budget,” “we think you guys always come in high,” etc.), or they’ll look a bit confused and ask, “uh, what do you mean?” In either case, all you have to do is explain that “different clients often mean widely varying things when they say the price is too high.” Then read off the list above: “some find it like sticker shock; some have budget problems; some just figure our opening prices are just that, and some have been presented some really different proposals.” Go on to say, “I don’t know if I can help or not. Some of these situations lend themselves to working out, and some don’t. In any case, if you’ll share with me a little more about what’s behind your concern, then we can see if something can be done or not. If so, great. And if not, then we’ll both at least know we tried.”

The Intent Behind the Conversation

Your words have to work for you; using my words may or may not do the trick. Which means, you need to be very clear about the intent behind this conversation. The intent is to treat price concerns like any other objective piece of information: you explore its meaning and implications with the client until you have a shared understanding. Your time to market is too slow? What do you mean by too slow? Compared to what? What are the implications of being too slow to market? What are the drivers of being slow to market for you? In that same spirit you want to understand the drivers of price concern for the individual in front of you. The fact that the discussion is about price and price is usually an emotional topic is not a problem—it’s a great opportunity. Because price is an equally uncomfortable topic for most clients (the Bazaar Bargainer an exception). And if you can be the one that turns a difficult one into a pleasant, curious, customer-focused question, then you are the one that gets credit for transforming the conversation into greater trust. Your intent, as always, is to develop a deeper relationship with the customer, and to do the right thing for that customer. You can never control the outcome of a price conversation; but being curious and honest about it increases the odds, and pays relationship dividends in future.

For continued reading on this subject check out: How Bad Thinking Can Lead You To Discounted Prices

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Why Value Propositions Are Overrated

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Freud famously wondered, ‘what do women want?’

Professional services (and most B2B salespeople) wonder, ‘what do buyers want?’ Unlike Freud, however, they often think they know the answer.

The received wisdom—very often—is that buyers want “a compelling value proposition.”

As John Caddell puts it in “Another kind of value proposition”

The term “value proposition” has been in vogue in business-to-business sales for twenty years or more. In short, it means that a product for sale must, in essence, create more money (in increased revenue or reduced costs) that it costs to purchase. “If you buy my widget for $x, you’ll get $5x back over the next 10 years,” or something like that.

…The value proposition is a very logical concept. That is its beauty and its limitation.

Caddell is exactly right. Scan the search engines for “value proposition,” and you find common themes: competitive differentiation, better price/value ratios, identify and satisfy unmet needs, tangible business results. Typical excerpts:

To achieve customer success, your company should deliver a particular customer value proposition to a definable market in order to exist…something that can be conveyed in three to five bullet points, three to five sentences, or spoken in thirty seconds or less… [the] value proposition consists of the sum total of benefits which a vendor promises that a customer will receive in return for the customer’s associated payment (or other value-transfer)…Put simply, the value proposition is what the customer gets for his money.

Over and over one hears—if you have a compelling value proposition, you will sell more. This is all the language of homo economicus—rational, linear, deductive, data-based.

Just one problem, as Caddell points out: it’s demonstrably untrue. Or, to be more precise, it explains far less buying behavior than value-prop hawkers, and most sellers, like to believe.

What do the data tell us? Do value propositions really work? Sales author Jeffrey Gitomer puts it nicely: “People buy with their heart—then justify it with their brain.”

The late Bill Brooks, with Tom Travesano (in You’re Working Too Hard to Make the Sale), summarized a survey of several thousand medium-complexity buyers thusly: “People prefer to buy what they need from people who understand what it is that they want.” Not from those with the best value propositions.

Professor Gerald Zaltman at Harvard Business School suggests that 95% of our purchasing decisions occur in the subconscious. “Value propositions” do not address this 95%. Old-timer uber-salesman Zig Ziglar says, “People don’t buy for logical reasons. They buy for emotional reasons.”

The master of influence, Robert Cialdini (Influence: The Psychology of Persuasion) lists six key influence factors: not one of them is data, or rational argumentation, or anything resembling a “value proposition” as defined above.

The term “value proposition” in its daily business use simply does not acknowledge this data-based fact. Caddell describes the results of his own personal research with customers:

I haven’t heard one customer say, “I would recommend Company Y because we were able to increase our inventory turns and thereby reduce working capital requirements.”

Instead, they say things like, “I really like that they are easy to reach and work hard to solve my problems when I have them.” Or: “They could have nickled-and-dimed me when I had to make some changes during implementation, but they didn’t do that.”

In other words, what sticks with customers, and makes them recommenders, are things like “reliability,” “caring about my business,” “saving me time,” “making me smarter.” In other words, the deeper, emotional, fuzzy stuff.

Exactly.

Let’s state the conundrum baldly: mainstream B2B and PSF sales practices are heavily built around a concept that is demonstrably not the key decision driver. And, in my own experience—this is especially true in professional services.

Why should this be? Is it ignorance? Denial? Schizophrenia? An economist-like preference for models over data? Why should intelligent people put faith in logic, where logic has been proven—logically—to fail? How can salespeople justify this illogical behavior?

Here’s my theory. Test it the only place it counts: in your own gut (not your brain).

Consider a metaphor: Mark Twain’s Huckleberry Finn. Early in the book, Huck comes to grips with the “fact” (in his mind) that he is a sinner and will go to hell. Why? Because he realizes he is willing to help the slave Jim escape to freedom.

In Huck’s mind, a slave is another man’s property—to free him is outright theft, a crime that his church and all “right society” tell him is a grave sin. When Huck makes what we all consider the morally “right” decision—to free Jim—the price he pays is that he truly believes his soul will be condemned for all eternity. His moral innocence is unknown even to himself—his own social values have condemned him, even while his inner conscience triumphs.

In describing Huck Finn, Twain brilliantly skewers the moral failings of the slavery-supporting “ethics” of his day. We see that the truly moral person is Huck, not his cruel society.

Professionals face much the same dilemma with sales. What they are taught as right is really wrong. They have bought into the theories, models and “value propositions.” So strongly, in fact, that for them to accept the simple idea that an emotional connection might lie at the heart of a sale is tantamount to heresy.

There are very few Huck Finns out there in consulting firms, people willing to leave the orthodoxy of value propositions and heed the inner voice that says, “just help the client.” Even though that’s precisely what works.

Why is that heresy? Because professionals are content masters who have selling thrust upon them. They are hired, trained, rewarded and promoted for competence in the mastery of complex rational abstractions—the law, GAAP, C++. And, if they are really successful, then as an ultimate reward—they now get to Sell! What a distasteful irony!

In professionals’ eyes, selling means selling your soul. It means manipulation. Lawyers and accountants must follow strict rules regarding advertising. It means focusing on money, rather than on doing good for the client. At the very best, it is considered a “necessary evil, required to run the business.

“Sell” to professionals is a four-letter word. We prefer “business development.” (Note the passive voice: even “developing business” is a bit too direct). It all seems so unseemly; good work alone should suffice to beget more work. That it might not work that way is just too unfair to face.

So professionals and B2B salespeople do what they’ve always done to succeed in this world: turn a distasteful task into an academic pursuit, a business process, a subject for the creation of models. And above all, depersonalize it.

No MBA curriculum I know of offers courses in personal selling. You will see courses about marketing and sales management and decision models, but you will not see a personal-sales course. It is not academically “respectable” to actually train people in such activities.

The result of all this is psychological confusion. A manager-level professional, faced with the need to develop business to survive and advance in his or her career, is faced with Huck Finn’s moral dilemma. Do I:

a. surrender my moral principles, become skilled at the art of manipulation, con my clients, and take money from the people I have come to like? All to save my job and feed my family and move forward in the cruel world? or do I:

b. keep my principles, but give up on income, career advancement and success, and turn into The Unsuccessful.

Most experts who sell don’t even see it this clearly. They opt for some form of denial. Or they do a half-job of it, then resent and envy those who chose a clearer path.

The right answer is Huck Finn’s, with a twist. Follow your heart. Build the relationship. Tell the truth. Be transparent. View transactions as stops on the road, not as endpoints. Do the right thing. The twist is, you can have Mark Twain’s overview—you don’t have to feel Huck’s guilt.

Viewed this way, the proper role of an economic value proposition is to feed the brain that rationalization it needs to serve the heart. The real “value proposition,” if we want to keep that phrase, is the value the buyer gets from being able to have a trusting relationship with a seller.

The irony is even bigger than Mark Twain could have imagined. Those who choose to sell in accordance with the way people really buy end up being the most successful of all.

Stop Trying to Close and Enjoy the Ride

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This article was first published in Entrepreneur.com

One of the most common subjects in sales is closing.  How do you close the sale?  How do you get the customer to sign on the bottom line?  There are dozens of techniques, but nearly all of them boil down to a simple idea: that the objective is to get the customer to do what you want them to do, namely buy from you.

Let me say something obvious, yet radical too: the best way to close sales is to stop trying to close sales.

First, hardly anyone likes being conned, hustled, tricked, slick-talked and manipulated into doing something—even if it’s good for them.  We just don’t like that.

Second, even if you are selling me something that is good for me, and doing so by giving me good reasons why it’s good for me, I can still be suspicious of your motives.  If I think you’re in it mainly for yourself, and not for me, then how am I going to tell the difference between something that is good for both of us, and something that is just good for you?  How can you be trusted?

And the way most salespeople think—they can’t be!

The trick is to actually be trustworthy.  That means, among other things, that the seller must have as his or her goal, meeting the customer’s needs.  Period.  Full stop.  Including not making the sale.  Including, and I’m not kidding, actually being willing to recommend a competitor’s product—if that were truly the right thing to do for the customer.

Think of it—if you are never, in principle, ever able to even consider recommending a competitor’s product over your own—then how can I ever trust your recommendations?  They would always be, by your own admission, selfishly motivated.

If you think this is crazy, hold on.  What do you do when you run across someone whose sole motivation is to help you?  Period.  An accountant cousin’s freely given tax advice to you at a holiday party; a non-commissioned customer-focused store clerk on their last day at work; someone who simply does not have an agenda other than to help you.

The answer is: if we need what they are selling, we buy—disproportionately—from such people.  We buy from those we trust—way more than from those we don’t trust, if we ever have a choice.  We buy because we trust them: because we trust they actually have their interests at heart.

This you can bet on.  You can be on it so thoroughly that you don’t have to close every deal.  If they’re going to buy, they’ll buy without you forcing them. If they don’t buy, it’ll be because your proposition—whatever it is—isn’t what they need just now.  Your job is simply to help them figure out what it is they need, and when and how and from where they need it.

Your job is not to close them.  Your job is to help them close themselves.

If you help them do that, more will buy from you.  More still will come back and buy from you later.  Yet more will be impressed and tell others to buy from you.

You will close more sales if you stop trying to close sales, because it’s not about you.  But—you must let it go to let it happen.

The Only Two Screening Decisions You Have to Make

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Much sales literature talks about sales in terms of processes. A key process element is lead screening, or lead qualification. And that process is often described in terms of efficiency.

As one CRM article put it:

…the process of lead qualification has been codified into the 8-4-2-1 Rule…for every eight leads that pass preliminary qualification, four will lead to sales presentations, which will produce two quotes and finally one sale.

In other words, the sales funnel narrows sharply even once you’ve done your preliminary qualification. Obviously, considering the increasing cost, the further you move into the process, the better it is to narrow the funnel early on. If you can reduce that 8-4-2-1 to a 4-2-2-1, you’ve saved half the cost of lead handling.

Think about that. The focus is on how to do sales cheaply, efficiently, at least cost. This may seem an obvious and good goal until you consider what it leaves out: the impact on the 7 out of 8 who are screened out.

By focusing on sales through the twin lenses of process and efficiency, we run the twin risks of damaging client relationships and of poisoning the marketplace well. And as online social media continue to explode, that risk only increases.

How Lead Qualification Can Hurt Relationships

Imagine somewhere it’s important to make good relationships. Maybe your child is entering a new elementary school. Maybe, if you’re single, you’re entering into the dating world in a new community. If you’ve switched companies, you’re getting acclimated to your new co-workers.

In those cases, we know the importance of treating everyone decently. We have our likes and dislikes, but we don’t let them affect our etiquette. It’s a small community, and we know the value of getting along. And so we behave in polite, decent, ways.

Not so in the world of sales. The screening process drives focus on one question: can I or can I not sell to this person?

If the answer is no, we want to stop wasting time on them. If the answer is yes, we want to move as quickly as possible so as to achieve our end result—the sale.

You may personally believe in relationships and in being nice, but if you walk around with a lead-qualification model in your head, you are subconsciously driven to treat your leads as primarily means to your ends, with some taking more of your precious time than others. This attitude inevitably bleeds through into your interactions.

Lead qualification as it’s usually practiced hurts relationships because it is inherently self-oriented, aimed at the seller not the buyer.

How Lead Qualification Can Poison the Well

When services firms look at the cost of sales, they often begin by focusing on the clients they’ve won and how much it cost to win them. They forget the much-higher cost of not getting all the clients they didn’t get, thus under-estimating cost of sales.

A similar blind spot affects firms looking at their lead qualification process. It’s simple to drop someone from your target list; having dropped them, they are out of sight and out of mind. Your sight, your mind, that is.

But they have memories of you. Did you simply drop them? Did you not return the last call? Did you cancel some meeting or event? Did you give the screened-out client any indication that they had been screened out?

Most firms don’t have any particular approach to screening out prospects; they simply stop doing what they were doing. Yet the same people would never drop a social relationship.

Should your child just begin ignoring a casual new acquaintance at school? If you’re dating, should you simply not call back after a first or second date? At work, do you simply turn your back on new acquaintances?

The reason we do in sales what we wouldn’t in social situations is that we assume closed social settings, but infinite lead streams. It’s just a lead, we rationalize. We’re a tiny firm, the market is huge. There are always more leads.

But there are not. Leads are finite. Worse yet, many prospects know each other. Word of mouth doesn’t just work among customers and ex-customers, but among leads and ex-leads too. Your reputation is greatly affected by the way you sell, and part of that is how you treat people you screen out.

The old customer service rule of thumb was that a person would tell four or five others about a good experience, but several dozen about a bad experience. In an age of YouTube and Twitter, negative stories don’t stop at a dozen—they explode to tens of thousands, and in just a matter of days.

The Only Two Screening Decisions You Have to Make

The lead screening process and underlying mindset can make us treat prospects as if we were examining them under a microscope for incipient dollar signs in our wallets. It drives self-focus and makes objects of our prospects. It dehumanizes both of us, and—it pollutes our prospect base at a frightening rate. Lead screening processes done poorly equal self-destructive marketing.

Fortunately there’s a simple answer. There are just two screening decisions you must make:

  1. Are we willing to treat this prospect as a potential client?
  2. When shall we review this decision again?

As long as the answer is yes, just one goal should drive our behavior. That is to determine whether and how we can help a prospect, by talking with them.

If we figure out how to help them, and they agree, a sale is the natural result.

If we figure out how to help them and they don’t agree, we have failed to communicate; that’s our fault.

If we decide we cannot help them, and they agree, we should thank them for the chance to explore together, and leave on good terms.

If we decide we cannot help them, and they don’t yet agree, we owe them the decency of an explanation that is satisfying to them.

Screening should not be a solo and self-oriented decision about timing based on what’s in it for us. It should be a consensus-based joint decision about whether to continue the dialogue, based on what’s in it for both of us.

Done that way, a screen-out is nearly as positive as a sale, because it implies a joint decision. Screened-out prospects become good marketing. After all, such joint decision-making is how we develop responsible and mature relationships with others.

Do a Sales Job on Yourself

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This article was first published in Entrepreneur.com

Let’s get real for a minute. If you look up the dictionary definition of the word “sell,” you may not like some of what you find. There are unpleasant synonyms and usages, words like “persuasion,” “inducement,” “sell out,” “hard sell” and “sell down the river.”

Selling, in other words, doesn’t have an entirely good reputation, but you probably already knew that quite well. You know some people who react negatively to being “sold” and even deplore sales as a career. You’ve probably spent some energy justifying the role even to yourself.

All this makes it hard to do a great job selling. Unfortunately positive thinking alone won’t change people’s perceptions. And crossing over to the dark side—accepting the role of con artist and hustler—is ugly, immoral and doesn’t work well, anyway.

But there’s a way out, a way of acknowledging the tough reputation of sales and overcoming it at the same time. It involves the most important sale you’ll make—the sale inside your head.

Pick one of these simple ideas, however you say it:

  • You get more sales by getting people what they want than by trying to sell them what you want.
  • If you stop trying to control people, they’ll cooperate with you.
  • If you listen to people first, they will then listen to you.
  • If you help people you increase your chances of making sales.
  • If you put your customers’ interests ahead of your own, you’ll end up better off than if you tried to achieve your own ends directly.

There’s a good reason most customers are suspicious of salespeople: Most salespeople are, in fact, more motivated by getting the sale than they are by helping their customers. And it’s made worse by the sales professionals’ relentless pursuit of efficiency, closing and objection handling—all of which are about the salesman, not the customer.

The idea is so plain it can be difficult to believe. It seems paradoxical: Stop trying to control your customers and you’ll get better results than if you try every trick in the book.

People want to buy from those they trust. The best way to be trusted by your customers is simply to be worthy of their trust. Be trustworthy. That means truth-telling and transparency. Above all, a relentless focus on the best interests of your customers will earn their trust.

If you constantly serve your customers’ ends, you’ll gain a reputation for being trustworthy. When people trust you, they hassle you less about price, they refer you to others, you get fewer competitive and more sole-source bids, higher repeat rates and far more cooperation from your customers.

Successfully selling yourself on building a trust-based relationship is a win-win. Customers get their interests served better, and you get your interests served better. But this only happens when you don’t lead from your own self-interest.

That simple, internal sales job is not all that easy. But the very best salespeople in nearly all industries have managed to make that sale. They have convinced themselves that everyone, themselves included, is better off if their primary focus is serving their customers.

Put it another way: Make your own sales not a goal, but a byproduct, a byproduct of making customer satisfaction your primary goal.

Wall Street Run Amok: Why Harvard’s to Blame

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This article was first published in Businessweek.com

On Oct. 2, Michael Moore’s new movie, Capitalism—A Love Story, spooled out in theaters nationwide. Like most of Moore’s films, it will likely do well—spectacularly so for a documentary. It will also likely stoke the Main Street sentiment that Wall Street is a den of iniquity, or something worse.

How did this schism come about? Just where did Wall Street go wrong? It’s popular to blame misaligned incentives, lack of regulation, or just plain greed. Those would be conveniently simple explanations: We could just fix incentives, regulate more, and prosecute the guilty.

The truth is, sadly, more complex, but it boils down to this. Harvard Business School (Harvard Full-Time MBA Profile) is to blame. Not solely and specifically HBS, but HBS as representative of business’s best thinking and the preferred finishing school for the American System of Free Enterprise. Our best and brightest did it.

Harvard Business School led the charge away from an approach to business centered in relationships and commerce, and toward one rooted in markets and competition. They promised us competitive advantage and efficiency. They delivered.

But those benefits came at a cost. The cost included a Hobbesian view of business—nasty, brutish, and every man for himself—and a rejection of the idea that ultimately we’re all in this together. Which is precisely what we do not need at this time of increasing global interdependence.

How did this happen?

In 2006, I attended my 30th reunion at Harvard Business School. A few things had visibly changed.

Fading Role of Experience

In the mid 70s, HBS viewed itself, and was viewed by others, as graduating leaders of industry. Management consulting and investment banking together were the “hot” new segments, but still employed only about a quarter of total new graduates (a proportion that roughly doubled over the next few decades).

The curriculum had a limited number of courses; the faculty, many with significant business experience, took pride in cross-referencing concepts across courses.

Most cases (remember, HBS uses the case method) personalized the manager’s role. They’d begin with, “As Joe gulped down his first coffee, he pondered the situation of…” and ended with, “What should Joe do? What would you do?””

For three cases a day, five days a week, for two years, this was the intensely pragmatic approach HBS taught us: What is the problem, and what should Joe/you do about it?

Today, HBS offers many more courses. There is less cross-referencing—the experience is less integrated. Faculty are more likely to be professional academics—fewer have degrees in business, and they are less likely to have business experience.

But most interestingly, Joe is reportedly gone from the cases. In his place? Structural analyses of competitive dynamics, and business redesign through markets and outsourcing.

Growing Focus on Competition

Joe’s absence reflects the two major intellectual trends of our (business) time: a view of strategy as competition (think “sustainable competitive advantage”) and a view of business as optimizing systems (think business process re-engineering and outsourcing). The competitive view literally redefined suppliers and customers as sub-categories of competitors—we learned to compete with our customers. The process view replaced markets with organizations—we now outsource human resources in the name of efficiency (and, tellingly, speak of employees as “human capital”).

Harvard Business School was a leader in the New Strategy thinking, and a significant participant in Business Process movement. This view of business is less about commerce, more about competition; less about managers, more about management; less about relationships, more about systems and processes. In this worldview, “business ethics” is an oxymoron; not because of bad behavior, but because ethics can’t even exist apart from some notion of a “relationship” to something or someone else. Subordinating everything to shareholder value is, literally, anti-ethical.

One example is the mortgage industry. It was completely redesigned since the 1980s along good HBS guidelines—to maximize efficiency, lower costs, and increase liquidity. Collateral damage: no relationships, skewed incentives, incompetent regulation, and greed run amok.

Meanwhile, the world is moving in precisely the opposite direction. The salient fact of business nowadays is that it’s all connected. In a connected world, a focus on competitive relationships is no longer useful. What we need is connectivity, trust, and collaboration. And it starts with the way we think. Which means Harvard and other business schools have a huge obligation to correct their teachings.

HBS needs to teach less competitive differentiation and more collaborative value-adding; less how to win supply chain negotiations and more how everyone gains by operating as collaborators; less about transactions, more about relationships; less about winning individually, and more about jointly succeeding.

Where’s a good place to start? We could do worse than to bring back Joe.

The Paradox of Selling

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This article was first published in Raintoday.com

One obvious purpose of selling is to persuade buyers to buy what you are selling. Most people have no trouble agreeing to that proposition.

And yet—the harder you try to get people to do what you want them to do, the more likely they are to push back, resist, and generally behave contrarily. Again, I think most people would agree.

Put these two statements together, and we can easily see selling as an ongoing struggle to get people to do what we want, without making them feel that we are trying to get them to do what we want. Selling has at its heart a struggle to reconcile these two truths. You want to sell. They don’t want to be sold.

When two truths collide, one tends to lose, or they both tend to get watered down. But the way out is not to give up one goal (to sell) or the other (to not cause the feeling of being sold); it is to fully recognize both and transcend the apparent paradox.

It can be done. Here’s how.

The Tension Between Sellers and Customers

This paradox is hardly new. Sellers have palpably felt since time immemorial the tension to selling. Most sellers resolve the tension by one of three strategies:

Defaulting to Truth One: Hard-sell 24-7 to anyone who comes within feeding range;

Defaulting to Truth Two: Being nice and giving away money, relying on the hope that guilt will induce a sale;

Living with It: Internalizing some of form of denial, schizophrenia, or multiple personalities.

But there is another way:

The Other Way: Time, Gifts and Trust

People resist being sold. But people love receiving gifts. In fact, receiving a gift induces a sense of obligation on the part of the recipient. Which suggests a strategy of gift-giving might be the best form of selling.

For services businesses, there is an analogue to gifts—it’s what’s called sample selling in product businesses. Sample selling in the services might mean brainstorming; a small project; a lunch-and-learn; a webinar; a series of articles; a series of conversations for which you don’t bill time; sharing of some previous work.

Sample selling works even better in intangible services than in businesses with “hard” products. The best way for a client to learn how to work with you is to let them work with you. Create a sample experience.

But that’s only half the problem. The other half is, if you set out to give a gift with the express intent of inducing guilt-based buying, you’ll get the reverse—outraged backlash at what is perceived as bait and switch, duplicity, two-facedness. A gift has two features: it is open-ended, and it implies an ongoing relationship. (Think of Don Corleone’s in the movie The Godfather: “Perhaps, some time In the future, and that time may never come, I will call upon you for a favor.” It is non-specific; it is not legally or logically binding; but it carries huge emotional obligation.

When we try to use the language of the market: “If you give me this, I will give you that,” “If you do this for me, I will do that for you,” things change. That is the language of a contract, of money, of transactions.

We violate social norms when we offer a social good (like a gift), but really mean it as a market good (“you owe me”). In one case, there is no binding—yet we feel personally bound. In the other, there is explicit market binding—and we feel market-bound, not socially bound.

The trick is for the seller to give up attachment to the specific short term outcome of a particular gift to a particular buyer in a particular timeframe. To give a sample as a gift, not as an obligating transaction.

That power of a gift is unleashed if it is given without overt conditions of time or obligation. But a gift is diminished if it is conditioned on anything—it turns the gift into a market exchange at best, a bribe at worst. If the gift-giver puts conditions on the recipient, the receiver immediately knows it is not a genuine gift, and the magic connection is ruined.

Applied to selling, this means a strategy of loosely controlled sample selling is far more powerful than a tightly controlled strategy of transactions. In simple terms, if you’re generous as a policy to a sensible group of people in the short term, many of them will buy in the long term.

But only if you don’t ruin it by trying to control them, by treating them transactionally.

Why This is So Hard to Practice

The best salespeople practice this technique already: they freely give of their expertise—a tiny bit to everyone, a lot more to a select group of people. They don’t expect sales from any particular person at any point—yet they definitely expect an aggregate amount of sales from an aggregate amount of leads. They don’t know from just whom or when; but as long as the return rate remains high, they are quite happy not to be more controlling with any one lead.

Unfortunately, this line of thinking is the opposite of what passes for Received Wisdom in sales these days. Tools like Salesforce.com reinforce the idea of more control, not less; of smaller time increments, not longer; and of more metrics, not less. The dominant theme in improving sales is about efficiency, not effectiveness. Break it down, parcel it out, check it off.

In other words, every transaction is treated not only in isolation from others, but is broken down even more finely. Behaviors are sliced and diced, incentives more finely tuned. Qualifying the lead happens more and more frequently at shorter and shorter time intervals.

The net effect on the customer is to feel more and more mechanically processed. How does a buyer feel to be on the receiving end of a process which constantly evaluates his or her financial worth to the seller? Buyers will predictably feel resentment, and will push back. They don’t want to feel sold, to feel a pawn in someone else’s game. And any attempt to introduce social norms will backfire if they are tainted by overt commercial attempts at precise control. No one wants to be treated as a means to someone else’s ends.

How to Do It

It takes a strong personality to not give in to the general business demand for short term and impersonal sales techniques. But the rewards of staying the course are great. The way to think about it mainly comes down to two changes: less control in timing, and looser control in metrics.

Timing. Take a longer view of the desirability of a particular lead. One-off gifts from strangers don’t work as gifts; they just raise suspicion. It’s the ability to show a sustained, genuine interest that offers the chance of a relationship. A focus on transactions kills relationships; a focus on relationships allows transactions to blossom. This doesn’t mean you don’t screen and exclude buyers; it means you do it more definitively, and less frequently.

Selling this way doesn’t mean accumulating specific checkmarks—it means a periodic account review where the decision is simply ‘do we keep investing in this lead—or not?’ Maybe that review happens every 6 months, maybe a bit less. But it is not an ongoing, automatic, short-gated decision. If you’re investing in a client, invest in them—until you decide not to.

Metrics. If you loosen up the timeframe, you can also afford to loosen up the criteria. In a longer timeframe, you no longer have to be bound by 3rd level input metrics to evaluate the worth of a lead: at a longer timeframe, things can get simpler. Are you being invited in, or not? Are they returning calls, or not? Is there a real project being discussed, or not? If yes, keep it up. If not, stop it. The decision metrics become far simpler, and selling can focus on relationships, not evaluating transactions.

The Paradox of Selling

Yes, you still want to sell what you sell. And yes, they still don’t want you to control them.

Don’t choose one or another, and don’t sub-optimize. By lengthening your timeframe and reducing the precision and number of metrics, you open up space for the natural human instincts to work. In that context, you can intelligently give the gift of sample selling; and you can reduce the need to control that gift. That way people can feel the natural inclination to reciprocate, rather than the resentful guilt or rejection that short-term control induces.

Discounting, Price, Value and Psychology

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RainToday.com recently published its Fees and Pricing Benchmark Report: Consulting Industry 2008 in which they analyzed a ton of data from 645 consultants. There were six price-related topics, all of which are interesting. But one in particular caught my eye: the analysis on discounting.

As the authors point out, discounting is Ground Zero for hypocrisy in pricing. Everyone decries it—yet everyone (actually, 65%) does it. It reminds me of dieting—“I know I shouldn’t, but this one little brownie won’t hurt. And I’ll get back on the wagon again tomorrow.”

Couched this way, the problem of discounting is one of willpower—we all know we should stick to standards and principles, yet we are morally weak at the moment of truth.

I don’t think that discounting is a moral problem, however. Instead, it is one of bad thinking. And it centers around two false beliefs:

  1. the belief that certain customers are inherently “price buyers”
  2. the belief that feeding the price beast will make it away.

The truth is that price is a proxy for several different fundamental buyer concerns. It has no meaning inherently. Price per se is a clearing factor, the point at which money exchanged balances with the various benefits received. And this balancing point is not just “value” as most firms mean that term; it is very much tied up with the psychology of the buyer.

WHAT CLIENTS MEAN BY PRICE OBJECTIONS

It seems obvious.  A client expresses an objection to a price. They say they want a lower price. Clearly—they are concerned about money, value and price. Right? So the only question is, shall we discount, and by how much. Right?

No, and no. Here are four distinct things that buyers are saying when they say they want a lower price. And not one is really about price.

  1. Mismatch with expectations. Only experienced buyers do a good job of guesstimating price quotes from professional services firms. They tend to focus on a basic mental model of time vs. rate, and naturally under-estimate each.  (Recall your own shock at first finding out your billing rate as a newcomer; and the shock of industry hires when they first see time estimates for what they thought was just a request for a data-dump from an expert).This “objection” isn’t an objection at all—it’s just the natural human expression of surprise and dismay when we find out our expectations didn’t match reality.  Discounting just confuses them more, and rewards their delusions for the future.
  2. Mismatch with budget. Sometimes buyers just have a limited budget. They feel trapped, and often a little embarrassed that they have asked you to quote into a situation in which they under-budgeted—or over which they have no real control. Their natural reaction is to push back, in hopes that you can solve their problem without their having to confess their embarrassing ignorance, or go back to their boss for more money.This too is best not seen as an “objection;” it is a simple constraint of the world—budget vs. cost. Again, discounting just confuses the matter, and reinforces the idea that the client can afford to not be open and transparent with you.
  3. Mismatch with competitors. Frequently clients faced with competitive bid situations will say, “Company X is cheaper than you by 25%—you need to discount to stay in the game.” Let’s assume the claim is true on the face of it.  There are two reasons for one firm pricing 20% below another; one is intentionally buying the business, with the intent to raise price later.  The other—and most common—is that the client is comparing apples to oranges.The solution to the first is easy: explain to the client why your competitor’s cost structure is virtually identical to yours, and why a 25% discount is inherently unsustainable—therefore the client is facing a relationship vs. transaction issue.  If they choose transaction, then be glad your competitor just trashed their bottom line to buy a price-shopping client.  They’ll eventually be back.The solution to the second is to have the client carefully compare features of your bid with features of competitor’s bid. You know where costs get built up and where they don’t; have the courage to give your client the data to do the comparison.

    Competitive mismatches aren’t really price objections; they are fundamentally rooted in a misunderstanding of either industry economics or project design economics. The answer is not discounting, but education.

  4. Mismatch with motivation. Professional services firms suffer disproportionately from the delusion that clients make decisions on purely rational, monetary, statistical criteria. Clients, like everyone (including ourselves) make our decisions with the heart, and justify (rationalize) them with the brain.A basic human need is to make sure we didn’t get a “bad deal.”  You can give all the “value” data you want, but unless a client feels you are being straight with them and/or they’re getting the best possible “deal,” they will remain suspicious. When suspicious, our innate tendency is to bargain, to determine some subtle psychological resistance point, just as we would at a bazaar or yard sale.This behavior has nothing to do with price per se, and everything to do with transparency of your economics and the prices others have gotten from you.

    Not paying attention to motivations leads to discounting, which has the perverse effect of convincing buyers that—aha!—you really were holding out on them! Which leads them not only to haggle again the next time, but to fundamentally mistrust you because you quoted them a price that was an attempt to “get by.”

    So what’s to be done? We all know the answer—don’t discount—but we think it’s a moral weakness, a failure of principles. It’s not—it’s a failure of understanding the reason for price objections.

    Armed with the truth—that it’s not about price, and it never is about price—we can do the right thing; be curious, probe and sensitively get one level deeper when presented with price objections.

    Back to RainToday’s survey. Why do 65% of consulting firms discount, even when—as the authors point out—the average 11% reductions could go straight to the bottom line?

    It is simple fear—fear of losing the deal, particularly—which drives us inward rather than outward.  Rather than asking curiously, “Please, help me know what’s behind that?” we fearfully back off in the face of the aggression in the client’s tone—and start discounting.

    The only reason to discount is to buy your way into a strategically new piece of business. And be careful when you do so, because only certain clients buy that way.

The most tragic result of discounting is not even the lost profit; it is that we confirm the client’s suspicion that we are untrustworthy.  It leaves the client thinking, like Sir Winston Churchill’s apocryphal line, “we have now established what you are, we are merely haggling about the price.”