Short-termism, ROI and Green Economics

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From BusinessWeek comes the painful story of an idealist butting heads with resistance and inertia. Nominally it’s a story of Green economics — identifying ways to be profitable while reducing environmental impact.

But it’s also about an emphasis on short-term economics that is not only paralyzing environmental activity, but is harming business and society.

Think of it as the triumph of payback time over ROI analysis.

Auden Schendler is a classic young outdoorsman environmentalist, full of hope that his employer, Aspen Skiing Company, will “get it” regarding his recommendations.

He recommended a $100K project to remodel the oldest lodge; it has a 7-year payback.

Too long, said the company.

OK, then, how about fluorescents in guest rooms—a 2-year payback in eco-friendly savings.

Nope, not warm enough light for guests.

OK then, how about $20K to save $10K per year in the underground garage?

No, we’d rather spend it on amenities guests notice.

It took Schendler two years to overcome resistance to the garage-light replacement, and then only after he secured a $5,000 grant from a local nonprofit. He acknowledges the strangeness of a corporation with annual revenue of about $200 million, according to industry veterans (the company declines to provide a figure), seeking charity to reduce its electricity use. With a hint of sarcasm, he notes: "This is the sort of radical action that’s needed to get people over ROI thresholds."

BW is writing about Green economics. But look at the examples.

What kind of capitalistic enterprise is passing up 50% returns on investment? The answer—a whole lot of them.

Our economy is increasingly governed by the belief that a bird in the hand is worth more than two in the bush—because that two-bird bush could blow up at any time, and besides, you just might find a four-bird bush around the corner.

Look at the forces of short-termism at work:

• The average length of ownership of a stock is down by orders of magnitude from a decade ago;
• mortgages used to be resold once or twice; now they are sliced and diced and repackaged into securities that are themselves sold over and over;
• the growth of private equity is, among other things, a shortening of the time period of evaluating a company’s worth;
• the growth in auto leasing represents a shortened ownership period;
• Real estate is increasingly a short-term investment to be “flipped;”
• Outsourcing reduces the time required to make a switch in organizations;
• Divorce rates, clothing style cycle times and TV show lifespans—all becoming shorter.

A shift toward transactions goes hand in hand with a reduced time perspective. These shifts make for more efficient markets, and reduce transactional costs (though increasing their number). But there’s a big downside: if everyone’s looking for fast hits, then no one’s around to play the long game.

Mathematically, there are three reasons payback analysis is supplanting ROI analysis:

1. Investment “owners” are turning over faster; I want mine now, thank you;
2. Uncertainty feeds the “get rich quick” mentality; why tie your money up because,hey, you never know!
3. Uncertainty also feeds perceived risk. In effect, investments are being assessed at increasing hurdle rates for farther-out timeframes (note to self—or kind reader?—check bond markets for evidence of this)

So we get more of this kind of thinking:

• Why should a private equity firm invest in anything beyond what will increase the return when the company is sold in three years?
• Why should any company invest with a longer timeframe than three years, lest it be taken over by a private equity firm?
• Why should a company invest in employees, since after all they might leave?
• Why should a company invest in customers if the payback takes over a few years?
• Why invest in branding? In training? In anything you can outsource? (And make sure the outsource contract shows a payback of at least two years).

With this kind of thinking endemic, it’s no wonder we’ve got a hard time figuring out how to reform social security, save the environment, deal with immigration, or rebuild falling bridges. It’s just not fast enough to suit us.

Thank goodness Schendler has the optimism of youth. He doesn’t know what he’s up against.

 

Trust vs. Incentive Compensation: What Joe Torre and the NY Yankees Have to Teach Business

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Let’s talk fundamentals: how to manage and motivate people in an organization.

Which statement do you agree with (from the New York Times)?

1. “[it is] important to motivate people, as most people in everyday life have to be, based on performance.”

2. “It’s not the money that is…the determining factor. It’s…the commitment and trust — because you can’t have one without the other.”

If you agree with the first, you’re agreeing with Randy Levine, New York Yankees President and lead contract negotiator. And with the majority point of view in business.

If you agree with the second, you’re agreeing with the most successful manager in modern baseball history, who just turned down the most lucrative offer in the major leagues—Joe Torre. But with the minority point of view in business.

“When I walked into that room, I saw businesspeople,” said Torre. Too true. The dominant view among compensation consultants, business schools and general management—basically—is that incentives help performance, and that the best incentive is money. Just like Levine said.

Both business and the Yankees see Torre as a unicorn—they refuse to believe people like him exist. Their denial extends to a refusal to acknowledge the fact that his 12-year superior performance was achieved without incentive clauses.

Alfie Kohn has written extensively about the harm caused by reward systems, in business and in education. “Monetary rewards definitely incent people,” he says “—they incent them to get more monetary rewards.”

What they don’t do is incent people to do things for their own sake. Like manage a great baseball team. Or develop great software. Or serve customers.

Really great performance doesn’t come from the extrinsic motivation of rewards—it comes from intrinsic motivation (this is frequently true even on Wall Street, in the business of money).

The hijacking of American business thinking by B. F. Skinner in this regard is astonishing. Despite massive evidence to the contrary (think Babe Ruth: “you mean you’ll pay me to play baseball?”), the mantra continues to be “they won’t play without that pay.”

Kohn cites a study in which children were observed, in order to determine their favorite game. Once the game was identified, the children were offered incentives to play that particular game.

Whereupon they promptly lost interest.

Kind of like Torre, who said he was insulted by making his compensation “incentive”-based. “I’ve been here for 12 years; I didn’t think ‘incentive’ was needed.”

For Torre, it was pride—in himself and in his work—which was demeaned by the Yankees’ rats-and-cheese model. In his words, “It was a very generous offer, no question about it. It still wasn’t the type of commitment that we’re trying to do something together as opposed to what can you do for me.”

This means the Yankees’ incentives worked, all right—they incented a consummate team player to quit the team.

The Yankees say they really wanted Torre back—which is either a lie or reveals the depths of their denial. Because if Levine, Steinbrenner et al really wanted him back, they would make him an offer that restored his pride. Yet—they’re too proud to do that.

So here’s the real irony. The thing that drives both their own behavior and Torre’s—pride—is something they don’t believe exists.

When you believe in a philosophy that is contradicted by your own behavior, that’s some serious denial.

If your company’s compensation people get the bright idea of incentivizing trust—“I know, let’s give them big rewards for behaving selflessly!”—send them to the Bronx. The Yankees’ front office is their kind of place.

Software Programming and the Economics of Trust vs. Transactions

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In a charming blogpost, Paul Duval says that developers should “Fire your best people and reward the lazy ones.”

As he explains, developer shops often consider “troubleshooters” to be among the best employees. They know where all the hard-coded quick fixes are, and they can spot them like lightning. Trouble is—those hard-coded fixes are impenetrable to other programmers.

Troubleshooters perpetuate impenetrable coding—because it’s faster, and perhaps because they are the beneficiaries of continued arcane language.
“Lazy” developers, by contrast, are those who can’t stand repetition. Every time they encounter a hard-coded arcane fix, they take the time to craft a generic solution that any future developer can understand.

One key fact: Duvals says that for every time a method is written, it’s read (and maintained) ten times—a 10:1 ratio. Suddenly, the “lazy” developer is the one reaping relationship-based economics for the employer; and it’s the “troubleshooter” who is perpetuating a repetitive, transaction-based high cost structure.

So it is that the world of software development is a microcosm of the broader world of business relationships—rewarding transactional behaviors in a non-transactional world.

We live in a world of incredible inter-dependence, connections, networks—and it’s moving ever-faster toward more, not less, of those connections. Yet we live by ideologies that focus on and reward transactions, not relationships.

• In software development, it’s a focus on how fast the problem can be solved—rather than on the systemic cost of solving the same problem over and over.

• In sales, it’s the dominance of linear “models” that begin with a lead and end with a close—rather than on lifetime and network-based models of business development in a sustained relationship environment.

• In investment banking, over the years it’s become about how to get the deal, rather than nurture the relationship.

• In commercial banking, it’s about transaction fees (e.g. overdraft charges), rather than about earnings based on assets under management.

• In mortgage banking and credit cards, it’s become about penalties charges (prepayment penalties and late penalties) rather than underlying economics.

• A major aspect of the subprime mortgage debacle has been the “transactionalization” of what used to be a relationship business. Mortgages have been on the ownership dimension—being sold repeatedly; on the risk dimension—stripping principle from interest; and on the time dimension—dealers in mortgage “products” increasingly get paid from transaction fees for moving on to the next step in the chain, rather than on the underlying interest paid.

• Private equity in its entirety is arguably an example of transactionalization of the corporation, though at the outset it introduced a needed jolt to stodgy bureaucracies. Of late, however, PE firms are increasingly finding earnings based on—you guessed it—transaction fees.

In all these arenas of business, we are seeing a structural challenge to trust. If you disrupt the relationship aspect of business in favor of approaches that are one-off, transactional, short-term in nature, you destroy the natural economics of trust.

Ironically, the long-term economics of trust far outweigh those of short-term transactionalism. But an ideology of get-in-get-out-fast has overwhelmed commonsense. The result is not only housing bubbles, but a paucity of social trust in business.
 

Beta Software You Can’t Trust

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The other day I decided to offer credit card payment capability.  I quickly narrowed it down to two choices—JPMorgan Chase, and PayPal.

Chase was professional and comprehensive, but required me to fill out forms, fax them in, then phone someone a day later. Uh uh, not me.

PayPal offered a cool online menu for creating customized Outlook-generated email with embedded credit card payment links.

I went with PayPal. Then the fun started.

Let’s just say it didn’t work.  I called PayPal tech support.

“Oh yeah, I see. Hmm, you’re right, it doesn’t work. Well, that’s beta software, and we really don’t support it.”
“If you don’t support it—why do you offer it on your website?”
“Well, some people like it. But it’s beta, we really don’t support it.”

Now, I like PayPal.  It’s a business I’d like to see succeed.  Nice technology.  Nice people, good customer service manners, cool techies.

But the end result—in this case—is flakey. Doesn’t work. Undependable.  Can’t rely on it. Untrustworthy in that sense.

And the big sin?  They think it’s OK!  After all, it’s just beta!  What do you expect?

Increasingly, I expect it to work.

PayPal is not alone.  I remember discovering Plaxo, one of the early contact management software updating programs, and thinking, “what a great idea.”  It was being offered in beta test format.

I tried it.  Spent hours on it.  Pissed off several friends.  I called to complain, and the nice/service-oriented/tech-savvy person offered me a free year if I’d come back in a month and try their update.

I did.  It was not updated enough.  I left them, and now here I am saying bad things about them online.  They blew two chances with me, and thought it was OK!

I think it started with Netscape. In its early days, academics and gurus were raving about this new business model that allowed customers to actually contribute to the design. User-friendly! Cutting-edge!

True. But also flakey. Undependable. Untrustworthy.  But they thought it was OK!

I’d be interested in hearing from others, but for my money, the trend has gone way past the equilibrium point. 

I don’t want to help design some trivial widget—I just want the stupid thing to work.

And I certainly don’t want to contribute to testing something I’m going to be depending on—like payment systems, Outlook add-ins, printer driver updates, data converter programs.

The tweaks just ain’t worth it. Dependability is worth it.

We are well past the invention of major new categories. We are into the ability to trust things like we used to trust dial-tone. That is to say, we want 99.9% dependability.  But too many developers still think selling mediocrity-in-progress is OK!

The new killer app isn’t email.  It’s dependability.  Software producers, you’re on notice.  I’m quite happy to pay full retail for a working product; I’m not falling for anymore “get it first” or shareware-priced new software.

I want software I can trust. Software that works.  I’ll pay good money for it.

But I’m done paying you money for the privilege of debugging your marginally-interesting flakeware.

Do your own damn beta.  It’s not OK by me anymore.

Mummers, Trust, and the Threat of Violence

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If you’re like me, you have a (very) vague sense of “mummers.” Or “mummers plays,”  or of Philadelphia’s “mummers’ parade.”
Turns out mummery (or mumming—hard to know what noun form to employ) takes on some curious forms. Particularly in parts of rural Newfoundland.

Check this out:

COLUMBIA, Mo. – Residents of small isolated fishing villages on the northern peninsula of Newfoundland have participated in the ritual of “mumming” for centuries. According to the tradition, small groups of villagers, or mummers, disguise their identities and go to other houses to threaten violence, whereupon the people of the houses try to guess the intruders’ identities.
A study by researchers at the University of Missouri-Columbia argues that this tradition is a manner of communicating trust and trustworthiness. The mummers who threaten violence must prove themselves trustworthy by not committing a real act of violence, and the hosts of the invaded home must demonstrate trust by not responding to threats with fear or violence, said Christina Nicole Pomianek, an MU doctoral student.
“In this ritual, participants are making themselves vulnerable at the hands of the other,” said Craig T. Palmer, assistant professor of anthropology in the College of Arts and Science. “It’s a way for community members to prove their trust and commitment to each other.”

If even remotely true, this is one of those quaint social innovations that is firmly rooted in and serves to elucidate human nature.

There is no such thing as trust without risk, I would argue.  Blind faith is not trust at all, because it rules out risk as irrelevant.  And if you are dealing in probabilities alone, you are similarly not dealing with trust, but with statistics.

Trust exists at that interesting boundary line, where you must take a step forward not being entirely sure that there will be solid ground to support your step.

You’re invaded by dressed-up mummers.  In all likelihood, they are just the boys up the road, doing the halloween-like ceremony.  But there’s always the chance—well regaled in lore—that one or more of them really are out to rape, pillage and burn your house down.  Do you keep one hand on the shotgun?  Or decide to trust?

You’re a dressed-up mummer, going down the lonely dark road in Newfoundland to drop in those strange old folks down the dark road you only see in town rarely. That’ll add some edge to your life.  You mean them no harm, you want to play the game and have a drink after—and make some friends.  But they may have a shotgun handy too.  Do you play the game to the hilt? Or rip off your mask to guarantee your life—but ruin the game?

The Columbia researchers speculate that the timing of the holiday—early winter—supports the need to develop trust during the long cold dark season to come.

How clever—a mutually created mutual threat, almost certain to be resolved—but not quite guaranteed. In order to create trust.

Makes sense to me.

Many thanks to Ed. (short for "editor") of Blawg Review  for tipping me to this; it comes courtesy of Andrew Sullivan’s online column The Daily Dish at Atlantic.com.

Customers and Bottled Water: It’s the Coverup Not the Crime

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Advertising Age presents Martin Lindstrom, at Coca Cola’s home in Atlanta, in his video:
 

Watering Down the Coke Brand?

Admitting the Source of Bottled Water

ATLANTA (BRANDFlash) — It’s surprising how just three letters — "PWS" — can generate such angst throughout an industry as large and savvy as the North American beverage business. But the issue of publicly admitting that bottled water comes from a "Public Water Source" is a huge one for marketers such as Coke. The concern, of course, is that if the consumers know those expensive bottles of water come from the same public reservoirs as tap water they’ll cease buying them. But, in fact, similar experiences in other categories show that consumers will not easily abandon products that have become as much of a habit as bottled water.

Lindstrom talks about Coke’s effort to introduce Dasani in the UK as a pure, pristine water. It’s a message that didn’t go over well when the truth came out (PWS), then took a second hit from a bottling contaminant scandal.

Lindstrom’s tone is bemused. And rightfully so.  As businessmen and politicians are continually rediscovering—it’s the cover-up that hurts you, not the crime. Think Nixon. Jeff Skilling. Larry Craig. OJ.  Monicagate.  Rigas. Mark Foley.  Corvair. Ted Haggard. Dan Rather.  Bhopal.  It’s endless.

And yet—as Lindstrom accurately reports, “The [marketers’] concern… is that if the consumers know those expensive bottles of water come from the same public reservoirs as tap water they’ll cease buying them.”

I know! I’ve got an idea! Let’s just shade the truth a bit.  Not a flat out lie, of course.  Just repositioning.  Images, not words.  Suggestions, hints, juxtapositions, transference, intonations.  Nothing illegal.  No lies, of course.  After all, what do you take us for?

It is shockingly hard for most of us to just tell the truth.  Maybe marketers have just a little harder time than the rest of us?  Maybe their paranoia is just more publicly visible. 

What’s peculiar is—as Lindstrom points out—the truth really isn’t so bad.  Consumers can be quite comfortable buying PWS water. It mainly depends on—whether they’ve been told the truth about it.  The whole truth.  And nothing else.

If we doubt the truth of any part of a message—not just lies, but omissions, shifts, allusions, and particularly motives—then everything begins to unravel. What a tangled web we weave…

Once we doubt someone’s motives, it’s like dominoes—one statement after another gets challenged.  We become cynics.  And we end up not trusting the speaker.

A good case  can be made for Public Water Supply water; it’s not so hard to make.   And it beats the heck out of an implied fake that ends up being discovered for what it is.

A lie by any other name will smell the same.  Like contaminated water.

 

Who Do You Trust? What Trust Rankings Really Tell Us

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You’ve probably noticed, from time to time, survey results on trust—which professions we trust the most, which institutions, which messages, channels, and so forth.

The most recent such data—from Nielsen— tells us that web users around the world trust the recommendations of others more than they trust advertising.

Other surveys tell us we put “a person like yourself” ahead of all others. 

Still others tell us the relative trustworthiness of various professions.
There are two messages in these surveys—one explicit, the other implicit.

The explicit message is the headline—we trust doctors more than newscasters, we trust blogs more than advertising, and so on. Those data tell things like “who’s winning,” and how Australians differ from Chinese. Interesting. Food for marketers’ thought. And great for parlor conversation.

But the implicit message is about the nature of trust itself. Which is not at all obvious.

Imagine a survey asked people “How closely are you related to other people?” Now imagine findings like: “Parents top the relation list; followed closely by children and siblings. Cousins are found to be less related, about tied with in-laws. Neighbors and TV sitcom families appear to be the least closely related.”

Silly, because such a survey just re-enacts a trivially true definition as if were a new empirical discovery.

But isn’t trust much the same? We all have an instinctive sense that we trust certain people more than others. If I know you, have history with you, have shared personal moments with you, converse with you, work and play with you—then the odds are far greater that I’ll trust you than I’ll trust someone two degrees away on LinkedIn.

So when Nielsen tells us that consumers trust consumers more than advertising, the headline is about the low trust scores of advertisers.  But perhaps it shouldn’t be.
Perhaps that finding rates a giant, massive “Duh!”

Perhaps the headline should be, “trust linked to personal relationships.”

A major business trust issue today is how to “scale” trust. What can be done to networks of strangers to approach the high level of trust we see in more personal relationships?

Some efforts focus on increasing network size—Amazon’s algorithm for predicting what books you’ll like, for example. It works very well—for predicting books you’ll like. But for whether you should buy a house now in this market?  Hmmm.

Other efforts focus on track records. Of those who recommend buying a house now, vs. waiting—who has the better record of predictions? This helps with investing—but do you trust your investment advisor to recommend restaurants?  Or to play matchmaker?

Still other efforts increase the bandwidth available for us to evaluate others: Facebook and Match.com owe a lot to the ability to let people be who they are, let it all hang out—and share it with others.

The most successful networks will be those that replicate the full human experience—providing us broad markets, rich data—and deep exposure to the humanity of the others that lets us create bonds.

Those are the networks that will end up being trusted. And end up scoring high on trust surveys.

It’s no secret.

Lessons in Propaganda: What Politicians Learned from Business

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I am hardly the first to note the application of PR principles to politics. Nor is it a new observation. Kennedy and Nixon had their communications advisors; Lincoln read books on rhetoric—ancient Greeks wrote them.

We now see it in mind-numbing three-word phrases printed, Louis Vuitton-like, on backdrops behind the Presidential podium; in the evolution of “talking points” from a novelty phrase during Monica-gate to commonplace today; and in the devolution of the Cabinet from advisory body to vehicle for staying “on-message.”

Many call this a failing of George Bush or of a Republican administration (though the Clintons know this material well too), or a misapplication or perversion of business principles.

But that’s not quite right. Politicians haven’t misappropriated business lessons—they borrowed directly, main-lining their Big Brother 1984 lessons from the very heart of what has come to be called business best practices.

The problem isn’t cynical politicians twisting business ideas; it is cynical business ideas themselves, granted mainstream legitimacy by business opinion leaders—the business media, business schools, industry associations, and business leaders themselves. Politicians are just following.

Take four common terms: “on message,” “brand,” “alignment,” and “communication.” Now think Marketing 101 (or any CEO’s speech), and see how familiar this sounds:

In this consumer-empowered, media-cluttered age, the company that understands customer needs and communicates its message the best is the one that will survive in this hyper-competitive market.

Consumers have less and less patience and attention span: companies need to develop a coherent branding message—the same on the web, in stores, and in ads—about who they are and what they can do for the customer.

A company not completely aligned around its core value proposition and the message it communicates about that proposition will fail. Sales collateral must be on-message with marketing’s branding; incentives must align with company strategy; measurements must track missions, aggregating to sustainable competitive advantage.

Even marketers—professional cynics—are taken aback by the success of a current ad campaign. You’ve seen it / heard it:

Apply directly to the forehead—apply directly to the forehead—apply directly to the forehead.

Blunt force repetitive trauma to the brain. Think Orwell. Goebbels. Big Brother. The Big Lie.

From there, it’s a quick trip to “we’re in Iraq to stop Al-Qaeda from invading Kansas,” with flight jacket and aircraft carrier backdrop.

Massive repetition works. Better than we like to admit. “Brainwashing” is just a value-laden term for what politely passes as “alignment” and “on-message” in the corporate setting. Even “shared values” brushes uncomfortably close to the same territory.

Reggae rapper Shaggy parodied this angle a few years ago in the song “It Wasn’t Me.” Seeking advice after having been caught in flagrante by his girlfriend, he’s told, “Just say ‘It wasn’t me’.” Repeat it often enough and you can get away with anything. Was he being ironic? Or just astute? (Did he help Larry Craig and OJ come up with “I’m not gay” and “it was my stuff”?)

Mainstream marketing and business 101 teach companies to simplify, refine, and focus on one message and mission, then design the whole organization to apply massive force to the fulcrum point of the customer.

The result is called “tuned,” “focused,” “aligned, “and—most chilling—a perversion of “customer-centric.” Apply directly to the marketing. Apply directly to the marketing. Apply directly to the marketing.

There is nothing “wrong” with these techniques per se—the means, in this case, are value-neutral. It is the ends to which they are put—the motives—that matter.

Unfortunately, Roger Ailes, Turdblossom et al didn’t have to translate the business play book to politics. They copied directly. Both have become about winning against other competitors/candidates—not about helping consumers/voters. Bombardment of the consumer/voter with simple messages is good for quitting smoking or announcing emergency traffic routes. For selling pharmaceuticals, wars and presidents? Not so much.

In business, it’s reach and frequency—in politics, it’s being on-message. Tax and spend. Support our troops. Apply directly to the amygdala.

The problem in business and politics is identical. Both have become all about competition and winning—not about consumers and voters. Both have turned the legitimate concept of “customer focus” from a goal into a tactic, linking it tightly to quarterly earnings and the two-year election cycle.

Business has turned "customer focus" into a codeword for tweak, massage and manipulate.

Modern marketing practices flaunt the dictionary, Shaggy-like, when they turn "communication"—formerly defined as "exchange of information"—into the one-way megaphone of "apply directly to the forehead."

At root, this is a failure of belief systems. We are teaching an ideology of short-term me-me-me-ism in business, and our politicians are drinking the same Kool-Aid. For those who think this brand of “competition” is what makes for a successful economy—take a look at the falling US dollar. A focus on commerce, not on competition, is what makes an economy great. We’ve gotten it backwards.

Don’t blame George Bush, Republican; blame George Bush, MBA President. Until the B-schools start preaching networks, collaboration, transparency and commerce in their strategy classes instead of in their so-called “ethics” classes, we in business have no right to complain about the politicians.
 

The Limits of Needs-based Selling and Consultative Selling

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These are popular concepts in today’s sales world:

Consultative Selling Amazon 568 mentions
Consultative Selling Google 270,000 mentions
Needs-based Selling Amazon 158 mentions
Needs-based Selling Google 22,800 mentions.

Both approaches ask questions to define buyer needs, so that the seller can alter or position the product to address those needs, thereby raising the value to the customer and the likelihood of closing the sale.

This may sound stunningly obvious and commonsensical. To that extent, it’s a tribute to the triumph over the old product-focused approach of convincing people they needed whatever it was you had to sell.

(At the same time, sounding obvious doesn’t mean it gets practiced all the time, or even usually. Product-based selling is far from dead).
The mainstream view among sales practitioners is that needs-based selling and consultative selling represent the state of the art, the high road, professionalism in selling.

But it’s just not true.

Reading the consultative or needs-based books, websites or training programs, you’ll find two beliefs—implicit or explicit—that limit the value of these approaches to selling. Those beliefs are:

1. Their primary intent is to close the sale
2. A secondary intent is to qualify prospects.

Those may sound obvious and benign as well, but look at it from the customer’s side.  Together, those two beliefs mean that if you’re paying attention to me as a customer, it’s only for as long as you think this transaction will result in a sale for you.

That means:

a. while you’re definitely in it for you, you’re only in it for me if it bodes well for you, and
b. while you’re willing to talk about my needs, you’re not willing to do so unless you see a sale close at hand.

Either way, it certainly appears you don’t have my interests very much at heart.

There is another way. It’s called Trust-based Selling®. It says focus on buyer needs, so that you can better articulate them and get them met.  Period.

You don’t focus on their needs because it’ll get you the sale—you do it so you can help them better articulate their needs and get them met.  Period.

You don’t focus on buyer needs in order to screen out buyers who don’t need what you have to sell. You do it so you  can help them better articulate those needs and get them met. Period.

The key difference lies in liberating sales from the transaction.  Trust flourishes only when then quid and the quo have some blue sky between them.  Screening at the transaction level screams “I only care about your wallet;” trust-based sales screens at the strategic customer selection level, not the tactical transaction level.

For needs-based or consultative selling to become trust-based, you need to migrate away from the tight leash of the transaction.  Loosen up.  Get free of the “pay me now or I quit doing this consulting” mentality.

Trust-based selling says, if you consistently do the right thing by your customer, then when the customer needs what you’re selling, you’ll get the first call. And you’ll therefore make more money.

The highest profit comes when you make profit a byproduct—not a goal—of a truly customer-centric sales process.