Posts

The Dirty Little Secret about Subject Matter Expertise in Sales

It may be the dirtiest little secret in professional sales. The lie we all love to tell ourselves. The truth we just hate to face up to. What secret/lie/truth is that?

The myth of the subject matter expert as key to sales success.

Sources of Mythology about Subject Matter Experts

There is no shortage of prognosticators about the increasing importance of subject matter expertise. You’ve probably seen a lot of it:

  • You may have heard from The Challenger Sale folks that if you’re not coming up with new insights about your customers’ business, then you’re a relationship wimp.
  • You may have seen the article Top Ten Trends in Sales and Business Development, which lists the rise of the subject matter expert as number one on the list.
  • You may have read the Canadian Professional Sales Association article The Rise of the Subject Matter Expert, which says B2B organizations are increasingly turning to subject matter experts.

What all of those pieces have in common is an underlying view of the buying decision as rational, calculating, value-based, and economically driven. And that’s Just. Not. True. That’s the dirty little secret.

To be precise, it’s not that buyers are irrational. Nor are economics or rational thought irrelevant. But the role we ascribe to such thinking is profoundly mislabeled by an awful lot of sales “experts.”

So, let’s get it right.

There are two types of thinking, there are two stages in B2B buying (which largely correspond to those types), and there are two logical roles in the buying process (necessity and sufficiency). When we get it right, those all drop into place, including the role of subject matter expertise.

Two Types of Thinking

Daniel Kahneman, in his book Thinking Fast and Slow, outlines two types of cognition. The first, System 1, is fast, is intuitive, and jumps to instinctive reactions or conclusions. System 2 is the slower, logically deduced, careful check. His book (and his life’s work) consists of showing over and over how much our lives are controlled by System 1, contrary to popular belief.

A similar point is made by Jonathan Haidt in his brilliant book The Righteous Mind: Why Good People Are Divided by Religion and Politics. He uses the metaphor of the elephant and the elephant driver. The latter thinks he is in charge, but in fact the elephant pretty much does what the elephant wants.

If you prefer the same idea in a far more accessible and practical manner, read Josh Waitzkin’s The Art of Learning, in which he explains how he became a junior globally ranked chess champion and then a world champion in the martial art Tai Chi Chuan.

How’d he do it? He learned the link between thinking fast and slow thinking; he learned when and how to use the elephant and when to use the elephant driver. He drilled over and over the most minute movements, strategies, and counters until they became subconscious and he could trust them with “fast thinking”—thereby reserving his “slow thinking” to focus on that one, single differentiating move.

The point is not that one is right and the other wrong. They are both necessary to human functioning, but they play different roles.

Two Stages in B2B Buying

David Maister originally observed that most B2B buying processes proceed in two stages: screening and selection. In the screening process, staff people typically “round up the usual suspects,” putting criteria on spreadsheets and evaluating who should be in the “final four.” That is a prototypical rational process—think spreadsheets, analysis, and quantitative tools—which is why it’s delegated to junior staff.

Then there’s selection. Selection is heavily instinctive, intuitive, and non-rational. Selection is done by senior people who are experienced, have confidence in their judgment, and have the track record to back it up. But of course they don’t claim clairvoyance or rely on gut feeling. No, they rationalize their instincts. To put it prosaically, people decide with their hearts, then rationalize the decision with their brains.

Two Logical Roles: Necessity and Sufficiency

Some things you must have in order to get other things. On the other hand, some things are all you need. Writing a term paper may be necessary to get an A in the course, but writing a paper alone isn’t sufficient to get that A. We often mistake necessity for sufficiency. And subject matter mastery is a classic example.

In B2B sales, it is pretty much necessary to have and demonstrate subject matter expertise. In fact, such expertise is specifically looked for in the screening process assigned to junior staff. The absence of subject matter expertise is often justification for being removed from the final list of firms invited to present.

But subject matter expertise is far from sufficient (the same is true of low price). You’ve seen plenty of cases where neither the lowest price nor the highest technical ability got the job. Instead, the job frequently goes to the seller who is “good enough” on technical (and price) terms, but who clearly has a better trusting relationship with the client.

Interestingly, often this is not stated. In fact, it’s even denied. Selection decisions, which are made with the intuitive, “fast thinking” mind are often rationalized by referring back to the “slow thinking” rational criteria that were employed during the screening phase.

Putting It Together: Revealing the Dirty Little Secret

The dirty little secret is that subject matter expertise plays two important, but precise and limited roles. The first is to screen out uncompetitive offerings up front, so that time is not wasted on providers that are least likely to win. This role is finished once the finalists are selected.

The second role is to rationalize the decisions that are made by the “fast thinking” mind, the “elephant” mind, the subconsciously competent mind that has absorbed experience and can trust its own intuition. Here the rational mind is the handmaiden of instinct and experience.

The buyer may tell you and everyone else that you won the job because of your expertise and credentials and that competitor B lost it because they weren’t as brilliant as you. But don’t you believe it.

You won because you were good enough on the expertise side of things and the client loved you. That means they felt you had integrity, they could get along with you, they could be honest with you, you’d be straight with them, and that if there were problems, they could work them out with you—and not with those other folks.

The dirty little secret is the same thing that popular girl told you in high school when you invited her out and she said, “Oh, I’m so sorry, I’m busy Friday night.” She wasn’t busy; she just didn’t want to go out with you. “Busy” was the socially acceptable excuse of high school dating. “Expertise” is the socially acceptable excuse of B2B buyers.

You gotta have it, but don’t kid yourself that it’s enough.

 

This post first appeared on RainToday.com 

What’s So Different about Trust-based Selling?

What’s the purpose of selling?

Sounds pretty straightforward, right? Try Googling It – you’ll get “the purpose of selling is to gain revenue,” or “the purpose of sales is to create a customer.” But there’s a problem with viewing sales that way.

If you think the purpose of selling is to add to your firm’s topline (or your own bottom line), then you’re thinking in you-terms – not in client-terms. No matter how much you sugar-coat it with language about “serving client needs” and “addressing fundamental client problems” there’s no getting around your overriding purpose – to move money from their bank account to yours.

Clients feel this. They can sense your discomfort with selling, and feel it in your high-flying verbiage. They know in their bones that if your primary objective is to get the sale, then you are not on the side of the angels – you are on the side of the used car salesmen.

Harsh language? Not if you realize there’s an alternative – and there is. The alternative is to view your fundamental purpose, objective and goal as being to help – your – client. Regardless of whether they buy your canned solution. And to view the sale as being a byproduct – an offshoot – the collateral good fortune that comes your way by doing a fabulous job of helping your client.

Most people are skeptical. They have two concerns. First, is it realistic? Do clients really behave this way, or will they take advantage of us? Second, does it actually work? Do we really have time to run around being nice to clients all the time – ‘don’t you realize we have to make a living?’

Both these concerns are unfounded. Let’s address them head on.

First, about being realistic. Ask yourself: would you rather buy from someone who genuinely has your best interests at heart, or from someone who’s trying to extract money from you – and isn’t even comfortable saying so?

And, if you do run across someone who is competent, capable, and truly dedicated to your best interests – do you personally choose to rip them off and take advantage of their naivete? Or do you decide, ‘This is actually the kind of firm I prefer to do business with.’

The vast majority of buyers prefer such sellers – (and the cynical exceptions are easy enough to spot, so you can pass them on to your competitors).

Second, about efficiency – do we really have time to give away in just being generous? Don’t we have to focus on selling?

Again, ask yourself: how would you behave if you ran across a person and firm you could really, genuinely trust? Wouldn’t you stick with them? Wouldn’t you spend less time on lawyers? Wouldn’t you be more open and forthcoming about issues? Wouldn’t you feel more comfortable collaborating with them?

Of course you would. And that’s why trust-based selling produces higher repeat business, lower sales costs, greater insights, less scope creep, and higher levels of cooperation.

Put it this way.

  • In Scenario A, you focus on getting the sale: you win 50% of the time, and your average sale is $100K. Net expected value of a given sale, $50K.
  • In Scenario B, you focus on doing the right thing for the client – and as a byproduct you get 60% of the sales, and your average sale is $1.5 times X. Net expected value, $90K (60% x $150K)

Scenario B represents an 80% revenue improvement over Scenario A – before even counting lower sales costs!

That’s exactly what happens in Trust-based Selling. Buyers have a strong, predictable preference for buying from people who have their best interests at heart – and not from people whose main objective it is to sell them.

It’s a real paradox, isn’t it? By being willing to detach from the outcome, we actually increase the odds of that outcome. The “trick” is – you simply have to believe it.

Why Experts Are Bad at Sales

Why Experts Are Bad at SalesIf you’re a lawyer, accountant, management consultant, VAR, systems engineer, financial advisor, CRM expert, architect, IT services consultant or even an HR consultant – odds are that you’re ineffective at selling.  That’s the bad news.

The good news is – it isn’t hard to get better.  If you do,  you’ll compete far more effectively against those who haven’t learned the trick. The trick is dialing back the emphasis on expertise.

Trust Sells

Let’s start with the commonsense observation that trust sells – powerfully.  If your customers trust you, many good things follow – higher close rates, lower price sensitivity, greater client loyalty, to name a few.

Trust isn’t one monolithic quality.  In the Trust Equation, we deconstruct trustworthiness into four components – credibility, reliability, intimacy, and low self-orientation.  Data collected over the years (see the Trust Quotient Self Assessment) identify the relative importance of those four factors in creating a perception of trustworthiness.

Trustworthiness Data

For example – gender and trustworthiness. When asked to guess which gender is more trustworthy, about 85% of my workshop audiences guess women; and 12,000 datapoints say they’re right.

Further, nearly all the gender difference is due to different scores on one factor. I also ask workshops to guess which factor that is, and again, they are overwhelmingly right – it is intimacy.

Score two for commonsense backing up the data.  And there’s more. Surveys of trustworthy professions show shifts over time in the least trusted professions – used car dealers one year, lawyers another, politicians another. But the most trusted profession is remarkably consistent – nurses. Again, audiences find that this “makes sense.” And tying the data together, note that of the four attributes of trustworthiness, the one most easily identifiable with nursing is, again, intimacy.

Finally, we were able to isolate six “Trust Temperaments” – differing combinations of high scores from each of the four trust equation components. The three highest-scoring pairings were the three that contained Intimacy as one of the factors.

The combination of high Credibility and Reliability scores is what we most associate with subject matter experts.  And that combination was tied for least trustworthy among the six pairs.

The level of technical mastery required by the professions, for example, is considerable, and necessary. It’s not surprising that people in such lines of work would score highest on the attributes of credibility and reliability, the two “rational” and “hard” components of trustworthiness.

The problem comes when they assume, implicitly, that what their customers most want is a massive display of that expertise. Selling in those businesses, more often than not, is dominated by exhibitions of mastery, methodology, intellectual performances, credentials and references.

But technical mastery is the least effective approach to trustworthiness.  The most effective component of trustworthiness is precisely the one that so many experts shun – intimacy.

The Cure for Expertise

There’s nothing wrong with expertise; it’s necessary. It’s just not sufficient. What’s needed are some basic intimacy skills. That means, above all else, listening.

The listening that’s required is not listening as in being quiet, or even listening as aggressively pursuing questions. It’s listening as a sign of respect; listening with no objective beyond understanding the customer.

This kind of listening is part skill, part attitude. It requires the ability to suspend the overwhelming desire to solve problems. It isn’t easy to do – but it is simple. It is accessible; it can be learned.

Another intimacy skill is the ability to take an emotional risk.  Examples of such risks include saying you don’t know when you don’t know (very difficult for experts, whose careers are based on avoiding such moments), and acknowledging feelings – your own, and those of your customers.

Most technical professionals will remain expertise-based – and ineffective at sales. And that spells great opportunity for the few people and firms who are capable of recognizing the power of soft skills in producing hard results.

This article was first published in RainToday.com in a longer form. 

The Crisis of Confidence in Selling: Dialogue with Ago Cluytens and Charlie Green

Crisis in Confidence in Selling(This post is written jointly with Ago Cluytens, and will appear jointly on both our sites.)

Ago: Recently, Charles H Green (I get to call him Charlie) and I had a heart-to-heart about three seismic shifts that are completely changing the way buyers and sellers relate. Even though we live on different continents and have had dramatically different careers we interestingly both saw the same things happening – albeit from slightly different perspectives.

Charlie: Well Ago, we’ve outlined this general topic of what’s different in sales. But that’s pretty broad. Let’s break it down, as you suggested, to several themes that may be easier to address.

Ago: Sure. Let’s start with the elephant in the room. Are we in a Crisis of Confidence, where “selling” no longer sells? What do you think?

CG: Of course it depends on what you mean by each of those terms, but basically – I agree with you. What I mean by that is that two things have changed fundamentally in just the last ten years.

– Buyers have become more suspicious of the intentions and motives of sellers;

– Buyers now have access to far, far more information.

The result is a more empowered, cynical customer base. The traditional observation is that “the balance of power has shifted” to the buyer. But to state it that way is to miss the great opportunity facing sellers and buyers alike – to move away from defining the sales relationship as one of competitive, zero-sum entities, and toward collaboration and mutuality. The one road that is not going to work is trying to regain the power in the old game.

AC: You know, I like the way you focus on collaboration and mutuality. As you know, I used to be a management consultant. The second I started realizing that what my clients were looking for was not for me to tell them what to do, but to jointly figure out the problem and develop a solution that solved it, that changed my entire outlook – as well as the results I was getting.

Similarly, when I became an entrepreneur, I instinctively realized that (sales) success would not come from desperately trying to “sell someone,” but instead from finding those people for whom my service offering could be a potential solution and working together to define the best way to move forward.

If we can get over the “me versus you,” winner-take-all mindset and get into a mood of collaboration and joint problem solving, both sides win. Better deals are made, better terms are negotiated and better outcomes are reached.

CG: In that vein, let’s talk about the changing role of the buyer, and then of the seller as well, shall we? I’ll start us off with the role of the buyer.

As I see it, a couple of things have changed. One, as noted above, is that the buyer has access to more information. But the information itself is only part of the story there. The information they now have access to used to be available only through interaction with the seller. And now they have access to it without having to talk to a seller.

Now, that is a change in dynamics. Because, think of it: when you’re a buyer starting out in a purchase process, you probably know less than the sellers about the sellers’ offerings. So you feel at effect of, trapped, suspicious, cautious, hesitant and careful; because the information you need is being doled out to you by the seller, whose interests have always been perceived as lying in selling you the product. You are at their mercy.

For a buyer these days, those chains are gone. The only seller interactions that are required are high-level, complex questions (e.g. “have you ever combined this with an existing CRM system?”); and when the interaction happens, the customer is already highly educated. All that power game stuff is gone. The buyer feels empowered.

AC: You know, in addition to what you mentioned, there’s something even more subtle at play. It is a well-known fact that as the amount of information and choice available increases it actually has an adverse effect on our ability to make decisions and move forward.

Everything from our mobile devices to billboards spews out “information” 24/7, meaning we are slowly but surely buried under an avalanche of data. According to Mashable, 571 new websites are created, 100,000 Tweets are sent and 204 million e-mails are sent every minute. I mean, every minute.

And the effect this has on buyers is simple: total, complete overload. They stay stuck. Don’t move. The most effortless, most comfortable and safest path is always the same: to do nothing.

AC: So let’s talk a little bit about what that means if you’re a seller. Our new role as sellers is no longer to push our wares to the top of the pile, but to help the buyer stand back and make sense of the pile in the first place. Put in slightly more intellectual terms, our job is to be curators and advisors to our clients – not product pushers.

Generally speaking, there are three major trends I am seeing that set apart those who will be successful in the future (of sales) versus those who have been so in the past.

1. They think buying first, selling second. Meaning they see things from the buyer’s perspective, can “step into their shoes” and can often define the problem better than their buyer can

2. They start adding value from the second they meet – they do not wait for someone to be “qualified” before they start helping them, but understand that relationships are built over time and the best way to make change happen is to lead the way

3. They produce clarity, not complexity – they use their experience and broader viewpoint to help the buyer make sense of reality, the various options available and develop a process for making decisions.

And, as is often the case, precisely because they do those three things, they win a disproportionate percentage of all the deals they go after. That’s what I mean when I say “Stop selling. Start helping your buyer buy.”

If you combine the three trends I outlined, an interesting picture of the seller starts to emerge. Not a sleazy “used car salesman”, but a highly valued, trusted confidant and advisor.

CG: Wow, that’s interesting; I pretty much agree. I would only add that the seller has to change roles, given the shift in information availability, and in the dynamics of the interaction. The right way for the seller to interact today is to make it as easy as possible for the customer to get all the information they might want – without having to first talk to me.

That goes against every instinct of the seller; sellers have been taught to tightly control information, don’t discuss price until you’ve talked value, that sort of thing. It’s not easy to just give it away, with no trick strings attached, and then take on a very passive role, waiting for the buyer to come to you. But that’s part of the challenge.

I’d argue that the biggest role change for sellers is the need to change their objective. Big picture – as long as salespeople hold to the view that the objective of sales is to sell to the customer, they’ll have trouble. They have to change their objective, to that of “always be helpful” to the customer. Viewed way, sales become an effect, rather than the goal.

CG: Now Ago, that gets us to the next Big Category – changes in the shift of power. What’s your take on that?

AC: You know, Charlie, here’s what I am thinking. I believe that – to a certain degree – there has been a shift of power. Buyers are now more informed, more educated and more aware of their relative position of power than ever before.

But, in my experience, the most sophisticated buyers still approach the buyer-seller relationship from the same perspective as before. They don’t see sellers as predatory hunters who are out to “get them,” nor do they view them as subordinates who provide a commodity service and can be endlessly squeezed on price. And – just because they have more information – they understand that does not always mean they have more power.

If I were to make an analogy, most C-suite buyers I am in contact with view those selling to them as dance partners. Equal counterparts that provide a valuable and needed complement to what they see, know and understand. And with (the best of) whom, they are joined at the hip and need each another to produce the kind of results they want.

CG: We both agree that there has certainly been a shift of power, from the seller to the buyer. But that’s just what’s happened – that doesn’t tell us the answer. And the answer for sellers does not lie in regaining power. It lies in changing the game radically, for the benefit of both parties, to focusing on adding value and improving the customer’s business. There is an element of faith here – faith that if you consistently put client interests first, clients will tend to reciprocate, and become interested in buying from you.

If you as a seller just can’t handle that idea – if your feeling is “I can’t let them have that kind of control, they’ll abuse it and ruin me,” then you’re going to have a hard time. Because you have lost power already. And until you figure out how make one plus one equal to at least three, you haven’t got a replacement game.

AC: I think what we’re both saying is that this Big New Idea isn’t entirely new – this trend started many years ago – but it’s very, very Big. And at its core, that idea is simple: selling is about building trusted relationships.

The kind of relationships that allow you to view long-term, gain a common perspective, collaborate, share insights, and generally allow for the synergies that can only happen when working with people you trust.

And when done right, something magical happens. Like watching a pair of expert dancers whirl across the room in some Buenos Aires tango palace. They instinctively understand each other, know when to seamlessly transition from leading into following, when to move and when to pause. Not unlike a sales process, I might add.

The end result is something that goes way beyond “two people on a dance floor.” That’s how long-term, multi-million dollar relationships are built.

CG: Absolutely. The days of zero-sum competition are over; you have to add value, and the only way to add more value than others is to establish better relationships with the client. To do that, you have to build trust. And to build trust, you have to abandon the old sales objectives of gaining share of wallet, conquering competitors, maximizing price, and so forth; instead, you have to adopt one over-arching objective – to improve things for your client. And then believe that by so doing, you too will benefit.

Trust-based Selling

This week, as we get ready to say goodbye to 2012, we’re going to be posting some of what we call “Golden Oldies,” great posts from our Trust Matters vault. We hope everyone has a safe and happy holiday and wonderful New Year.

————————————-

In trust-based selling, the default mode of presentation is transparency.

In trust-based selling, the time-frame is lifetime. Assume that you will meet this customer again, along with his or her customers, cousins, bosses and Facebook friends, and that every interaction is evident to all of them instantly. That’s your reputation.

Trust-based selling relies on the proposition that people return good for good, and bad for bad. If you treat a customer respectfully and with trust, and they happen to need what you are selling, the natural response is to buy it from you.

That proposition is not only an ethical template – it is a business model.

Trust-based Selling: McGraw-Hill, also available in Kindle and CD-ROM format. It’s a good book.

You Can Lead a Horse to Water, but You Can’t Make Him Buy

The biggest problem in sales? Violating the laws of human nature.

Exhibit A: one of those timeless folk-wisdom sayings, “You can lead a horse to water, but you can’t make him drink.” Not many of us have equine interactions these days, but we still get the metaphor: you can’t make people do what they don’t want to do.

Cue Bonnie Raitt’s achingly beautiful “I Can’t Make You Love Me – If You Don’t,” for a Top-40 version of the same wisdom.

Or, if you prefer, try telling a teenager what to do. The same law will present itself.

Seller vs. Human Nature

When you try to sell a client – or, if you prefer, to “persuade” them (or to get them to take your most excellent advice, it’s all the same) – what’s your attitude?

Probably you’re trying your best to add value, to listen, to come up with great ideas. You’re trying to frame issues sensibly, to identify pain points and to clarify objectives and outcomes. All great stuff, of course.

And all the while, inside, not very deep down, your inner voice is screaming:

     “Drink, you damn horse – drink!”

Detach from the Outcome

The problem is, all those linear sales models lied to you. Not the first part – it’s all good, the leading the horse to water part.  The problem comes in making the horse drink.  Because people don’t do what you want them to do.

No need to get all psychoanalytic here, you can test it on yourself. When someone tells you to do something, what’s your instinct? And if they try to dress it up, pretty please with candy, pretending they don’t actually care if you do the thing they want you to do – what’s your instinct?

Neeeiiiighhh!

The trick is simple, really.  Give it up.  Detach from the outcome. Stop being wedded to the horse drinking. Stop obsessing about the sale.

Seriously – let it go. The client will buy, or the client won’t buy.  If you’ve done everything you can to bring the horse to water, then stop at the water’s edge. Let the horse drink.

The amazing thing is, if you do that, the odds of getting the sale go up. Not down, up. To get results, give up control. If that sounds more like a Buddhist mantra than a Salesforce.com app, ask yourself which model has been around longer.

Try selling instead from the serenity prayer: change what you can, accept what you can’t, and be attuned to the difference.

Story Time: He Who Eats With Chopsticks Wins

Our Story Time series brings you real, personal examples from business life that shed light on specific ways to lead with trust. Our last story proved that trust is personal.  But what does it take to really close a deal?

A New Anthology

When it comes to trust-building, stories are a powerful tool for both learning and change. Our new book, The Trusted Advisor Fieldbook: A Comprehensive Toolkit for Leading with Trust (Wiley, October 2011), contains a multitude of stories. Told by and about people we know, these stories illustrate the fundamental attitudes, truths, and principles of trustworthiness.

Today’s story is excerpted from our chapter on the dynamics of influence. It vividly demonstrates how non-rational factors—like respect for tradition—can make or break a sale.

From the Front Lines: Decisions Aren’t Just Rational

Russell Feingold, now of Black & Veatch, recalls an early-career sales win.

“The client was a large electric utility in Hong Kong, and the project was complex. My company invested considerable time preparing our proposal, responding to questions, and meeting with the client face to face in Hong Kong. We won the project.

“However, it was during our working lunches that I really won the client’s trust—by my proficiency with using chopsticks. Quite simply, my clients appreciated my respect for their tradition, when even their own children were turning to Western ways of eating. To this day I believe my ability to use chopsticks not only ingratiated me with our client for the remainder of the project, but was a deciding factor in our being selected in the first place.”

—Russell Feingold (Black & Veatch)

What’s the most unexpected factor that’s won you a job?

++++++

Read more stories about trust:

Trusted Advisor Inflation

The term “trusted advisor” has undergone some changes since I first co-wrote the book by that title 11 years ago.  Three changes, to be precise:

  1. It’s amazing how many more people claim to be one;
  2. It’s becoming clear that not every industry needs one;
  3. In the industries and functions that matter, the concept is gaining headway.

It’s the third point that’s most important, and most promising.

1. Grade Inflation, Title Inflation, Trusted Advisor Inflation

The United States has taken to heart Garrison Keillor’s fictional Lake Wobegon, where “all the children are above average.” That’s got to be the only sensible conclusion from the data, which show in-your-face grade inflation at the college and university level.

A couple of years ago, the Economist proclaimed that “Inflation in Job Titles is Approaching Weimar Levels.” (In case you’re not down with economist jokes, read here, and I won’t tell anyone).

So I guess it’s no wonder that we have “Trusted Advisor inflation.” I’ve sat in on several corporate training programs lately where generally mid-level attendees were asked to indicate whether they were operating at the “trusted advisor” level with their clients.

About 70% said they were. That may not be Weimar territory, but it’s Lake Wobegon for sure. I will tell you from experience: that was not the case 12 years ago, even in the same industries.

My conclusion? Not much, actually. We live in a post-Warholian age of hyperbole. “Friend” doesn’t mean what it used to, nor do “authenticity,” “talent,” or “good audio,” for that matter.  But it’s OK: it means what it means, namely how people actually use the term. Definitions are living things, captured only momentarily in dictionaries.

2. Not Every Industry Needs a Trusted Advisor

I had dinner the other day with an old classmate, a very senior advisor to a Very Big private equity fund, who keeps tabs on a dozen global retail clients. “So Charlie, tell me what’s up with Trusted Advisor Associates these days,” he said.

It was clear from his tone that he was skeptical about the relevance of the concept to his businesses – mainly B2C consumer-level chains in things like pet foods, electronics and sundries.

I could tell that because he visibly relaxed when I said, “Gary, I don’t need a trusted advisor relationship with the counter-guy at Dunkin’ Donuts. I love that he knows my order when he sees me come in – but that’s quite enough. It would ruin everything if we ever got past, ‘hi guy, the usual?’ And ditto for Starbucks.”

It’s true. There are whole bunches of roles and industries that don’t need to have trusted advisor relationships. Most B2C retail doesn’t need it. Traders don’t need it. Marketers don’t generally need it. Most non-client-facing roles don’t need it. Manufacturing roles don’t generally need it.

That’s not to say all those roles can’t benefit from the basics of curiosity, good values and manners. But, as per point 1 – let’s not inflate that into Trusted Advisor Status.

3. Those That Do Need It – Are Starting To See It

The term “trusted advisor” originated in high-end professional services and wealth management relationships and it’s still valid and well-understood there.

The biggest shifts I’ve seen since the original The Trusted Advisor in 2001 have come in four areas: sales, internal staff functions, leadership and the financial industry. (One industry that’s still a work-in-progress – pharma).

Sales. In the last decade or so, the field of sales has undergone a number of changes. Some – like Salesforce.com, Sales 2.0, Google clicks – have often made the function less personal, and arguably less trustworthy.

But others – like inbound marketing, complex sales, and the amazing transparency machine called the Internet – have made selling more personal, and often more trustworthy.

I like to think my own book, Trust-based Selling, published by McGraw-Hill in 2005, played a little role in that too.

Internal Staff Functions. The Big 5 staff functions – HR, IT, Legal, Marketing, and Finance ­– have made large jumps in many companies to realizing that their internal client relationships have exactly the same needs. How to get invited in before problems arise; how to get your advice taken; how to add value – these are all critical functions for an internal staff function. More about those functions here.

Leadership. Tons of things have changed with leadership. Let’s sum it up by saying leadership has become more horizontal, less vertical. That moves influence, persuasion and trust way up the required skills list for leaders.  Rob Galford wrote about that in 2003 in The Trusted Leader; Andrea Howe and I wrote about it in last year’s The Trusted Advisor Fieldbook: A Comprehensive Toolkit for Leading with Trust.

Financial Industry. Something is happening in the financial planning and wealth management industries. The line between brokers and fiduciaries is finally getting defined, and the balance of power seems to be shifting toward trusted advisor, client-focused relationships. (Some of you know this issue as fiduciary vs. suitability).

The issue is delightfully defined in a YouTube video about the difference between your butcher and your dietitian.  For more on this issue, read Michael Kitces, who writes well and often about it.

Just around the industry corner is Wall Street, investment banking, and the flap about Michael Smith’s Goldman resignation. Investment banking used to be a pure trusted advisor kind of business. People like Epicurean Dealmaker still speak eloquently about that part of the business.

But investment banks have more complex business models these days, and it’s far from clear (to me anyway) that all of those businesses should be built on the long-term, client-centric models required by true trusted advisors.

Conclusions:

1. Just because you think you’re a trusted advisor doesn’t mean you are one – Lake Wobegon is mythical, after all.

2. But neither does it necessarily mean you should be one. We don’t need trusted advisors on every street corner.

Sometimes a cigar is just a cigar, and we should leave it at that.

What’s the Link Between Trust, High IQ and Investors?

A recent Journal of Finance article suggests there’s a high correlation between IQ and participation in the stock market. Now, what does that mean?

Yale Economics Professor Robert Shiller explores the theme in a NYTimes column. He posits an interesting link between intelligence and trust.

The Smarts To Do What?

IQ tests are notorious for being good at measuring what IQ tests measure. What that is, is another question. But let’s stipulate that mathematical intelligence is somewhat correlated with IQ tests, and that intelligent investing requires more math than buying milk at the supermarket. That might explain why only half of American adults have money in the stock market.

But does it explain why higher-IQ people also seem to construct better-performing portfolios than do lower-IQ people? As Shiller points out, it’s not that high-IQ people are better stock-pickers – they just do a better job of following the basic rules of investing, namely diversify your risk.

But why should ‘rule-following’ correlate with IQ, anyway?

The Smarts to Trust

Shiller cites another study, this one from the Netherlands, that finds “those who indicated a high level of trust were 50 percent more likely to invest in the stock market.”

Further studies indicate low stock market participation may be the result of fear and suspicion – low trust prevents people who don’t understand the stock market from approaching those who do.  Namely investment advisors, brokers and the like.

Now the link gets clearer. It may not take a high IQ to understand diversification, but if you don’t trust the people who talk about diversification, you’re not going to learn about it.

Shiller makes another leap here that I’m not so sure about: as he puts it, “Knowing whom to trust, and relying on those who are trustworthy, is itself an aspect of intelligence.”

Intelligence, Education and Trust

I’m not going to get involved in defining intelligence, but I do know this. The tendency to trust others has been shown by trust researcher Eric Uslaner to be positively correlated with optimism, and with a sense of control.

People who feel the world is basically going downhill – and that others are controlling their lives – are untrusting people. By contrast, those who feel that the world is generally moving in a positive direction, and who feel some degree of control over their own lives, are more likely to trust other people.

And what drives those distinctions? Uslaner points out the biggest drivers are income inequality and education. In other words: uneducated people in a society of high inequality are at the greatest disadvantage.

The Vicious Circle of Trust, Education and Investment

The less that uneducated people in an unequal society are willing to trust those who understand financial planning, the more likely they are to stay doomed to low income, thus driving perceptions and reality ever downward toward greater inequality. So what’s to be done?

Of course, it would help if the financial industry got more trustworthy. Josh Brown, in Backstage Wall Street, notes that “93% of all investors didn’t understand that their broker didn’t have a fiduciary responsibilty to them.” Yet the industry continues to advertise an image of trustworthiness, while opposing legislation to make them subject to fiduciary standards.

Such behavior definitely drives mistrust, and it’s the industry’s own fault.

But other policies are society’s fault. In the rush to cut our deficits, I heard a few weeks ago that the School District of Los Angeles no longer employs any music teachers. Certainly education has become a far lower priority these days in our rush to what we think is fiscal rectitude. A casualty is trust.

And finally, inequality itself breeds distrust. That simple fact is very uncomfortable for a great many of haves, and a lot of political ideologies. But the fact is, economically egalitarian societies have higher trust levels. Inegalitarian societies have lower trust levels. The trends are self-reinforcing.

Do we want a vicious circle? Or a virtuous circle? If we’d like people to participate in the stock markets, we’re not going to get there by advertising or by cutting school budgets.

We’ll get there through trust. And it shouldn’t take a high IQ to figure that out.

Upcoming Events and Appearances: Trusted Advisor Associates

Join us at one or more upcoming Trusted Advisor Associates events. This Spring, we’ll be hosting and participating in events in New York, NY; Washington, DC; Fargo, ND; Boston, MA; London, England and through globally accessed webinars.

Also, a word about the Trusted Advisor Mastery Program.

—————————————-

Mon. Apr. 4th Global Charles H. Green

Charlie will be participating in a three person roundtable discussion through the Focus Roundtable Series. The Moderator is David A. Brock (President and CEO, Partners in EXCELLENCE), the panelists are Charlie Green (CEO, Trusted Advisor Associates) and Dave Stein (CEO and Founder of ES Research Group). They will be talking on the subject of “Professional Selling: Are We At an Inflection Point?” Click here for more information and to listen in on the discussion.

Wed. Apr. 20th Washington, DC Andrea P. Howe
Andrea will be speaking at the Washington DC Chapter of the Project Management Institute on “Trust and Influence: What Every Successful Project Manager Needs to Know.” Paolo’s Ristorante, 11898 Market Street, Reston, VA, 11:30am. Open to public: Sign up here. PMIWDC Members $30; Non-Members: $30; lunch will be served. PDUs will be available for Project Management Professionals (PMPs).

 

Wed. Apr. 27th Fargo, ND Sandra Styer

Sandy Styer will be presenting “The Heart of Trust: Keys to Becoming a Trusted Advisor” at the Tristate Trust Conference of the North Dakota Bankers Association on April 27th.

 

Wed. May 18th Boston, MA Stewart Hirsch

Stewart Hirsch will be a guest lecturer at Emerson College, speaking on “Becoming a Trusted Advisor.” The class to which Stewart will be addressing is a part of a professional services marketing course taught by Prof. Silvia Hodges, Ph.D.

 

Tues. & Wed. May 24th-25th London, England Julian Powe & Charles H. Green

In a highly interactive, practical and lively day-and-a-half program, TAA will be offering the opportunity to accelerate your professional growth, identify and strengthen the outstanding practice you already have, and address areas for improvement. This is the first time these two extraordinary presenters have offered this program together! Our early-booking price for the program will be $2200, with discounts available for group participation. For more information or to register contact Julian Powe or Tracey Del Camp, respectively.

——————————-

The first tranche of the Trusted Advisor Mastery Program has completed the 19th module in the program, individual coaching calls and its third group call, and the members have agreed to keep up lively discussions on the online Forum. Here’s what one participant has to say about the program:

“This course works because it is not based upon the newest fly-by-night pet theory, but upon rock solid principles of human nature and social psychology. The ability to engender trust is the one attribute that separates those who succeed in both business and in life. Take this course and you will be well on your way to success in both realms.” (Nils Victor Montan, Of Counsel Danneman Siemsen Bigler & Ipanema Moreira, Rio de Janeiro, Brazil)

To be notified of the next available program, email us at: mastery@trustedadvisor.com.