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The Problem With Lying

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We learned in grade school not to lie (probably just a bit after we’d already learned how to lie – sometimes you have to know a vice before you can see the virtue that counteracts it).

But even if we learned it – the lesson didn’t seem to stick. (Check daily newspaper headlines). As we see headlines about LIBOR, Volkswagen, drug pricing and you name it, are we losing the ability to be shocked by lying?

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When in doubt, look to humor – particularly sarcasm.   Here’s Dilbert on trust and lying:

dilbert

Scott Adams nails it.  And with a surgical sledgehammer, as usual. The pointy-haired boss is ethically clueless, and blatantly so.

We all get the joke, much the way we get the old George Burns line, “the most important thing in life is sincerity – if you can fake that, you’ve got it made.”

But sometimes it’s worth deconstructing the obvious to see just what makes it tick.  So at the risk of stepping on the laugh line, let’s have a go at it.

Lying and Credibility

The most obvious problem with lying is that it makes you wrong. Anyone who knows the truth then immediately knows, at a bare minimum, that you said something that is not the truth, aka wrong.

The shock to credibility extends even to denials. Think Nixon’s “I am not a crook,”  or Clinton’s “I did not have sex…” or the granddaddy of them all, the apocryphal Lyndon  Johnson story about getting an opponent to deny having had sexual relations with a pig. In each case, the denial forces us to consider the possibility of an alternate truth – and the damage is done.

But credibility is the least of it. There are two other corrosive aspects of lying: evasiveness and motives.

Lying and Evasiveness

When you think someone is lying to you, you likely think, “Why is he saying that?” Evasive lying is rarely as direct as the Dilbert case; more often it shows up in white lies, lies of omission, or lies of deflection. “You know, you can’t really trust those damage reports anyway,” “I wouldn’t be too concerned about the service guarantee if I were you,” and so forth.

If the first response to a lie is to doubt that what is stated is the truth, then the second response is to wonder what the truth really is. And we sense evasiveness as we run down the list of alternate truths, each more negative than the last.

Lying and Motive

But the most damning aspect of lying is probably the doubt it casts on the liar’s motives. We move from “that’s not true!” to “I wonder what really is true,” to “why would he be saying such a thing?”

To doubt someone’s motives is to add an infinite loop to our concerns about the lie. First of all, motive goes beyond the lie, to the person telling the lie – who is now incontrovertibly a liar.

Second, the rarest of all motives for lying is an attempt to do a  greater good for another. Despite frequent claims that “I did it for (the kids / the parents / justice), almost all motives for lying turn out to be self-serving at root.  (Including the lies we tell ourselves about why we’re telling lies). Why would he do such a thing? Because there was something in it for him, that’s why! It’s almost always true.

And if people act toward us from selfish motives, then we know we have been treated as objects – as means to an end and not as ends in ourselves. This is unethical in the Kantian sense.

Worst of all, bad motives call everything else into question. “If he lied about this, then how can I know he was telling the truth about that? Or about anything else?” This is why perjury is a crime, and why casting doubt on someone’s character is a common way to counter their statements.

Recovering from Lies

We’ve all told lies. At least, everyone I know has. Okay, I have. We can often be forgiven, just as we can forgive others their lies to us. To forgive and to be forgiven, the liar must express recognition and contrition around the full extent of the lie, and then some.

This can be done more easily for the wounds of credibility and evasiveness. “I was wrong to do that, I know it, and I am sorry.” It is harder to forgive the part about motive, because it goes to something much deeper. How can someone be believed about changing their motives?  How easily can you change your own?

This post first appeared on TrustMatters.

When to Offer a Low Price

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Last week, we talked a bit about pricing low to get the sale – and how that is not always the best option. But when is it okay to offer a low or  lower price? There’s always an exception (or two) to every rule out there. So, if you want to know a bit more on when you should offer a discount – read on.

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Few things in business have such dramatic impact on customer perception as how you handle your pricing, particularly when and how you offer discounts.

People may evaluate your products or your service by averaging out multiple experiences. But drop your price just once, and you’ll see how hard it is to recover. For a current example of how powerful your pricing image is, consider Bill Ackman’s painful failure to revamp the image of JC Penney—away from frequent discounts to everyday low prices as a strategy.

Yet in professional services and complex businesses, we play with offering discounts all the time. Shouldn’t we have a strategy behind it?

Don’t Just Stand There: Stand for Something

There is no one “right” approach to offering discounts. Your approach will vary with your business, your objectives, and your markets. But there are some things every approach should do:

  • You should have a rule for when to discount.
  • That rule should be easily explainable to clients.
  • You have to be willing to live by the rule.

That may sound obvious. But how often have you heard things like, “Don’t tell Bill that Joe got that price. It’ll only encourage him to want it,” or “Those guys’ll do anything to get the business.” Those statements indicate a lack of policy, and that’s death on your reputation.

What to Stand For

Again, your business will vary. Here’s what I decided for mine. I run a high-end professional services business, offering speaking, training, coaching, and related services. I want to be known for high quality, professionalism, and subject matter expertise. And in my case, because the subject matter is trust, I need to be seen as completely above suspicion.

It’s clear, then, that I need to articulate and live by some rules about when to discount. Here’s what I came up with over the years.

1. Frequency. I want to be at the opposite end of the spectrum from a JC Penney strategy of frequent discounting. I don’t want clients looking for bargains. If they’re looking to price shop, I want to send a subtle message that they’re in the wrong place.

2. Exceptions. To help that message, I need to be very clear about where discounts are appropriate. In my business, I can clearly state three such situations:

Volume. In my business, perhaps the biggest cost is cost of sales (the time, expense, and investment it takes to generate professional fees). It stands to reason that if someone can reduce my cost of sales, I have room to pass some of those savings along in lower prices.

The biggest example of that is a simply volume discount. The economics of selling one training session to 10 clients vs. selling 10 training sessions to one client are pretty clear. I am happy to receive multiple orders, and I’m happy to offer volume discounts to reflect it.

For me, volume discounts are easy to explain and easy to justify.

Special Situations—For Me. Sometimes I want to work in a new industry or with a novel offering. Those situations are as important for me as they are for the client. In those cases, I will offer a significant discount. I don’t want to shave nickels; I want to send a message about what is important and what isn’t. And in those cases, it’s about the learning. Those kinds of discounts rarely happen.

Special Situations—For the Client. Non-profits never have the kind of money that corporations do; most associations are limited as well. I don’t say yes to all those requests, but when I do, it’s only reasonable to price “off-label.” (Government is a special case, and one I won’t go into here.)

3. Non-Exceptions. That’s about it. That leaves a lot of other situations where I choose not to discount. It’s worth pointing them out:

Pleas for budget. Sorry, I have a list of charities, and corporations with a squeezed budget this year are not on the list. And make that never if you’re in the pharmaceutical or financial services industries, or if you have office space in midtown Manhattan. I have convinced myself that I need your money more than you do.

Bargaining. I have a simple way of declaring that this is not a bazaar: transparency. I explain my business model, explain when and how I give discounts, and—that’s it. I recall one client who, after our initial phone call, said, “I assume that if we go ahead, you’ll grant us our customary 20% discount.” He assumed wrongly.

The Positive Alternative. “Just say no” may (or may not) be a good strategy for drug usage, but it’s not a satisfactory answer to a client on the receiving end. None of us like to be told no, even with a great explanation.

Over the years, I developed another business practice that turned out to have a great side benefit: making people appreciate my saying “no” to discount requests. That practice is to simply take a few minutes extra to talk with them about their situation and refer them to someone else who can help them.

I am a very small player in all the markets I play in. I am far from the only one providing great service. If someone doesn’t happen to fit my business model, they may be caviar and champagne for someone else’s model.

It costs nothing to spend a little time thinking about alternatives for clients who don’t quite fit with my needs, and it generates huge amounts of goodwill. It’s a small investment with a big marketing return: they may come back when they have a need that is a fit with me, and they may speak well of me to others. And—they’re no longer complaining about how I don’t discount.

Again, my model is not the only one. You have to decide what’s right for you. But whatever it is, it should be clear, it has to be explainable, and you have to be willing to live by it.

 

This post originally appeared in RainToday.com

If Selling Is Too Hard, You’re Doing It Wrong

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Salespeople are frequently fixated on athletic metaphors. Try these two:

  • No pain, no gain
  • The harder you try to hit the ball, the worse you do.

So – which is it? Effort – or form? Grit – or ease?

Many fine sales authors will tell you that an essential ingredient in selling—perhaps the essential ingredient—is effort. Gumption, grit, hustle, sweat—whatever the word, the image it conveys is that success in selling is tough. No pain, no gain.

Selling is a lot like football, this view says: the team that exerts the most effort is the team that wins. And there is a lot of truth in that viewpoint.

But consider another truth. Think about hitting a golf ball. As anyone who’s tried doing that can attest, the quality of your golf shot is in inverse proportion to your effort. That pleasing “thwock” of a well-struck iron almost never comes from trying hard.

Instead, the “trick” in golf is not how hard you swing—it’s how smooth, relaxed, and “at ease” your swing is. If you’re swinging too hard, you’re almost certainly doing it wrong. And there’s a lot of truth in that viewpoint as well.

I’ve learned that most dichotomies like this are false. Selling isn’t only like football or like golf. It’s both, in different aspects. But that’s a different article. This article is about just one side—the golf side, if you will, where if you’re working too hard at selling, you’re doing it wrong.

Adam Smith, Competition, and Selling

Blame it on Adam Smith’s The Wealth of Nations, if you will. The Scottish moral philosopher and economist famously claimed that by the self-oriented struggling of the butcher and the baker, the “invisible hand” of the market makes itself known by balancing out all for the greater good. Out of individual selfishness grows the maximum collective good.

While Smith has been unfairly characterized as arguing against regulation and in favor of unfettered free markets, there’s no question that his powerful formulation rhymes with competition—individuals seeking their own betterment. Perhaps ever since, business has been full of metaphors from war and sports. And nowhere are those metaphors more prevalent than in sales.

Here’s a partial list for just one sport alone: pitch, curve ball, hitting cleanup, bottom of the ninth, pinch hit, get our signals lined up, strike out, bases loaded, don’t swing at the first pitch, home field advantage, double play, we’re on the scoreboard, leaving men on base, pop-up, foul ball, home run hitter, shut-out, and so on.

Here’s the thing about sports metaphors: they’re all about competition. Real Madrid vs. Barca. Yankees vs. Red Sox. All Blacks vs. Wallabies. Seller vs. competitor.

And—most of all—seller vs. buyer.

Selling without Competition

It’s hard for most people to even conceive of selling without that competitive aspect between buyer and seller. Isn’t the point to get the sale? Isn’t closing the end of the sales process? If a competitor got the job, wouldn’t that be a loss? And why would you spend time on a “prospect” if the odds looked too low for a sale?

When we think this way, we spend an awful lot of energy. It’s hard work—particularly because much of it is spent trying to persuade customers to do what we (sellers) want them to do. And getting other people to do what we want them to do is never easy (if you have a teenager and/or a spouse, you know this well).

There is another way. It consists in simply and basically changing the entire approach to selling.

The first approach is the traditional, competitive, zero-sum-thinking, buyer vs. seller—the age-old dance that to this day gives selling a faint (or not-so-faint) bad name. It is one-sided, seller-driven, and greedy.

The new social media capabilities have not made this approach to selling go away—they have empowered it. Just look at your inbox, spam filters, LinkedIn requests, Twitter hustles, and pop-up ads on the Internet.

And boy do you have to work hard to sell that way.

The second approach is different. The fundamental distinction is that you’re working with the buyer, not against the buyer. Your interests are 100% aligned, not 63%. If you do business by relentlessly helping your customers do what’s right for them, selling gets remarkably easier.

You don’t have to think about what to share and what not to. You don’t have to control others. You don’t have to white-knuckle meetings and phone calls because there are no bad outcomes.

Selling this way works very well for one fundamental reason: all people (including buyers) want to deal with sellers they can trust—sellers who are honest, forthright, long-term driven, and customer-focused. All people (including buyers) prefer not to deal with sellers who are in it for themselves, and constantly in denial about it.

This is the golf part of selling: the part where if you lighten up, relax the muscles, let it flow, you end up with superior results. And there’s a whole lot of truth to that view. If you’re working too hard, you’re not getting the sale.

This post first appeared on RainToday.com 

Clients Don’t Buy Solutions, They Buy Problem Definitions

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You’re familiar with the old idea that people don’t buy products, they buy solutions – not drill-bits, but holes, in Ted Levitt’s classic formulation. This idea became closely allied with the commonplace view that we should be selling value, and packaging up ‘value propositions.’

But when it comes to complex services, Uncle Ted understated things.  The very idea of what is behind the “sale” in the first place needs re-examining.

So here’s a provocative statement: People don’t buy your value proposition – they buy your problem statement – and give you the sale as a reward for having defined it in a way such that the buyer can see the road to success with greater clarity.

Value: The Usual Suspect

If sales were like the movie Casablanca, and you rounded up “the usual suspects” for getting the sale, at the top of the list might be “demonstrated value.” Salespeople like to think that the reason they got the job was they did a better job at “adding value,” “demonstrating value,”  convincing customers of the “value proposition” they put forth. “Go with us,” salespeople say, “and you’ll get the greatest expected value.”

We impute this decision-making process to our customers, too. If they bought from us, it must be because we did the best job of creating potential value – maybe modified just a bit by their confidence in our ability to deliver on the value we promised.

This value-centric view of selling confirms all the biases of today’s salespeople: it’s a matter of producing challenging ideas, grand scopes, clearly articulated solutions. The winners are those who conjure up the right mixture of smarts, expertise, and hard work.

So we like to believe.

The Truth: It’s the Problem Definition

My old colleague David Maister once said, “The problem is never what the client said it was in the first meeting.” And while at the time I thought he was being slightly hyperbolic, I came to believe he was, in the real world, exactly right. A perfectly defined problem rarely requires outside expertise – it just needs a purchase order.

Consultative sellers get called in for other reasons.

The reason is, buyers – consciously or unconsciously – want the benefit of sellers’ expertise. They are open – more, or less (often less) – to learning from the seller. Yet arguably the most common error of sellers in consultative sales situations is – they blindly accept the customer’s definition of the problem.

If the problem definition is wrong, then a solution based on it is going to be wrong as well. Worse yet, a fully worked out proposal grounded on a faulty problem definition becomes increasingly tenuous. Buyers acutely and painfully recognize this, and this fact explains why so many consultant CRM systems are full of entries that say “died” instead of “lost.”

Clients don’t want to admit the definition was wrong from the get-go, so they simply stop returning calls, the sellers get resentful – and everyone goes off to try the same thing all over again, getting, of course, the same results.

The problem definition is the heart of the matter, for two reasons. The obvious reason is if you don’t solve the right problem, you’ll just make things worse, and as noted above, that becomes increasingly clear to all concerned.

But there’s a deeper, psychological reason.  If you as a seller can truly engage a buyer in a joint process of discovery, you then trigger something magical: a willingness to explore openly the true issue, and a willingness to engage your expertise in the pursuit.

The result is huge: an expertise-based joint journey of discovery, with a greatly enhanced likelihood of a better problem definition, and a vastly higher level of acceptance of that problem definition.

Getting There is Way More Than Half the Battle

A joint discovery of problem definition requires an openness and a willingness to collaborate on the part of the client. No client I’ve ever met starts out that way – no client has ever come to me and said, “Gee, Charlie, we’re really not sure what’s wrong here, but we kind of hope that maybe if you talk to us, things might get better.”

Instead, clients come to sellers with the usual set of highly defined problem definitions, desired solutions, and specifications for how those solutions must be tailored to their organization. It takes a great deal of skill to get to the point where you can mutually confess imperfection, and go on a joint journey.

It’s the opposite of that old “I’m OK, You’re OK” paradigm – it’s more like “I’m a Fool, You’re a Fool, Let’s Figure This Sucker Out Together.”  (And you don’t get there by quoting Maister about how their problem definition is wrong, either).

Having gotten to a point of mutually confessed imperfection, the best problem definition begins.  And when you do get to a great problem definition, the amazing thing happens.

The client doesn’t buy the best solution: instead, they reward the firm that did the best job of helping them define the problem. You’re not getting paid to do the job – you’re getting rewarded for having created the best ah-ha for the client – the ah-ha that says, “Ah, yes – thatis indeed precisely the issue that we’ve been having all along here. That’s the heart of the matter.”

Having gotten that ah-ha, why in the world would a customer then hire someone else to deliver on the vision you’ve jointly created?  Why would you trust anyone but the ones who created the bond with you to develop the insight to actually get you over the river?   You just wouldn’t, that’s all.

Clients don’t buy value: they buy the people they have come to trust. In particular, they hire those who have helped them define their problem in a way that they can finally see their way clear to a resolution of their issues. The project, the sale, is not “the thing” – it is simply the currency of reward for having best-defined the problem.

This post first appeared on Trust Matters. 

Bleeding Trust from Every Sales Interaction

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If there’s one guaranteed head-nod, bromide, platitude that most marketers and salespeople would agree to, it’s that trust in the seller positively affects buyer behavior. Conversely, companies we don’t trust are adversely affected by a lack of trust. Pure data to support this claim is tricky to come by, but it’s a commonsensical proposition most of us are willing to buy on the face of it. And rightly so.

And yet – the degree to which modern companies bleed trust (hemorrhage might be a better word) is astonishing.

And I’m not just talking about the egregious mistakes – auto emissions software, blown drilling platforms, rigged interest rates. I’m talking about the myriad little, every-day, seemingly trivial ways that add up—ending in a virtual bloodbath of lost trust. In no particular order, let me identify a few.

Customer Tales of Woe

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

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

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

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

One Cut at a Time

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

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

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

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

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

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

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

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

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

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

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

This post first appeared on RainToday.com

The Twelve Steps of Business Relationships

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Usually when someone hears the words “12-step program,” they’re quick to judge it as something to get out of a rut. But what if you turned that perspective on its axis? What if you saw a program – particularly one with 12 steps – as something to advance you to a new level of life, thought and, well, relationships?

Below are 12 key steps to take when looking to grow strong, trust-based business relationships. Easy? Yes. Simple? Well, see for yourself.

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Rarely will you see someone fail in business who has thoroughly followed these simple suggestions. Those who do fail are typically people who are incapable of being honest – with their colleagues, their customers and their partners.

Other problems may temporarily deflect you, but the ability to be rigorously honest will prove immeasurably beneficial in all your business relationships.

Twelve Steps of Business Relationships

Step 1. Accept that you have no power over people, that all your attempts at control have failed. Trying to get other people to do what you want them to do is doomed to failure, no matter how good your intentions, how right your cause, or how much benefit it would bring the other.

People just wanna be free. Go with it.

Step 2. Recognize that by yourself, you can’t succeed. Your success will inevitably be tied up in the success of other people. Not only are you not driving the bus, you are just another passenger.

Step 3. Resolve that you’re going to stop trying to drive the bus, that you’ll start doing things to help other people, that you’ll focus on getting the group to succeed. When things don’t go your way, remember “your way” is what got you into this mess. Repeat steps 1 and 2.

Step 4. Make a list of all the stupid, controlling, selfish things you do to others. Be specific about whom you do them to, and what harm it does to them. Stop at ten people.

Now add to the list a few good things you do. You are, after all, worthwhile.

Step 5. Go share your list with someone you trust. Listen to what they have to say about it and learn from what they have to say. Don’t waste time arguing with them.

Step 6. Get yourself ready to stop behaving in those old ways. Think about it for a while. Make a list of the new things you’ll do. Envision yourself responding in new ways; rehearse new “lines.”

Hint: your list should probably include listening. Also, listening.

Step 7. Pick a time of your own choosing to begin the change. It could be right now, it could be next week, but not next summer. Write that date in your calendar. When it comes, step out of your old ways and start working the new.

Step 8. Think about the customers, co-workers, peers and partners you might have tried to control and what you did to them. Think of what you might have done better and plan to do better next time.

Step 9. Go back to the customers, co-workers and partners you’ve tried to control, and tell them you realize what you have done. Acknowledge your responsibility in those situations, and tell them specifically how you plan to behave differently in future.

Hint: Don’t do this if it causes upset or harm to the other person. And don’t confuse this with trying to get them to forgive you – see Step 1, above.

Step 10. At each day’s end, do a mental run-through of how you did in your new approach. Note where you fell short and what you could have done better.

Then let it go and get a good night’s sleep.

Step 11. Create a little mantra for yourself, to remind you that your job is to help others, not yourself. Get out of the instance, secure in the idea that better relationships will float all transaction boats.

Step 12. Having recognized how to apply these principles to your business affairs, give it a shot at home and in the rest of your life.  You saw that one coming, right?

How to Increase Trust in Organizations

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I was grocery shopping one Saturday. It was 2PM, 96 degrees out – pretty hot for New Jersey – and I was in the checkout line. The cashier had started sliding my purchases through the register, when suddenly I noticed a bag left over from the customer before me. She had left and gone to her car.

The woman doing the bagging noticed it at the same time. She grabbed the lady’s bag and dashed out into the heat. She was making pretty good time for a woman in her 60s, and we all could see her out the window as she finally caught up, handed over the bag, and started back.

Then the cashier suddenly exclaimed, “Omigosh, she left two other bags as well!” Looking quickly at me and the woman behind me in line, she said, “Will you two please excuse me for just a minute? I’ll be right back.” And she too took off after the forgetful lady, with two bags in tow. She was in her 20s, and made very good time.

It occurred to me I could slide a few groceries over the line and into my bag and escape without paying. (I don’t do such things, but the idea did show up in my mind). Then the elderly woman behind me in line said, “You know, I don’t mind one little bit waiting for someone who’s doing a good deed like that.”  Neither did I, I said, neither did I.

When the cashier and the bagging lady came back, we both complimented them, and they blushed a bit and said thank you. (I sent a complimentary email to ShopRite’s HQ later that night with the store number, employee name and cash register number, all of which were on the receipt).

So my question is: how do you get employees to behave like that? I mean generously, based on principle, willing to take certain risks, confident to act in the moment. How do you keep from getting sullen employees who talk about “career-limiting moves,” who won’t lift a hand or take a risk to help another?

How Do You Induce Values-based Behavior in an Organization?

Earlier that same day, I had the opportunity to briefly visit a Sears store, a Macy’s store, and a Bed Bath and Beyond unit. Sears was awful – employees keeping their distance from customers, 100 feet away, pretending not to notice. Macy’s was a little better, but still sullen, under-staffed, and radiating not-helpfulness.

BB&B was a huge contrast. Several employees, busy doing other things, asked me if they could help. I asked two for help, and they both went out of their way to do so.

How does this happen?

The standard answer in most businesses, I’m afraid, is to focus on the wrong things: typically  incentives, communications, and procedures.

The more I see of business, the more convinced I become that the single most powerful way to create values-based behavior is none of the above – it is to do it yourself, and to talk about it with others.

The Usual Suspects

Incentives appeal to the individual’s rational economic or ego-satisfying needs. Fine and dandy, but if you’re trying to incent selfless behavior, the concept of rewards is just a tad self-contradictory.

There is probably (I’m guessing) more money spent on communications than on any other “solution” to issues of trust, ethical behavior, and customer-focus. Companies love to pronounce their values to their customers, and reinforce them internally in posters, newsletters, and blogs. The problem is, impersonal companies communicating about personal relationships is some kind of category mistake.

And procedures? The whole point of values-based behavior is that the employee extrapolates from principles in the moment. Rehearsing and drilling doesn’t help extrapolate values, it replaces that process with rote memory.

Role Modeling

Think of how we learn from our parents. Think of the sports or public figures we admire (there are still a few). In all cases, we are influenced by what they do – not by what they say they will do, or did do, or wish they’d done.

When it comes to values, I suspect BB&B has leaders in their operations organization who both walk the talk, and talk it too. People who lead by example, and who are convinced that values like customer assistance are valid only if kept sharpened by use.

I suspect Angie the cashier at ShopRite was hired partly because she exhibited values. I suspect that the folks managing her store make a point of being helpful and customer-focused, and engage customers about values like that. I suspect it didn’t occur to her that she shouldn’t take the risk of leaving her cash drawer and my groceries unattended – because her leadership would have trusted their customers and done the same thing – and she knew it.

We have overdone the behavioral, incentives-based, needs-maximizing best practices model of human resources. We have under-estimated the human power of changing humans. After all, the business of relating to other people is personal.

This post was originally published on TrustMatters.

The Business Case for Trust

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Be honest. When you think of growth and profitability, is trust the first thing you think of? I doubt it.

The things that often come to mind when we talk about a successful practice are much more likely to sound likesustainable competitive advantage, hardball, you get what you negotiate, be number one or two in your market, first mover advantage, lowest cost producer, or share of wallet. But trust?

Usually we think of trust as an element that is nice to have, something associated with genteel behaviors which we can afford when things are going well but which have to take a back seat when push comes to shove. However, for those in the consultative professions or other complex intangible businesses—nothing could be farther from the truth.

What A True Trust Relationship Looks Like

A lot of what passes for trust isn’t. Trust isn’t high client satisfaction ratings—it isn’t even “client delight.” It’s not loyalty, as measured by retention rates. And it certainly isn’t being “client-focused,” because a great deal of client focus is done solely for the sake of such things as increasing the seller’s profitability and share of wallet.

Trust is personal, not institutional; it’s emotional, not just rational. Above all, it has to do with the firm’s intent. Is your intent to help the client, or is it to make money by helping the client? Your client knows the difference.

In one study of 2514 buyers by Bill Brooks and Tom Travesano (You’re Working Too Hard To Make The Sale, Irwin Professional Publishing, 1995), 94% of buyers who bought on the basis of needs said they would “certainly” consider buying from another provider.

And 91% of benefits-based buyers said they would “probably” do so. But in stark contrast, 99% of those who bought on the basis of wants said they would “absolutely not” consider buying elsewhere. That’s a dramatic difference – and it’s the kind of difference trust makes.

Howard Schwartz was the head of the financial services practice at a consulting firm, when he got a call from his counterpart at McKinsey. “One of our clients has urgent need of a project. We have tried twice and failed to deliver satisfactorily. This work has to get done – would you folks do it?”

Howard couldn’t believe it—a front door invitation to a McKinsey client. He took the job and his team did great work. But when he asked the client to consider doing more work with them, the client said “Thanks very much, great job, but we would never leave the firm that was big enough to bring you in. We know they’ll always do what’s right for us.” “And,” Howard said, “I couldn’t blame them a bit.”

The Economics Of Trust-Based Relationships

What happens when you get 99% declarations of absolute loyalty–when clients say they’ll “never” leave you on principle? The economics are massive.

A Harvard Business Review article (Collaboration Rules by Philip Evans and Bob Wolf , 2005) by BCG suggests that the US GDP is comprised of roughly 50% transaction costs and that the primary strategy for reducing those costs is trust. 50% of an entire economy is pretty big.

Now, on a micro-level, consider what happens when a client really trusts you. Your advice is taken; your insights are sought. Decision processes are fast-tracked. The costs of auditing, legal, and tracking disappear.

Your recommendations are taken at face value. The likelihood of RFPs is greatly reduced. You get asked in at earlier stages of issues. Disagreements are sorted out in furtherance of a long term good. Information is shared between professional and client, and points of view are welcomed rather than suspected.

The payables clerk gets your checks out on time, and you’re upgraded to preferred provider status so “on time” means what it says. Pricing is accepted as “fair.”

Finally, client loyalty based on trust is far higher and stronger than loyalty based merely on things like business processes or pricing. Mechanically, this raises the firm’s profitability through reduced sales costs and higher margins. But, more importantly, it makes the firm far more effective in helping its client.

The Client Benefits Of Trust

What about the benefits to the client? Economic benefits are even greater and come at three levels. First, the direct costs per transaction with a trusted provider are lower.

Second, when a provider understands client needs, that supplier is likely to make more appropriate suggestions, to better anticipate emerging needs and to make better recommendations. Those benefits are indirect, but probably outweigh first level benefits.

The highest client payoff of all comes from the ability to trust immediately and completely the advice of a talented outside expert without spending any time or resources on tweaking, critiquing, hedging checking, auditing or second-guessing. At this level, professionals are as dependable as our most-valuable employees, yet with the added benefits of expertise and objectivity that come from being an outsider.

With that confidence in the pocket, a firm can afford to fast-track processes, make far faster decisions, and take bold actions without fear. The benefits go past mere cost reduction, and instead towards achieving significant revenue and strategic enhancements.

The business case for trust ultimately rests far more on effectiveness than on efficiency. A trust-based client relationship enables far more effectiveness in the marketplace for both parties than do conventional relationships built on negotiations, contracts, and other indicators of arms-length treatment built on self-interest alone.

The Economic Paradox

It’s tempting to ask, “If all that’s true, why isn’t everyone doing it?” The answer is, because most of us have a really difficult time being trustworthy.

If a client trusts their provider in the way described above, the provider will be highly profitable and high-growth. But, if the firm sets out to be highly profitable and high-growth by means of being trusted, it will not work. Intentions matter and intentions are critical to being trusted.

The only way to be trusted in the way I’m speaking of is to be worthy of trust—to be trustworthy. The critical element to being trustworthy is to have the client’s best interests at heart all the time. And that goes to intent.

To intend to place the client’s interests first raises some radical implications. For example:

  • The purpose of a sales call is not to get the sale, but instead to help the client;
  • Your focus should be on work that needs doing, not on work that you can do;
  • Your ultimate strategic goals should be client service, not competitive advantage;
  • You should share, not hide, your economics with your client, because transparency fosters trust;
  • You should write your proposals sitting next to your client.

The paradox is: If you are willing to let go of your own short-term, self-oriented goals, you will achieve those goals. Your influence is greatest when you’re not trying to influence. Your profit is highest when your goal is not profitability by client service.

Barriers To Trust

Can it be done? Absolutely. Many successful individual professionals know the lessons of trust very well. But at the firm level, we have been seduced by the “reigning belief systems” of business: in particular, the ideas that business is about competition, and that ever-further refinement of measurements, particularly around client relationships, helps the economics.

Just because you can run division-level client profitability studies every week doesn’t mean you should do it. Just because you can calculate client share of wallet and hit rate on sales opportunities doesn’t mean you should focus on it. Those efforts turn clients into objects, means to our own ends.

Too many firms are focused too much on short-term measures and competitive definitions of success. We need to remember that the best short-term performance comes from executing on a long-term plan or set of principles.

Trust is the goal. The powerful economics of trust are merely a byproduct.

This post first appeared on RainToday.com

The Art of Listening: Establishing Trust without Saying a Thing

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Buyer Psychology

Ask a client what they want, and they’ll tell you “expertise; credentials; someone who’ll meet my needs.” Ask them what their needs are, and they’ll tell you.

But ask really successful salespeople (or honest clients with experience in buying), and they’ll tell you how it really works. Clients only ask for credentials and expertise because they’re not really sure what else to do. In truth, they’d rather get in range with expertise, and then decide based on their trust in the seller.

Clients will tell you their needs because they think they’re supposed to, and because they’re afraid if they don’t, you’ll take advantage of them. But if you can engage them in honest discussion, they’ll admit their uncertainties and discuss, engage in, and evolve their views of what their needs are.

It all depends on why you’re listening.

If you’re listening to hear an answer to a predetermined question, then you will hear the “canned” definitions of needs that clients have prepared for you. You’ll hear their request for credentials and expertise at face value, and not hear the undertone in the question, or in the bored way they listen to your answer.

Because what clients really want to talk about is what everyone wants to talk about: Themselves. When someone says, “Tell me about yourself,” they’re just being polite – whether it’s on a date, at a social event, or in a sales call. The right answer is not to tell them about your vast experience with other clients – it is to get them talking about themselves. And to listen as they do so.

The Quality Of Listening

The usual form of listening is conditioned by sales models looking for answers and by flawed views of buyer psychology focused on surface dialogue. What is required is a different quality of listening.

The main reason for listening to prospects is to allow the prospect to be heard. Really heard. As in, actually being paid attention to by another human being.

This kind of listening is listening for the sake of listening. Listening to understand, period. No strings attached. No links back to your product. No refined problem statements. Because that’s what people in relationships, at their best, really do. They listen because they want to know what the other person thinks about whatever the other person is interested in talking about.

This kind of listening validates other people. It connects us to them. It provides meaning. And, among other things, it sets the stage for sellers and buyers to interact – if that is the right thing to happen next.

Authors Bill Brooks and Tom Travesano, in You’re Working Too Hard To Make The Sale, note that people greatly prefer to buy what they need from those who understand what it is that they want.

Read that over again, carefully. People prefer to buy what they need (stuff they’re going to buy anyway), from those who understand them on the basis of what they want (things in life they’d love to have – wishes, hopes, desires).

You don’t even have to give them what they want; it’s enough to understand them.

To bring it full circle back to listening: Relationships are the context for successful selling. Relationships are based on trust; they predispose us to engage in qualitatively different kinds of sales conversations. And listening – unrestricted, unbounded, listening for its own sake – is the way we develop such relationships.

And therein lies the paradox. The most powerful way to sell depends on unlinking listening from selling – and instead, just listening. Listening not as a step in a sales process, and not as a search for answers to questions. Listening not as a means to an end, but as an end in itself.

The point of listening is not what you hear, but the act of listening itself.

Making It Work

Here are 5 tips to listening this way. Number five is the most powerful.

  1. Ditch the distractions. You cannot multitask undiscovered. Being multitasked feels insulting. Close the door. Face away from the window. Blank the computer screen. Turn the iPhone over. Now, pay attention.
  2. Use your whole body. Lean toward the speaker – even on the phone. Use facial expressions. Use hands and arms, shake your head, and use “non-verbal” verbalisms. This improves your listening – and indicates you are listening.
  3. Keep it about them – not you. Use open-ended, not closed, questions. Let them tell their own story – don’t use them as foils for your hypotheses.
  4. Acknowledge frequently. Paraphrase their data, empathize with their emotions. Make sure you are hearing both correctly; make sure they know you are.
  5. Think out loud. The biggest obstacle to listening is your own thinking. Be courageous – postpone your thinking until they’re done talking. Be willing to think out loud – with the client. Doing so role-models collaboration and transparency, and that reinforces trust. I hear you. I value you. I respond to you, with no hidden agenda. I trust you. You can trust me.

That’s the message of listening.

This article was first published on RainToday.com

Living Inside a Pariah Company

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Doggie at Door Exile iStock_000042122536_smallLast week I wrote a very critical blogpost about Volkswagen. I was, of course, hardly alone in doing so; the scandal has created tremors beyond even recent examples.

But in the days since, I’ve been trying to think in different terms – in particular, what must it be like to be an employee of VW in these difficult days? What is the view from inside the glass, looking up and out? What tensions must it cause people – and what can they do?

The Pariah Organization

My good friend Matt Nixon started writing a book last year, tentatively titled “Working for the Pariahs: Can Good People Stop Organizations Going Bad?”  He send me an early draft outline last year, and I’m re-reading it again now.

Matt has the credibility to write this book: an MBA, he spent over a decade in consulting (Accenture, Towers Perrin), then another decade as a VP at Shell Oil and later an MD at Barclays. He knows something about whereof he speaks. Combined with a classical English education and a wide network, the book makes for illuminating reading. [Matt – when are you going to finish this book?]

Matt suggests that being a pariah organization (think “outcast” and “exile”) is a phenomenon on the increase (just because you’re paranoid doesn’t mean they’re not out to get you, it’s really true).  He also points out that pariah-dom is about much more than individual moral failings – it is trackable at an industry level (another gut feeling ratified by data).

He provides some diagnostics and descriptive models to identify and predict pariah-like conditions in organizations. Particularly telling is his critique of “false metamorphosis,” the consultant snake oil of “transformation” that has been overblown. True change, he suggests, requires a lot more, and is a lot more uncommon.

But what about VW’s employees? As Matt notes from other pariah organizations, a great many people in such companies feel bewildered and unfairly treated.  They see themselves, and their company, as largely ethical, and remain quite positive about staying with the organization they are part of.

The overwhelming criticism of their organizations feels like torches and pitchforks.

At a time of crisis, Matt suggests employees go through a predictable sequence of emotions – shock, followed by anger and shame, swinging back to resurgent loyalty, and ending in a blend of guilt, responsibility, and denial. He talks as well about three “tribes” of employees: Loyalists, Mercenaries, and Heroes. The three tribes react differently to the four phases.

What Can Be Done?

I hope Matt finishes his book. It’s got some great insights for organizations and leadership. For me, for right now, I want to focus on what an individual at VW might be thinking about, what they can do, and what we can do to support them.

Human beings are delicate creatures. We process information that is critical of us in very self-protective ways. We will take advice from a friend that we would never take from a stranger.

As outsiders, this means we have to temper criticism with the recognition that exceeding few employees assume personal guilt. The vast majority feel very little personal accountability for the sins of the organization, and personalizing accusations doesn’t help them come to grips with any objective truth.

The increasing demand for personal civil and criminal accountability of leaders in pariah organizations is, I think, a good thing. But it must be tempered by some focus on responsibility – our criminal justice systems are easily inclined to focus on the underlings, and not the leaders. Indiscriminate demonization of employees is counter-productive. In the VW case in particular, the role of culture and corporate environment seems a strong contributor, rather than a simple case of “bad apples.”

As employees, the challenge is to see this as a “Santa Claus” moment: as in, “there is no…”  This did not happen in a vacuum; as Matt notes, the cult of leadership is partly to blame for obscuring the truth that corporate cultures “eat strategy for breakfast,” not to mention well-intended but impotent compliance programs. It’s critical to employees – for their own psychic health, as well as that of the organization – to be constructively schizophrenic.

They need to both feel secure in their own good intentions and, at the same time, be able to objectively see how things could have gotten to this point. As Henry Mintzberg angrily points out, this kind of phenomenon is best seen not as a scandal, but as a syndrome. And only insiders have access to the “real” story.

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Moral outrage has its place in the reform of business. So does shaming, by bringing business issues outside narrowly proscribed economic boundaries and into the social realm as a whole.

But blame and shame are two-edged swords, and very hard to control. At a social level, their overuse just promotes entrenched ill-will; look no further than the current state of US national politics.

At an individual level, blame and shame keep us from seeing and accepting reality, as it is. In a very real sense, as my friend Phil McGee puts it, “Blame is captivity – responsibility is freedom.”

As we look at the VW scandal/syndrome, we need to balance our outrage with a sense of respect for other individuals, and our defensiveness with a willingness to see things as they are.