It’s time to become a self contained business generation machine.

Last month we had Independence Day.  I sometimes wonder if people know what that means. “Independence Day” means that we declared that we were a country no longer tied to Great Britain; for all purposes self sufficient and not beholden to anyone.  It’s a day to remember and to acknowledge – especially during a time when too many people are DEpendent.  No, this isn’t about politics – it’s about a Salesperson’s Declaration of Independence.

You see, my belief has always been that salespeople should be what I call “self contained business generation machines.”  The best salespeople – the top 20% that I keep referring to – get it.  They are able to generate new business and new growth consistently, reliably, and predictably, year in and year out. What separates them from the rest, at least in terms of independence?  Read on.

The best salespeople understand their role.  The role of the salesperson is to be like the role of the US Marines – the tip of the spear.  Without us, nothing good happens.  Most salespeople know this – or at least they are willing to SAY they know it – but do they live it?  Judging by the salespeople I talk to, most don’t.  Here are some of the things that I hear…and what they mean:

“What do they do for leads?”  Means that “I don’t prospect and all I do is receive.”  This is the kiss of death for any company that needs to grow through prospecting.  This one is usually followed by:

“Sure, I’m willing to prospect if you need me to.”  “Willing to” are two of the scariest words a salesperson can say.  “Willing to” means, “I truly hate it, I won’t do much of it, I won’t do it with any enthusiasm, and I’ll probably be looking for another job where they won’t ask me to do this while I’m collecting a paycheck from you.”

“What do you have for presentation materials?”  This can mean any number of things, but what it usually means is, “I feel that my presentation skills are weak, and therefore I want to know that I have plenty of paper to compensate.”

“What kind of support will I get?”  This one is tricky.  Sometimes this is a very legitimate question, and I’ve asked it myself.  Good salespeople want to know that the companies they work for, and the people they work with, are good at what they do.  Will the services and products be fulfilled well?  If there’s an issue, and the salesperson is in the right, will the sales manager support you?  These are good and correct issues.  On the other hand, sometimes it can mean that the salesperson expects everyone else to do 90% of the work, and he collects the commissions.  This is of course less desirable.

Awhile back, I had a client who discussed a potential new hire with me.  This guy had, they said, been very successful in their industry, and he was a great presenter.  He did mention during the interview that, at his last company, they had employed a telemarketer to set all his new appointments, and gosh it would be nice if my client did the same.  I said, “Whoa, hold the phone!”  What he was telling my client was that, if he had to prospect, they were sunk.  So to get the maximum effect out of one expensive employee, they needed to hire another expensive employee.  After about a 10 minute discussion, my client chose (wisely) not to make the hire.

The sales profession is changing rapidly, and if you’re not one of those self contained business generation machines, you’re going to be left behind – and maybe left out.  Information technology is replacing many things, and information technology can replace mediocre salespeople.  By “mediocre,” I mean salespeople who don’t prospect, who don’t ask questions, and who don’t add value for their customers or their employees.

The good news is that, for those self contained business generation machines, there will always be opportunity.  If you’re wondering if you’re one of those people, ask yourself these questions:

Do I consistently and reliably prospect, and turn those prospects into customers?

Do I ask my customers questions that get beyond the surface and uncover real, and deeply set, needs?

Do I present my products and services in such a way that prospects immediately see and understand the benefits, and that differentiates from my competition?

Do I hold price and profit?

Do I consistently create value for my customers, whether they buy or not?

Do I need my boss’s help to close the tough deals?

You’ll note that the above questions don’t start with “can.”  Anyone “can.”  They start with “do.”  Few “do.” If you’re willing to learn the skills, if you’re willing to do the work, and if you execute consistently and reliably, you’re adapting well to the changing world of selling.  If not….well, it’s time to think about a change, either in career or habit.

When does a sale happen?  There are four key elements, and here they are.

I’ve spent years talking about how and why a sale happens.  Until recently, however, I’ve not spent much time talking about when a sale happens, and that can be just as important a piece of information as how and why.

For a sale to happen, four things must intersect.  They are:  need, solution, timing, and perceived value. That’s a lot to have collide in the same place, and too many salespeople try to “push the rope uphill” when one of them doesn’t exist.  Worse, some salespeople don’t recognize when all four DO exist in the same place, and miss sales.  To add to the degree of difficulty, the four exist in a particular order in the customer’s mind, and sales tactics fail when they don’t respect this.

The first thing that must exist is a need.  A “need” is a situation that the customer has that can be resolved by making a purchase.  In the B2B environment, a Need exists when the customer would like to improve a Strength, fix a Weakness, create or capitalize on an Opportunity, or head off a Threat (this, by the way, is why “pain” as a motivator doesn’t do the job – it only covers one of the four potential motivators).  In the B2C environment, needs boil down to a perceived improvement in the quality of life.  Unless a Need exists, nothing else matters – you won’t make a sale, and you usually won’t even get an appointment.

The second condition for a sale is a solution.  This means that the needs must be assessed, and a potential product or service measured for its capability to address the need (solve the customer’s issue).  Sales fail here when the salesperson just knows that his product will solve the problem – but fails to ascertain that the customer also agrees that the product constitutes a solution.  Sales also fail when the salesperson doesn’t really believe that his product is the solution but bulls on regardless due to the need for a sale.

Timing is a critical aspect of the sale – and perhaps the toughest to get your hands around.  Timing is one of those things that is up to the customer to determine – not you.  Timing could be a function of finances – right now, cash flow is too thin to purchase. Timing could be a matter of circumstance – for instance, the personnel to implement your solution aren’t hired yet.  Timing could be any number of factors, and the only way to find out if the timing is right is to ask good questions – preferably big-picture questions about priorities – that discover what you want to know.

Finally, perceived value must be in place.  Put simply, “Perceived Value” means that the customer believes that his/her money is better spent on a product or service than staying in their wallet.  Again, it doesn’t matter if YOU think your product is a good buy – what matters is if the CUSTOMER thinks the product is a good buy.  Some customers’ tipping point is low – the perceived ROI isn’t very much.  Some other customers have a high tipping point – you have to demonstrate significant value before they will buy.

The next time you lose a sale – or the next time you have a proposal dangling and are wondering if it’s going to close – ask yourself if all four of these key factors are in place.  If not, move on.

The sales profession has seen more changes in the last ten years than in the eighty previous.  Here are the five biggest.

We live in a new world of selling.  My career started in 1990, and I often look back at the early 90s as (what should have been) the death throes of the old-time, old school manipulative sales tactics.  In fact, my first training as a salesperson used most of those old tactics.  When I got back to my job, I quickly learned that, the less of these tactics I used, the better I did and the more my customers enjoyed the experience.

As my career progressed, I’ve developed certain philosophies and ideas about how selling should be conducted.  I’ve also discovered, however, that it’s best to allow these ideas to evolve over time; salespeople who don’t evolve are left behind.  In fact, our profession has seen more changes in the past ten years or so than in the previous eighty – and salespeople are, unfortunately, getting left behind every day.

Today, I’d like to discuss the five biggest changes in the world of selling, as we find it today – along with the ways that you can evolve to keep up and maybe even get ahead of the curve.

Change #1: The need for salespeople to EARN our place in the customer’s buying process: When I started in selling, I had no real competition.  By that I mean that I had no competition for my place in the supply chain.  I had competitors for my customers’ business, of course – but the salesperson’s spot wasn’t threatened.  Whether I was selling cars, industrial supplies, or plastics, my customers HAD to deal with me, or someone like me, in order to get what they needed.  They couldn’t just order off the Internet.  A few customers chose to fax orders in, but even then they would get a confirmation call from me or my inside salesperson to make sure the order was right.

It isn’t that way anymore, folks.  Your customers can simply get on the Internet and buy what they need – no matter what it is.  That means that our burden has changed.  We now have to EARN our spot in the customer’s visitor chair, or they won’t see us.

Change #2: The end of old, manipulative sales techniques: Once upon a time, the sales training world was a different place.  Sales trainers spent decades piling new insincere, manipulative tactics on top of the old, insincere, manipulative tactics.  It worked like this: Come up with some way to manipulate people into buying, or into thinking they had no alternative to buying.  Then give your tactic a clever name – so your audience would think that you knew some magic technique they didn’t.  This made you “marketable” to your clients.  This begat the Sharp Angle, the Take Away, and yes, even the Firing Horace.  The trouble is that all those tactics have trained not only salespeople, they’ve trained our customers.  Customers can spot this junk, and when they do, you immediately lose your credibility.

Change #3: No more “Person Who” calls.  The “person who” call is low-end prospecting.  When I started in selling, our best prospecting tool was the phone book.  So, you’d call a prospect company and ask the receptionist, “Can you direct me to the person who handles industrial purchasing? (or whatever you were selling)”.  The receptionist would then direct you to the lowest possible person on the food chain who had any tangential contact with what you were selling – or worse, to the purchasing department.  You were as removed from the actual buying decision as you could get while still being physically on the premises.

Nowadays, there are simply too many tools available to find the real decision maker.  Savvy salespeople now find the decision maker, ask for him/her by name, and get an audience with the right person.

Change #4: Product knowledge is no longer king.  When I started in selling, one of the first pieces of wisdom they gave me was “Product knowledge is king, son.  Know your product better than the other guy, and you’ll outsell the other guy.”  Sounded great, right?  The trouble is that this isn’t a true statement any longer.  Your customers can now spend 5-10 minutes on the Internet and know your product’s features and specs as well as you do, making all that wonderful product knowledge superfluous.  It’s still good to know your product, of course – you lose credibility if you don’t – but that’s no longer the trump card.

Today, customer knowledge is the trump card.  If you know your customers better than your competitor, you can better understand, anticipate, and assess needs – and then translate that knowledge into benefits targeted directly at your customer and their situation.  Plus, other than very basic information, your competitors can’t access customer information remotely.  This creates a different – and frankly, exciting and challenging – burden on salespeople.

Change #5: The rise of information technology.  This is the change that underpins all the changes above.  What is driving most of these changes in customer behavior (and thus our world) is the rise of information technology, and the need for us as salespeople to adapt to a more knowledgeable, savvy, and educated customer base.  There are simply too many easily accessible information tools out there for customers to settle for meetings with us that don’t drive new and additional value over the Internet, and there are too many tools out there for us not to take advantage of them.  The Internet has made the sales world into the autobahn with no speed limits – and nobody is picking up hitchhikers.

So, how do you adapt to these changes?  Well, it’s not simple, but it’s doable, and here are the five keys to surviving and thriving in today’s world:

Adaptation #1: Commit to a Purpose Driven Sales Call:  If your sales calls are only driven by the need to drop off doughnuts and pick up this week’s order, you’re dead in the water.  Instead, have a purpose to your call that drives value and interest for your customer.  Become a student of their industry and pick up articles and tips to help them solve problems.  Get involved in situations that don’t directly impact your selling, and find ways to refer customers to resources.  Make every sales call count- and your customers will still see you.

Adaptation #2: Unpack.  Salespeople take a lot of baggage into calls with them, literally and figuratively. One of the biggest bags contains what I call “head trash,” or old techniques that don’t work anymore.  Get rid of that stuff.  If you’re trying to figure out what to get rid of, ask yourself this:  “Does this technique improve the customer’s experience or create value for the customer?”  If the answer is “no,” get rid of it. Hint:  Any sales technique with a name (the “Firing Horace,” for example) should be left behind.

Adaptation #3:  Get your prospecting act together.  There are simply too many ways to learn the names of key executives to settle for the “person who” call.  Instead, use databases like InfoUSA, Hoover’s, or ReferenceUSA (check with your local library – this one is free) to create call lists that include good info and allow you to ask for your prospect by name.  This isn’t even a 21^st century tool; it’s a 20^th century tool.

Adaptation #4: Focus on customer knowledge.  Most salespeople learn their product in depth, and their customers on the surface.  Instead, get to know your customers in depth.  What are their biggest concerns – their plans – their key needs?  What motivates them to come into work?  Instead of asking surface questions, ask questions that dig deeply and uncover information that your competitors don’t get. And don’t ever STOP asking those questions; customers change over time and so do their needs.

Adaptation #5:  Use information technology.  I’m constantly amazed by the number of clients I see that don’t use a contact manager or CRM system.  Those clients fall farther behind every day.  CRM is now cheap and readily available.  So are Internet based tools like Jigsaw, LinkedIn, etc.  All of these tools allow you to do a better job of connecting with, and relating to, your customers.  If you are sitting there thinking, “I don’t need to do that stuff,” your career has an expiration date on it – and it may have already passed!

I realize that, for salespeople who have been in the business for a long time, these can be challenging habits to change, but this kind of change is essential to survive in the new world of selling.  Dinosaurs didn’t adapt.  I see “Sales Dinosaurs” every day.  Don’t be one of them.

Success in sales isn’t just about activity – it’s about your company culture.

In my years of experience in working with (and for) companies large and small, I have discovered that there is a common element to the most successful businesses.  The most successful companies have asales culture.  A “sales culture” is a philosophy that permeates the company, from the corner office to the loading dock, that says, essentially, “We are a sales organization, and everything else we are able to do is a product of our ability to sell our products or services to our customers.”

This isn’t a philosophical statement; it’s reality.  The only difference is whether you choose to acknowledge it or not.  It’s reality because no matter how good your products or services, if you can’t persuade someone to exchange money for those products or services, there’s no reason for production or service to exist, and hence your business will cease to exist.  An acquaintance of mine attempted to make a go of it as a financial consultant, and to be frank, he was the most brilliant financial guy I’ve ever met.  He’s now working for someone else as a CFO – because despite his brilliance, he was unable to make a single sale.

The most successful companies both acknowledge and embrace the idea that they are first and foremost a sales organization, and that culture flows from the top.  It flows from the top because it must.  Despite the protestations of those who advocate bottom-up leadership, the reality is that any corporate culture is set not by the employees at ground and field level, but by the overriding philosophy of management.  That’s you, by the way.  So, let’s assume for the moment that you have decided that your company needs to accept and embrace a sales culture.  How do we go about that?

Set the mission:  First of all, whatever your mission statement, throw it away.  I know, it’s something that you’ve put a lot of thought into and probably has some great phrasing.  It’s probably also something that your employees couldn’t remember if a gun were put to their heads.  Let’s replace it with something simple like this:  “We are a sales organization, and we grow profitably by Acquiring new customers, Developing current customers to greater profitability, and Retaining profitable business.”  Use this as the mantra that guides your company’s decision making.

Communicate:  All good things in sales (and business) come from good communication, and most bad things happen because of insufficient communication.  Knowing this, the next step is to communicate the message to your people, and to do so consistently.  This is where a lot of companies fail, because the communication happens like this:  The Big Guy at the Top will have a staff meeting where he/she communicates the ‘new mission’ forcefully to his key managers, and then expects the managers to communicate it downstream.  They do, but with varying degrees of emphasis and enthusiasm.  The Sales Manager obviously embraces the mission, while the Production Manager may be less enthusiastic, and so forth.  If you really want to effect change, it has to be up to you.

In creating a sales culture, there is no employee whose job is so small or insignificant that he/she shouldn’t hear this message from YOU.  Have all-company meetings, or all-department meetings, or all-branch meetings; however you need to do it in order to have the opportunity to have every employee hear the message directly from your lips.  I once struggled with the support personnel in a 50-person department; no matter what I told the supervisors, nothing seemed to change at ground level.  So, over the objections of several supervisors and even a couple of managers from other departments, I held a full-department meeting and laid out my goals for the next quarter, how we would achieve them, and what everyone’s duty was as part of the goal achievement.  The employees asked great questions, and within days were taking the actions that I needed them to take in order to achieve the goals.  Result – we didn’t just make the goals, we blew them away.  And you can bet that we repeated the quarterly meetings consistently.  The take-away is that, for the most part, if your people know the goals, they will act in accordance with them – if they believe that the goal is real and permanent.

Align Goals:  To accomplish your goal of profitable growth through acquiring, developing, and retaining customers, you must align all your departments and goals.  I once worked for a company that would set each department’s goals in a vacuum; for instance, sales would be tasked to grow the company 15% while the production department would be tasked to cut labor costs by 10%.  Assuming there are no major technical innovations (there weren’t), you had departments with goals that could not all be reached collectively.  This produced management and interdepartmental conflict on a constant basis.
Instead of this, set department goals in such a way that they can all be achieved together.  For instance, instead of budgeting in dollar terms, budget in percentages from the top line.  This way, when departments need more resources for equipment and personnel, they know how to get it – help grow the company.  Even with the best goal setting, however, you’re going to see some internal conflict.

Remove Internal Conflict:  Good sales forces, by their nature, create internal conflict.  This isn’t because salespeople are bad people, obnoxious, or difficult to work with (although that is a separate issue), but because good salespeople push the frontiers.  Because sales is all about growth, good sales forces are always creating extra work and pressure for the other departments which must then function at a higher level to support the sales growth created.  This creates conflict and push-back.
As a business owner, it’s your job to mediate and handle these conflicts and push-backs.  It’s a delicate issue because no department, or department manager, wants to feel subordinate or less important than sales.  The reality is that, if you’re truly embracing a sales culture, the other departments are exactly that – subordinate to sales.  When conflicts arise, you should go back to your mission statement; what helps your company grow profitably through acquiring, developing, and retaining customers?
Few things can be as demotivating to a sales force, or as detrimental to sales productivity, as the daily interdepartmental battles that can result when other departments feel that they must act as a brake pedal on progress.  Good sales cultures overcome this problem by empowering managers who are sales advocates and by removing internal obstacles.

Have a High Performance Sales Force:  So far, we’ve talked about aligning a company’s objective, people, and goals around the sales force, which creates a very sales-friendly environment.  Now it’s time to turn up the heat on the people who are doing the selling.  You have the right, and the responsibility, to demand excellence from your salespeople once you have molded the culture of the company around them.
First, you need a strong sales manager.  A “strong sales manager” is one who actively works, on a day to day basis, to strengthen and enhance the abilities of his/her salespeople.  Your sales manager should be not only a good administrator, reporter, and forecaster; the sales manager must be a good coach and developer of people.  He should be willing to advocate for the needs of the sales force while simultaneously demanding the highest effort and achievement from them.  He must be capable of surrounding himself with top talent and then making that talent even better.
The sales manager must understand the basic equation of sales achievement:  Quantity of activity x Quality of activity = Results.  To this end, the sales manager should have performance metrics in place to assess both quantity and quality of sales activity, and be equipped to hold salespeople accountable for those metrics and for the results.  Struggling personnel must be either coached or changed; top performers should be rewarded and coached to even higher levels.
Your salespeople should be excellent “fits” for your company and environment, and should be capable of winning new business, developing current business, and retaining customers (remember the mission statement?).  They should have the appropriate mix of traits necessary for success, while being highly skilled and trained (which means that your investment in training should be ongoing).  The salespeople in a high performance sales force are not salespeople that must be babysit or constantly watched to achieve results.
Moreover, the people in your sales force should be excellent relationship builders, both inside the company and outside.  That means that the sales force shouldn’t have any “cowboys” who are negative or abusive to other employees; for a sales culture to work, the other employees have to want to get behind the sales team.  Salespeople who can’t play nicely with others will work against your goals, no matter how good they are with customers.

Reinforce the culture:  As you’ve probably guessed, it’s not enough to have some meetings, say “we are a sales organization,” and call it good.  Cultures happen because they are reinforced, directly or indirectly.  For this to work, key decisions must be made based on the new mission statement:  “Does this decision help us to acquire, develop, or retain customers?”  That doesn’t mean that non-sales departments starve; that new machine for the plant may be completely justified by its benefits in product quality.  The raises for the production staff may be appropriate to reward them for their part in acquiring, developing, and retaining customers.  It does mean that your company has one universal criteria for spending, personnel allocations, and any other key decision making.

The Benefits:  There are numerous benefits to aligning your company around a sales culture.  The biggest is this:  Sales focused companies tend to produce excellence in every department.  The reason is simple:  Companies with a strong sales department cannot stay bad or mediocre in other areas; if they do, those sales gains will quickly be lost through customer dissatisfaction and attrition.  As noted earlier, good sales departments tend to lift other departments through necessity.  This is not true of other departmental objectives; an excellent production department seldom creates pressure on other departments to up their games.
On the whole, organizations that center their culture around the process of profitable growth tend to achieve that growth, year after year.  It’s not easy, but the results are worth it.

There’s no such thing as “product selling” these days.

I had an interesting experience yesterday.  While being interviewed for an article in Office Products International, a London-based publication catering to the office products industry, the interviewer asked, “Many dealers are now offering services in addition to their products.  Obviously selling service is much different than selling product – how much do you think salespeople are struggling with this change?”  My first reaction was, “Selling product?  People still do that nowadays?”

Of course, I know that people still sell based on the product they have, rather than the service they provide.  I see it all the time.  I even interview salespeople who are far more comfortable selling a product than a service.  That’s because we’ve become accustomed to it; we’ve been ‘selling product’ since the first time we did show-and-tell in grade school.  But there’s one big problem with selling product in today’s environment.

It’s an obsolete skill set.  You see, ‘product selling’ involves holding up your product (figuratively speaking, of course – I was in good shape as a car salesman but not that good!), showing the features and benefits of it, and convincing the customer that he/she should buy.
Which is exactly what the Internet can do for your customer, with the added bonus of not having to deal with a salesperson.

It’s true – nearly every product sold by a salesperson today can also be sold without a salesperson; the customer doesn’t have to deal with you at all to buy.  It wasn’t always this way.  Fifteen years ago, when I was selling industrial products, my customers pretty much had to deal with a salesperson – if not me, than the inside guy at my distributorship.  Sure, a few customers faxed in their orders, but they still dealt with myself or my inside salesperson if they had questions about applications, products, etc.

Now if you want to know what product fits what, what application is best suited for what needs, features and benefits, etc., you simply spend a few minutes with your computer, and presto – there are the pieces of information you want, with a little “add to cart” button next to it.  A couple more minutes, and your products are on the way – at your convenience, on your budgeted time.  No salesperson required.
If you’re a salesperson, where does that leave you?  Well, if you’re still selling products, you’re on the outside looking in.  That’s why, to succeed in today’s world, every salesperson should be a “service” or conceptual salesperson – whether you’re actually selling products or not.  Here’s what I mean by that.

Every product you’re selling has a level of service attached to it.  If you’re not selling that service – as opposed to merely selling the product – you’re losing out.  Think of it this way:  When you order something on the Internet, you have a very basic set of expectations.  Your expectations look something like this:

• You won’t get personalized service.
• You should know what you need.
• When you order and pay, somebody will put your item in a box and send it to you.
• You expect reasonably prompt and accurate shipping.
• You’ll pay a low price (sometimes an extremely low price) in exchange for the lack of personalized service.

Here’s the problem for too many distributors of product:  It’s neither possible, nor feasible, to match an Internet vendor’s price while still employing salespeople and dedicated customer service people.  Hence, the company that employs YOU has two options.  First, they can choose to stop employing you, cut costs, and attempt to match the Internet price.  This usually doesn’t work because the Internet vendors have a high level of visibility (Amazon, Ebay, etc.) that is hard to compete with.  Or, second, they must achieve a higher price point.

It’s your job to justify that higher price point.  You do that not by selling the product, but by selling theservice that you provide that surrounds the product.  Hence, to stay vital, every salesperson today is a ‘service salesperson.’  If you’re not one yet, get on the stick.  Here are a few questions to get you started:

1. What service do you provide to your customers over and above the Internet model above?
2. How does that service positively impact their business?
3. What is the monetary value to the customer of that impact?
4. How well do you know your customer’s needs (based on the questions you ask), so you can communicate that value?
5. Are you truly making the buying experience more pleasant/efficient/effective than tapping on a keyboard?  (If the answer to this one is “no,” you’ve got some serious changes to make!)

Reality, as I explained to Office Products International, is that all effective selling today is about selling the service, rather than the product.  If you’re not there yet, you have work to do.

If you’re struggling with pricing issues, you need to read this article.

 I just received a response to a proposal that I had issued for speaking at a trade show.  The response was that my proposal was not accepted; from discussions with the person, I know it’s because my fee was too high.  And I’m fine with that.  I’m never upset about losing business because my price was too high – but I’m always amazed by salespeople who are.

Our prices say a lot about us, no matter what you’re selling.  The price is both a declaration and arecognition of value.  When we supply a price to a potential customer, we’re declaring, “this is what we’re worth.”  When the customer accepts, they are recognizing, “Yes, this is what you’re worth.”  It’s a simple process and a simple transaction.  So why do so many salespeople get it wrong on the issue of price?

The reason, I think, is a lack of understanding, and a lack of willingness to update old, tired sales techniques.  The philosophy used to be “start high, you can always go down, but you can never go back up.”  That worked in the days when pricing on nearly every product or service wasn’t commonly available at a few keystrokes.  The Internet – and its quick, easy access to pricing – has revised customers’ expectations.  Customers now expect one-shot pricing.  If you’re going to survive and thrive today, you have to be prepared to provide this – and preserve profit as well.  Impossible?

Nonsense.  It just requires the recognition of a few simple truths.

Truth #1: Price negotiation is bad.  I know, I know; this goes against decades of sales teaching.  That’s fine by me; I’m educating salespeople to succeed in 2012 and beyond, not 1972.  The key problem with negotiation is simple.  There is a moment in time when the customer is most primed to buy, when the customer’s interest is highest, and when the customer wants to sign the purchase order.  That’s obviously the best time to close the sale, right?  Right.  The trouble is that when negotiation starts, the customer must then begin inventing reasons NOT to buy from you – and I don’t need to tell you why that’s bad.  So, how do we keep the customer at that level?

Truth #2:  Design your pricing with “realistic profit.”  What you want, at the point of a proposal, is to issue a price that you’re willing to stand by, that has a good profit in it, and yet one that the customer can pay and still look themselves in the mirror.  Here’s an example.  When I started selling cars, our dogma was that we started at sticker price and negotiated from there.  The problem was that most customers really didn’t LIKE to negotiate.  Negotiation brings with it fear that they’re going to get taken, and once negotiation begins, we have to agree on the ‘real’ price.  After going through that ordeal a few times – and watching my sales manager continually discount cars to the point where my commission  was nearly gone – I decided to try a new strategy.  I started pointing at the sticker, reciting that price, then quoting a price a few hundred dollars off it.  To my surprise, a high percentage of customers immediately bought at the discounted price – which was above the prices we usually got.  My commissions went up, my customers were happier, and so was the owner of the dealership.  And – not coincidentally – on busy days, I was able to talk to more customers because the sales process was shorter.

What was happening was that I was giving my customers permission to purchase without negotiation.  They knew they weren’t supposed to buy at sticker – but by giving them a small “feel good” discount off sticker, they were able to leave by buying at a “good deal,” and they didn’t have to fight for it.  My ‘quality ratings’ from customers even went up.  Not shockingly, no one else at the dealership embraced my strategy – and most of them made less money.

In today’s market, the best strategy for pricing is to design a price that you’re happy to live with – and happy to walk away from the sale if you don’t get it.  One of the most pathetic strategies I see salespeople using is begging for the ‘last shot’ at the price, which tells the customer that the proposal they have means nothing, and that the salesperson is willing to beg for the business.  There are ways to prevent that….but this article is running a little long.  I’ll talk more about this issue next week.

Today, we’ll conclude our discussion on handling price in selling.

Well, in my last missive, we discussed why negotiation doesn’t help you as much as you think when you’re trying to maximize profit.  In fact, many times, price negotiation can actually work AGAINST you when you’re trying to maximize profit.  If you missed that article, go read it now.  It’s okay.  I’ll wait.

Now that you’re up to speed, I ended that article by saying, “One of the most pathetic strategies I see salespeople using is begging for the ‘last shot’ at the price, which tells the customer that the proposal they have means nothing, and that the salesperson is willing to beg for the business.  There are ways to prevent that….but this article is running a little long.”  Now it’s time to talk about that, and to discuss ways salespeople should handle price pressure in the call.
I’ve said that negotiation is bad.  “But Troy,” I hear you saying.  “Customers are always starting price negotiation with me.  Then I have to do it!  What then?”

The fallacy in that statement is simple.  Yes, sometimes customers do start negotiation.  But most of the time, price negotiation is started not by the customer, but by the salesperson.    Salespeople initiate negotiation – and not coincidentally, give away price – in a variety of ways, usually without even knowing it or recognizing it.  I had a perfect instance happen two days ago, in fact.

I was role-playing with a salesperson who works for one of my clients.  The situation was a take-away sale from a competitor.  The salesperson is a darned good one, and one that I respect, so this is something that can happen to anyone.  I asked the price (as the customer), and he quoted a price.  And without thinking, he said, “How does that compare?”

The funny part was that saying, “How does that compare?” was completely a reflex action on his part.  He knew it was wrong, and even as the words were coming out of his mouth, the expression on his face said, “I shouldn’t be saying this.”  Yet he did – because for years, that’s what salespeople have done.  The problem is that, when you ask the customer for feedback on your pricing, you invite negotiation and communicate that the price you have quoted isn’t the ‘real’ price.  Whenever you imply flexibility, you have not communicated a specific price for a specific product or service.  Yet, that’s a fear-based reaction that comes from the fear of losing the sale.
Other great ways to invite negotiation are:

“This is the best deal I can get you.”  Nonsense.  That implies that there are multiple “deals,” which means that a better one is right around the corner.

“I want the last shot at the price.”  That means that whatever you have just quoted, it doesn’t matter – shop me elsewhere and I’ll come down.  That also precludes your ability to close the deal right then, so it’s a double-whammy.

“I want to earn your business.”  Classic “sales words.”  “Earn your business” is one of those phrases that’s only used  by salespeople, and usually car salespeople at that.  Sell like a car salesperson, end up negotiating like a car salesperson.

“How’s that price work for you?” Any invitation to the customer to give feedback on the price also invites the customer to cut price.  Don’t do it.  Want feedback on your price?  Ask for the business.

Ultimately, when you give up price, you give up profit.  Profit is good.  That’s what keeps us going.  The all-time best way to handle price is also the simplest.  “Here’s my price.”  Period.
Of course, there’s one other key facet here.  In order to succeed in getting a high price, you must be an active prospector.  That’s because strength in pricing comes from the ability to walk away from bad or unprofitable business – and you can’t do that if you have to have the next deal.

Thinking about adding a line to your bill?  Think carefully.  You may end up worse off.

I had an interesting comment last week from a client, and it reminded me of an experience I had a few years ago.  The client was discussing how they had, at one time, put an extra “box” charge on each package sent out.  The charge wasn’t much – fifty cents per box – but it cost them business and customer goodwill.  It made perfect sense to me because of something I’d seen as a sales manager.

In 1999, when fuel prices had their first big spike, I was the sales manager for a branch of a national uniform rental company.  The General Manager started panicking over the fuel cost, and decided to place a $1 per invoice “fuel charge” on each customer.  Predictably, customers raised the roof.  Worse, by adding an additional ancillary charge that wasn’t in their contracts, we had voided their agreements – and many customers took advantage to find other providers. At the end of the day, the revenue we raised from the fuel charge was significantly less than the customer losses.  I know why this was, and I know how to avoid it.

You see, customers perceived – correctly – that fuel was a normal cost of doing business for us.  It wasn’t as if our trucks suddenly began consuming fuel that they had not consumed before; they were consuming the same amount of fuel – the fuel itself had just gotten more expensive.  Customers perceived that since the cost of fuel was already built into our pricing structure, that the extra charge was abusive.  The extra charge generated no value for them. And they rebelled.

I’m actually looking at another example of this right now.  I’m writing this while sitting in the Kansas City International Airport waiting to catch a flight to Charlotte, NC, for a speaking engagement.  It’s 8:30 A.M.  I’m flying….well, I’m not flying Southwest, because they don’t fly to Charlotte.  And it’s very, very quiet in here.  That’s a big contrast to the flights for a recruiting project that I took to Louisville and Denver this week on Southwest; those terminals were very busy places.

Yet, I see reasons why.  When you fly Southwest, you basically pay one price, with one exception that I’ll deal with in a moment.  On the other hand, when you fly other airlines, you’re presented with a  cornucopia of ways to allow them to charge you extra fees.  Want to pick your own seat?  That’ll be extra.  Need to check a bag?  Extra.  That generates customer badwill.  I personally have a “one-hour” rule; if Southwest can get me within one hour’s drive of my final destination, I’ll fly Southwest.

You see, what has happened is that most airlines have begun breaking out things that used to be part and parcel of the experience – seat selection and baggage, to name a couple – and designated them as “extra.”  That would be like McDonalds starting to charge extra for the bun on a burger.

Not coincidentally, Southwest is by far the most financially successful of the airlines.  There is one extra, however – they do sell the first line spots for boarding with a $10 charge for “earlybird check-in.”  I always pay the $10.  What’s the difference between this and paying for seat selection?  When Southwest began charging for Earlybird Check-In, it was a new service.  Since it wasn’t something they had done for free in the past, they could sell it as added value.  And, for me, the value is there.

As another passenger put it to me when she was talking about the baggage charge, “Look, the plane is still going here, and they have the spot already created for the bags.  So why gouge?”
That’s the problem with ancillary charges – they are perceived as gouging.  If you’re trying to decide if your invoice charge is going to upset your customers, ask yourself these questions:

1. Is the charge a new charge for something that you’ve been doing all the time?  If so, you’ve got problems.
2. Is the charge one size fits all, or is it variable?  Customers will more readily buy into a charge that varies based on some facet of their service, rather than a per-invoice charge.
3. Is the charge something that could just as easily be built into your regular pricing?  If so, do that instead.  It’s always easier to sell a price increase than an ancillary charge.

Ultimately, I believe that the less ancillary charges, the better.  Extra charges invite customers to suspect that you’re trying to “get away with something,” which erodes customer trust.  And of course, trust is our most valued commodity.

We can all learn from sales experiences – even bad ones.

“Heyyy, Troy?  This is Chadwick.  Does that name ring a bell?”  I drew a blank.  “Nope,” I said.  “Uh….wow…that’s kind of a problem, man.  Ummmm….well, this is Troy Harrison, right?”  “Yes,” I said, “Can I help you?”  He replied, “Well, uhhhh…if I can, I’d just like to take 30 seconds to tell you why I’m calling.  Is that OK?”  Now I know it’s a salesman – and not a good one.  “You’ve got ten,” I told him.  After all, he’d already taken 30 seconds without saying anything.  “Well, uh, wow, 10 seconds.  Uh, what we do is we help people who are frustrated with their E-commerce platforms.”  “I’m not frustrated with anything,” I told him.  “Thanks for calling.”  End of one really bad cold call.

I’d bet that guy sits there and thinks, “Darn…cold calls don’t work at all!”  And I bet they don’t….for him.  Chadwick was a virtual how-not-to-do-it of cold calling.  It’s probably not his fault; he didn’t seem like a bad guy.  But neither did he seem like a good use of my time in conversation, and that’s really what we’re seeking in a cold call environment – to convince someone that time spent with us is time worth spending.  Chadwick failed.  Step by step, let’s discuss why, and within this, you’ll discover ways that your cold calls can be more effective.

Improper introduction.  “Heyyy, Troy, this is Chadwick.”  If you want to call someone that you know and just say, “This is me,” go ahead and do it.  But implied familiarity in situations where no familiarity is really established is bad, and it puts people on the defense from the start.  I think Chadwick (and yes, that’s the real name he gave me) is trying to fool people into thinking that he’s an acquaintance of some sort.  That ruins his credibility out of the gate, plus it forces me into the “what the heck is this guy trying to sell me” guessing game.  A proper introduction for a cold call is your name (I prefer first and last), and your company name.

Asking me for validation. “Does that name ring a bell?”  This is one of the most common ways that salespeople screw up a cold call – begging the prospect for some validation.  “Did you get my brochure?” is another way; so is, “Is this a good time to talk?”  The all-time worst is, “How are you today?”  When you ask the prospect for validation at the start of the call – before the prospect has any reason to validate you – you’re simply injecting your own fear into the process and letting your prospect know that not only are you a salesperson, you’re not a good one or a confident one.

Stammering and waddling around.  “Uhhhh….wow….”  Once it’s established that I have no idea who he is or why he’s calling, it threw Chadwick off his game, whatever that game might have been.  It took him quite a while to figure out what to do – and while he was figuring that out, I was trying to figure out how to get him off the phone so I could get back to my day.  When you call, you need to know what you’re going to say and how to handle the conversation.  “Be prepared” isn’t just the Boy Scout motto.

Hinging on “pain.”  Yes, yes, I know; “Find the pain” is a mantra for some salespeople.  The trouble was that Chadwick limited his conversation.  If I’m not ‘frustrated’ with my website – and I’m decidedly not – he’s dead in the water.  Instead of ‘pain,’ focus on needs and advantages.  If you take the approach that, “Whatever I do can help you do what you’re doing better, regardless of whether you’re doing it badly or not,” you’ve got a shot even if your buyer isn’t frustrated and upset.

In this call, Chadwick proved that he was a little sneaky and greasy, that he wasn’t going to be efficient with our time together, and that he really didn’t have anything to offer me.  Hence, no appointment and no sale.

If your cold calls don’t communicate an advantage and a positive effect quickly, then the problem isn’t that “cold calling doesn’t work.”  It’s your calls.

Are you telling your customers what they need to know in order to buy?

Last weekend, I judged at a high school debate tournament here in Kansas City.  Longtime readers know that I was in debate and public speaking in high school and college; it’s a big part of making me who I am.  So I enjoy it a lot.  But, I inadvertently stepped into the middle of a current debate controversy – and therein is a sales lesson, because I see the same problem in the world of selling.

When I debated, the affirmative’s burden was to explain to the judge what their plan was, and prove that it was worthwhile.  The “plan” involved telling the judge (essentially, the customer in the debate) what you planned to do, how you’d do it, and what it would cost.  The current fad, however, is for the affirmative to leave out the details of “how” and “cost,” and let the judge make up their mind without those.  I did make up my mind; I voted “negative” in each round where the affirmative took this approach.  My reason is simple – I can’t buy if I don’t know the cost.  This led to a very upset debate coach.  Read on, because as I said, I see the same thing in selling every day.

Said coach decided to accost me in the judge’s lounge complaining that I had unfairly given his team a loss.  I’ll leave out the nerdier points of the conversation, but suffice it to say that I explained to him that I couldn’t buy something when I couldn’t evaluate the cost – and he probably didn’t either in real life.  He walked away upset, but understanding why I did what I did.
You see, the reason that some teams have taken this tack is also the reason behind some of the really lousy selling methodologies today – FEAR.  In debate, the idea is that if you don’t address cost and funding, the negative can’t attack you on this basis.  In selling, it’s the same.

Some selling methodologies refer to explaining your processes, and showing your price, as “spilling your candy,” and construct complicated defenses to prevent the customer from getting ‘your’ information.  As the philosophy goes, if the customer doesn’t know your information, they won’t use it to find a different vendor.  Here’s the problem – if you go this route, you’re expecting the customer to buy without knowing what they’re buying.

Why does fear motivate us so much in selling?  I think there’s a simple reason for it – salespeople are unconvinced of the value that they, and their company, bring to the table.  Further, they lack confidence in their ability to execute the sales process and communicate that value to the customer.  So they’ll engage in defensive selling in an effort to prevent the customer from buying anywhere else – instead of engaging in affirmative selling that shows the customer the real reasons why they should buy.

Here’s a clue – if your customer is curious enough about your competitors, or unconvinced of your value, they’re probably going to shop you.  And there’s NOTHING you can do to prevent that.  The only thing that you can do to win the sale is to convince your customer that you prevent the best value in the sales arena.

Here’s another truth of selling – communicating our value is our job as salespeople.  If you don’t feel you can do that, you have a very fundamental problem with your skill set, and you should fix the problem rather than try to patch around it with evasive tactics that only annoy your customer and ruin your relationships.

So, the next time you’re worried about ‘spilling your candy,’ ask yourself one key question:

Am I withholding information that is necessary for my customer to buy?

If you are, how do you expect to close the sale?

Stop playing defense, and instead worry about WINNING the sale.  Much like the failed debaters that had me as a judge, you’ll be more successful if your ‘plan’ for your customers explains what you plan to do, how you plan to do it, and what it costs.