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Properly Manage Internal Expectations

Almost every sales organization and every seller operates under some pressure associated with quantifying and then making their sales numbers. The instincts that cause this are positive – the desire to succeed by meeting or exceeding quota, or perhaps to be seen as a top performer within the sales organization.

There are three related manifestations of this pressure that negatively impact the seller’s ability to deal with complex buy cycles.

  • We may raise expectations of success with internal management on deals where some of the fundamentals are missing or will take more time to develop. Such expectations can be made through forecasting in the CRM system or by what sales reps promise to their managers. Regardless of how this occurs, not taking reality into account affects the seller’s credibility and results.
  • We rush, trying to speed up the process. If the deal is not moving at the pace we desire (or which is imposed from above), this leads to mistakes and a loss of credibility internally or externally. In either event, that loss of credibility will further prolong the sales cycle or result in a lost opportunity.
  • We make unprincipled concessions in an attempt to get the prospect to act faster. As I explain in an earlier article, unprincipled concessions are “giveaways” not tied to a credible business rationale. Our research shows that this simple negotiation mistake costs businesses between 9 and 18% of gross revenue and significant profit. This is a much too high a price to pay in any sales scenario, especially when it doesn’t contribute to revenue.

To overcome the negative impact of these manifestations, I suggest you deal with each in a conscious way, in order to eliminate or reduce the mistakes and frustration caused by internal pressure. Very few individuals operate more effectively while under pressure. Prospects can sense it, and managers can sense it, and neither responds well to the type of selling environment caused by pressure.

One of the often unspoken issues is that the buying cycle can be vastly different from the sales cycle. Sales management can choose to dictate a certain sales cycle; say four months. However, while this sounds ok, the buyer may have a far different perspective on the timing of the deal. This is a good example of the quote, often attributed to John Lennon, “Life is what happens to you while you are busy making other plans.”

A few years ago, a friend was under some pressure to get a strategic contract done for his company. His executive called for status updates daily (sometime more often). He had a contract draft ready for the customer that at least one person other than him would normally review (two sets of eyes before something important goes to a customer is a good policy).

However, he felt he could not afford the couple of hours that the review would take. The contract had a critical typo in it that caused an internal escalation within the customer. While the deal was done, it took a week longer as a result. As mentioned above, the motivation for going against standard operating procedure was sound: the desire to make the sale happen on schedule.  However, in hindsight, the cost of the extra week was not worth the potential few hours saved.

Setting honest expectations and describing key dependencies and timing is always good practice, though it may not be what the boss wants to hear. This does not mean making excuses – rather it means being factual and explaining what needs to happen and what you are doing to facilitate an optimal outcome. This may be a bit painful in the short-term, where pressure to meet this quarter’s number is strongest – but it will definitely pay off over time, in terms of streamlined, less-painful and more profitable sales.

Using Your “Incumbency” to Create Positive Leverage in Negotiation

Some concepts are better expressed using an example. Our client was at a crucial juncture with their customer — a European bank. In just three months, the time frame was expiring on an agreement to provision identity access management. That project had been running for three years, and had progressed substantially as forecasted. So a renewal to continue with the work was being discussed, plus, our client wanted to extend the scope of services for 24/7 identity and access management, which they believed the customer could use.

This project was extremely complex, and it was incumbent on our client to express the value delivered to that point. This is extremely important: Nobody owes you recognition of your value. You have to make the case!

Being successful in this situation meant Read more

Communication Credibility: Without It, There’s No Persuasion or Negotiation Leverage

Communication CredibilityShow us a successful negotiator and we’ll show you someone who is highly conscious about how they communicate with others. It’s not about who can talk the fastest or prove that they know more than everybody else in the room—it’s about building credibility. This is crucial because credibility ultimately translates into leverage for getting the right deal done.

There are lots of ways to damage your credibility by communicating irresponsibly:

  • Addressing other people in terms of stereotypes rather than unique individuals. An example is treating an IT leader in the room like a geek who only cares about technology and assuming they won’t care about the strategic business value of your solution.
  • Being dismissive of other people’s contributions, even if you immediately disagree with them. Being gracious when somebody offers an idea you disagree with keeps them engaged and thinking how they could offer more helpful ideas. Rather than “That’s a stupid idea!”, try “Thanks for your thoughts, Ben. I think that will be important to keep in mind going forward.”
  • Using private facts as weapons against the other party. If you use something given to you in confidence as public ammunition, you can expect your ability to get this deal done—and all future deals with this party—to degrade considerably. And you will lose the respect of your own team in the process.
  • Not taking responsibility for what you say. This includes anticipating the effect of your words and taking complete responsibility for your statements. There is nothing more frustrating than trying to close a deal with somebody who has no internal editor or denies and twists their past statements based on a need for perceived temporary advantage.
  • Acting like you know everything. Be the “inquirer,” not the “knower,” and respect both the knowledge of others and the limits of your own knowledge. Those who always lecture tend to sound condescending, which breeds resentment.

These are just some of the behaviors that can damage your credibility. When you are credible, people tend to listen to you. This is critical in negotiations. Think about what happens when you engage in conversation with someone who has no credibility, someone you consider a “b—s— artist.” What do you do” You usually turn off; you stop listening. Well, if you are not listening to someone, what chance do they have of persuading you”

But being credible is only the first step. You must also be persuasive. For example, you can easily present a business case showing why the price you’re charging is competitive in your industry and is consistent with reasonable cost structures. However, to show the other side why they should pay that price—that it will make them more competitive in their business—you must know something about their business. That’s more difficult, because you don’t know as much about their business as you do about your own.

People don’t make decisions because they understand or believe what you are saying. While these first two attributes are important, the main reason someone decides in your favor is the value you provide for them. Dealing with you makes them “better,” however “better” is defined. And, of course, your value argument will usually have more impact if you can quantify “better.”

We wrote a white paper for those of you who have to make credible value arguments from the sales side during negotiations: It explores value-based arguments and selling approaches more deeply. Click here if you would like to give it a look.

The Dynamics of Credibility and Leverage

This is the third in a series of blog posts The Principles of International Negotiation: Finding Universal Value in a Complex World.

“You lied to us.”

That was what we heard from across the table on the opening of our fifth consecutive negotiation meeting during a Japanese engagement. The actual issue was minor, having only to do with the meeting’s start time. But tensions were high. Days one through four had started at eight a.m., usually stretching until two or three a.m. the following morning. The man making the accusation was a key Japanese negotiator from the customer’s procurement organization. He had been difficult, not because he was hard to work with, but because he was detail-oriented – and often right. In the preceding days he had used good logic and persuasion to push costs of the deal onto our side. Read more

The 7 Line Rule

A client made us aware of this “rule” recently, which seemed worth passing on. Why? Because the rules for getting someone’s attention have changed. The rule: Do you have a key message for a client (or for your manager)? Keep the heart of it to 7 lines or less. Because these days, that is how much of the message a Blackberry™* will show without scrolling. If your message isn’t compelling by then, the reader will never scroll to read the rest of your message.

You can stop here – this is line 7.

I often start a negotiation skills training session with this message. “I’m going to cut 20% out of your email workload over the next 2 days. Turn off your phone. I believe you will find that 20% of the “urgent” problems that you would have responded to will fix themselves before we leave.” Most people laugh, but why? They laugh because they know it is true.

Remember the days of actual memos? You know, with paper? Circa 1980? One of our colleagues used this method to manage responses: he put the physical memo in a “hold for one week” folder. At the end of the week, if nothing happened, put it in “hold for a second week”. After week 2? Discard it (and ignore the action). Why did he do this? “Too much mail, too many cc’s.”

A recent CEO profile in the NY Times quoted a CEO who basically said that if he was only on a cc list, he immediately erased the email as not important to him.

We all know the problem – too much email, and not enough time. So if you want to get answers, make it compelling…within the first 7 lines.

* Blackberry™, Android™, iPhone™… (td)

Got a question? Email a K&R negotiator directly at [email protected].

The FCC and Harvard Medical School

A short time ago, we wrote about news of a study done by the Harvard Medical School concerning the value of computerization in US hospitals.  A Computerworld article led with the headline: “Computers don’t save hospitals money”.  The article stated that in spite of promises to the contrary, IT improvements in hospitals do not improve care, and they don’t improve costs.  Now the FCC has gotten into the act, saying that broadband access will improve health care and save money. Do you believe Harvard, or the FCC?

First, as a negotiator, why do you care?  In short, it’s about credibility.  If you sell products, services, or ideas your credibility is directly tied to your success.  So if Harvard Medical School and the FCC disagree, it’s a credibility battle of titans.  When you are in a sales situation, your credibility has to hold up against alternative positions, or you may win the sale, but at a severely degraded price.

Let’s look at what the FCC has to say.  In Chapter 10 of their National Broadband Plan the FCC lists 11 recommendations related to health care.

Interestingly, one of the claims is that 61% of Americans are overweight or obese, which can lead to medical complications.  The cynical among us would argue that we need less broadband and more exercise to attack this problem.  Make us go to the library for research instead of looking it up on Wikipedia at our desk, and we’ll all lose a couple of pounds.  So let’s cut back on broadband as a national re-engagement with exercise.

OK, that’s not happening.  Moving on…

One of the things the FCC says is: “In its traditional role, the FCC would evaluate this challenge primarily through a network connectivity perspective.  However, it is the ecosystem of networks, applications, devices and individual actions that drives value, not just the network itself.”  This is a classic problem known to anyone that delivers infrastructure services or software.  What they sell (or in this case advocate) doesn’t solve any problems.  It only makes the system better able to incorporate problem-solving solutions.  This makes it harder to create a convincing value argument.  Your position becomes that by starting with your recommendation, and then putting other things on top, the client receives benefits that outweigh the investment.  However, you have to pay for the infrastructure now, with no guarantee that anything else will follow.  This is a tough sell.

The FCC goes on to say: “Health IT supports these priorities by dramatically improving the collection, presentation and exchange of health care information, and by providing clinicians and consumers the tools to transform care. Technology alone cannot heal, but when appropriately incorporated into care, technology can help health care professionals and consumers make better decisions, become more efficient, engage in innovation, and understand both individual and public health more effectively.”  The real issue here is credibility.  Do you, or do you not believe that these benefits will accrue?  Unless the belief is there, no progress will be made on the FCC’s proposal.

It’s all about two things.  First, the FCC needs credibility.  Then they need to make a convincing argument of value (benefit).  It is just like any other sale.   (td)

Got a question? Email a K&R negotiator directly at [email protected].

The Trouble with Value

A recent Computerworld article covered a study done by the Harvard Medical School about the value of computerization in US hospitals.  The article led with the headline: “Computers don’t save hospitals money”.  This is not good news if you’re a seller of Information Technology solutions.

First tip: Be prepared1. You can expect to hear about this, certainly if you are selling in the health industry, but generally if you are selling the value of Information Technology to people who either have trouble believing in the value of IT, or for whom it is disadvantageous to admit it (for example, buyers in procurement roles).  The article will be used in attempts to undermine your value arguments, and thereby reduce your prices. Read more

T-Mobile Credibility and Leverage… Again

You may recall our October article about T-Mobile’s Sidekick user data loss problem, or may have read some of the 25 or 26 million references available via a search for “T-Mobile data loss”. It is a simple, real-world example of how loss of credibility can hurt your business.

T-Mobile’s public statements allow us to make some estimate of the business value of this temporary service loss, and the  long-term credibility loss that goes with it.  Add these up:

  • The estimated cost of lost business in sales of Sidekicks and the far larger long-term loss from sales of service plans when T-Mobile temporarily suspended sales of the Sidekick after the outage.
  • The cost of the $100 “service vouchers” that were offered to users inconvenienced or impacted by the outage.
  • The 14% price reduction that T-Mobile has made to the price of the Sidekick LX model ($175 to $150), now that sales have been restarted.

It’s a big deal.  Next time your credibility is on the line, remember what’s at stake, and protect it.  How quickly you respond, and how effective you are, can add up to a lot.  (td)

More on Lose Credibility, Lose Leverage

Well, after last week’s “Lose Credibility, Lose Leverage” story about T-Mobile, Microsoft and the Sidekick, we can barely keep up.  Hitting the news this week: Microsoft and T-Mobile recover (sort of), IBM and the state of Indiana, “Balloon boy”, Raj Rajaratnam arrested, Energy Star© appliances that are not actually more efficient…

Where will it all end?  Google those, and get the scoop.  All of these fall into a fundamental category of credibility and the impact credibility has on leverage.  Will Rogers said, “Rumor travels faster, but it don’t stay put as long as truth.”  There is plenty of opportunity in the interim to feel pain, and if the rumor and truth coincide, the long-term outlook can be grim.  Preserve your credibility. (td)

Lose Credibility, Lose Leverage – Another real-life example

Well, we hope you didn’t have to read this, “Sidekick customers, during this service disruption, please DO NOT remove your battery, reset your Sidekick, or allow it to lose power.”  That’s the message from T-Mobile and the Sidekick data services provider after a reported “cloud computing” failure, which is expected to cause clients to lose their contacts, calendar entries, and photos.

We now have the latest in a long line of real-life “credibility and leverage” scenarios.  T-Mobile is scrambling to regain credibility and the satisfaction of T-mobile clients.  As part of that scramble, they have offered credits to affected clients.

You may expect to see their competition start advertising something like this: “Your personal information is safe on your phone, and is backed up when you use our service.”  Lose credibility, lose leverage.  The fallout will probably come at contract renewal time for those customers who were hit, who have to decide: Renew, or move to a new carrier?  (td)