Ryan Gosling Stole His Wife

Last Friday night, my friend and his wife and decided to go out to dinner. He came downstairs in jeans and a t-shirt with plans to get a pizza. He didn’t even shave. After all, they had been married for over 25 years. How much effort did he need to make? It’s the same woman he sees every day!

His wife, on the other hand, was beautifully dressed, as usual.

Outside, a car horn honked. In the driveway was a red Ferrari and Ryan Gosling was behind the wheel. He knocked on the door. My friend's wife opened it and Ryan Gosling handed her a bouquet of flowers. Ryan Gosling offered to take her to a 5-star French restaurant.

Off she went.

Twenty-five years of marriage and, in one day, Ryan Gosling stole his wife.

Fortunately, not a true story. But it can happen to you with your clients.

You have a relationship for 3, 7 maybe 10 years and it’s gotten comfortable. You’re on autopilot. The work gets done, maybe not with the same zest and sizzle as in the first year or two. But no one’s complaining. Suddenly, the competition knocks on the door. The competition gets a meeting. The competition starts whispering sweet nothings in the client’s ear, such as “data analytics,” “robotic processing automation,” or “lower cost of ownership.”

Next thing you know, the competition has your client in the passenger seat and they’re driving away.

Incumbency is one of the two hardest things to sell against. (I’d be interested in comments on what you think the second is.) And complacency is the Achilles heel of the incumbent service provider.

Remember: if you don’t treat your old client like a new client, they soon will be an old client.

How you handle dates with your significant other is up to you. Just watch out for Ryan Gosling!

No More Threes

I never expected a professional basketball player to be the inspiration for a lesson in client service.

In business there’s an old adage: you get what you measure. For example, if a company is measuring how many days it has gone without a safety incident, efficiency may suffer. Workers may do things more slowly or with undue care because moving quickly and having an accident would ruin the company’s safety record. So the company measures safety and it gets safety; but at the expense of efficiency.

When negotiating contracts with clients, I see this challenge arise when we are developing the service level agreement. This is the part of the contract that lays out how the parties will measure the performance of the services, such as system uptime; how fast we respond to issues; or number of transactions processed per day.

I take a great deal of care discussing service levels with clients because sometimes what the client asks to measure will not reflect how well the delivery team is doing. The client may complain that the services are inefficient, and that may be because we’re measuring safety! So I strive to focus the measurements on what matters most to the client’s desired business outcomes.

This week I smiled when I read a story about a decision NBA player Moe Harkless made in the last days of the season. Harkless plays for the Portland Trailblazers and has a contract with certain performance incentives. One of them is a payment of $500,000 if his 3-point shooting percentage is at least 35% for the season. On April 4, Harkless decided: No more threes. Why? His percentage for the season stood at 35.05%. One missed 3-pointer would take his average below 35% and cost him a half-million dollars. That’s an expensive brick!

Consider that Harkless was not being measured on number of games won. So the Trailblazers could lose a game without consequence to Harkless because that’s not how he’s measured. Once he hit 35% he’s met his service level. And the owners got what they measured, 35% 3-point accuracy, even though what they really want is wins! The 3-point clause did not make Harkless less competitive, however. He switched to driving to the basket. He was still going to take shots; just no more threes.

So before you and the client leverage some form contract or previous deal to measure delivery performance, have a conversation. What matters to the employees? What matters to leadership? What determines business success? Measure those things that will help your client feel like they are “winning” in their business. Because they’ll get what they measure.

I'm Not Gonna Say Anything!

Warren Beatty was in a quandary.

At the Academy Awards ceremony last Sunday night Beatty, the Oscar-winning actor/director/producer, was on live TV giving out the biggest award at the biggest event for the industry he has been a part of for over 50 years.

And he didn’t want to do the wrong thing.

By now what happened with the Best Picture award is old news. (If you’ve been asleep since Saturday, Beatty and his “Bonnie and Clyde” co-star, Faye Dunaway, announced the wrong movie to win the Oscar.) What’s interesting to look at from a business perspective is how his split-second decision changed the way the mess unfolded.

Beatty knew something was wrong from the moment he read the card in the envelope. In fact, he looked to see if, perhaps, there was another card. Then he paused and contemplated how to handle the situation.

I don’t know what I would have done under the same circumstances (do any of us?); but we do know how his decision took what could have been an uncomfortable moment for him and a few people backstage, and turned it into an epic blunder impacting him, the production teams of “La La Land” and “Moonlight” and causing cringes throughout the entire audience, including millions of people watching on TV.

Think about it: he knew the card was wrong. It had Emma Stone’s name on it, not the name of the producers. Why would Beatty know that’s wrong? He has one of those cards! He won Best Picture as producer of “Reds” in 1982.

What could he have done differently? In the moment he could have said, “I’m sorry, this is confusing. The name on this card doesn’t seem right.”

Someone would have come out from backstage, maybe the now much-maligned accountant who handed him the card, and said, “Sorry, wrong card.” Then the right name would be announced. The right people would have come on stage. The right people would have dealt with the mishap. And Beatty would be viewed as a hero for stopping what would become the greatest embarrassment in movie award history. (I’d say “award history” in general, but Kanye West coming on stage to challenge Taylor Swift and Beck is still pretty high up there.)

However, rather than raising his hand and potentially looking foolish doing something that no one at the Academy Awards has ever done (that is, stop the ceremony and say, “I think there is something wrong here…”), he decided, in that moment, “I’m not gonna say anything!” He punted. He showed the card to Faye Dunaway, who gleefully announced “La La Land” as the winner.

The rest is awkward television history.

Interestingly, Beatty still gets the blame, though Dunaway actually announced the winner. As well he should. He saw a mistake and chose not to say anything. And it became a bigger mistake.

A valuable lesson in decision making to make us better business people in serving our clients: If you see something wrong, say something right. Bad news doesn’t get better with time, and mistakes don’t get solved by passing the problem on to someone else.

Shut Up and Wait

Too often, sales people don’t know when to stop selling. There is an old adage for this (as there often is for practical advice): “If you’re still talking after the client says ‘yes,’ you’re buying it back.” The idea is that once the client agrees to move forward, there is no need to keep explaining why they should move forward! In fact, you might undo their decision.

I have found a related behavior among sales people, and that is the desire to get to a final answer in the room. While working on an important issue, we try to persuade the client to consider our point of view and the client disagrees. Our perspective is so obvious we can’t believe the client is not agreeing! We try again and again to persuade, and the client holds firm.

If the answer to the problem is that obvious, and the client is a rational business person, the client will eventually agree.

They just want to agree in private.

If a client puts a point of view on the table, and is suddenly asked to take it back, often there is a fear of losing face. Especially if they are so clearly wrong. The next step for the salesperson is to design a way for the client to back off their position and not hurt their standing or status. In sales, this is called “building a golden bridge” to allow the client a glorious retreat.

If you don’t know how to build a golden bridge, here’s some simple advice: make your point, and then shut up and wait.

Often the client will go into a caucus with the team, come back and agree with you. The time alone allows the client to rationalize a change in position. Perhaps they will seek other changes in the deal to balance their decision and give legitimacy to the change.

This occurs in personal relationships as well. A discussion can get emotional and people lock in on positions. Once the situation cools down, and everyone can think rationally, the answer becomes clear. The key is to make it easy for people to agree with you and solve the issue. If we focus on being “right” or “winning the argument” a client (or significant other) will remember our behavior solving the issue more then they will remember the solution.

Don’t strive to be the smartest person in the room; strive to be the best problem solver in the room.

Beware of False Prophets

Sometimes the salesperson gets sold.

It happens slowly, beginning with a “great meeting” with a senior executive at the client. This executive shows genuine excitement with the opportunity you present. He is the “industry guru” for this function: the “pharma data” guru,” the “logistics” guru or the “government compliance” guru. If he gets behind this deal, it will become an “industry utility,” a potential joint venture, a billion dollar business. He tells you he can “get it done.”

You rush back to your leadership and breathlessly tell them about this deal that will change the industry! “Mr. Big at XYZ Co. says he can push it through the company! He can’t wait to get started!”

In your excitement, you don’t do your due diligence around Commitment and fail to dig into the key questions to qualify the deal:

• Does he have the authority to say “yes” for this level of financial commitment? (Come on! He’s a senior executive! He just needs to bring the CFO up to speed about what it means for the company.)
• Has he addressed all internal approvals? (Don’t worry! Mr. Big said he has the authority to push this through.)
• Does he own operations and/or the P&L? (Are you kidding? This is a cost saving opportunity the COO will jump at!)
• Has he followed the company’s typical buying process, including procurement? (No problem! He can handle procurement! No need for a competitive bid! He’s buddies with the CEO.)

Beware of the False Prophet.

The False Prophet is the seemingly “plugged-in” executive at the company who, usually with good intentions, personally gets involved with the deal and seems to have a power to make lower-level executives (who speak of him with reverence) jump because of his authority. The False Prophet will have you spending money on “pilots” and get you to set expectations within your own company of a huge deal coming “in the next 30 days.” And those 30 days never seem to end as delays and new stakeholders and new questions arise.

By the time you realize that your deal is a pipe dream, you’ll have spent your whole business development budget, have no agreement on pricing or scope, and have your management asking you, “Tell me again how you thought you would get this deal done?”

Here’s a quick piece of guidance: New executives can’t make old companies take big risks in new ways.

What that means is this: established companies have a process on how they buy goods and services. Your job, as a salesperson, is to know that process and who controls it. If you don’t know how your client buys you won’t know how to sell. And if a new client executive gets excited about your market-making idea and says he can get it done on his own authority without following the process, it’s time to do your homework on him. In fact, you may be able to add value by educating him about his own company’s policies and procedures, and you will make a trusted ally. More importantly, you will avoid allowing a False Prophet to lead you astray of your sales plan.

Something is Wrong

Years ago I heard a story about my grandfather, Henry Dieffenbach, and how he handled a dispute between my aunts, Helen and Eleanor.

Helen and Eleanor were teenagers at the time and they were fighting over whose turn it was to do the dishes. Again.

My grandfather, who was a piano player for silent movies in New York City in the 1920s, was on his way out to work for the evening show. He had heard them fight before, many times. This would, in fact, be the framework of their relationship for their whole lives.

Henry listened to Helen and Eleanor bickering. Then he made a decision. He reached over, lifted the dishes out of the sink, walked to the basement doorway and threw the dishes down the stairs.

“Now no one has to do the dishes,” he said. That got their attention. And then he went to work.

Tuesday night I watched the election results with surprise, like most everyone else. We had been told by the experts what we should expect and the outcome was exactly the opposite. What happened?

Half the country threw the dishes down the stairs.

The easy answer is for one side to say the other side doesn’t know what they voted for. They got conned. But tens of millions of intelligent, well-informed people voted Tuesday and half of those well-informed people had something to say: No one is listening to our concerns. No one is addressing our problems. We want to be heard.

So rather than one side dismissing the outcome as the result of a bunch of ignorant "deplorables" surging on our electoral process, maybe we should acknowledge: Something is wrong.

I’ve been a part of and settled many disputes in my career and what always fascinates me is how blind one party can be to its own faults while blaming the other side. That drives the other party crazy. People usually behave in a rational fashion to fulfill their own self-interests. In the case of the election, no one voted to make America worse. They voted to make America better… for themselves. What we now have is the result of 59 million people saying, “No one is paying attention to me, so I am voting for change.”

Set aside the news highlights of the bad behavior, comments and t-shirts from some of the rallies. Those highlights don't tell everyone's story. And don’t ascribe all voters’ decisions to the worst things a candidate said. Interviews I watched with voters Wednesday showed normal, caring, middle-class and working-class people who said, “We’re tired of struggling for decent jobs, paying high taxes and not being able to afford a better life for our children.” One 65-year-old former factory worker said, “I didn’t like the choice I had to make, but I wanted to send a message.” He was not alone in his sentiments, and that message came crashing down on us all on Tuesday. Now it’s up to all of us to get to work and answer that request for help.

Your Eyes Are Bigger Than Your Stomach

My friend, Mike, called me several months ago for some advice. He was working on a potential $200 million outsourcing deal with a large manufacturing company. (Yes, I know, the word “potential” is a spoiler!) The company wanted to reduce operational costs by outsourcing a critical business function to Mike’s company. This was a sole-source deal, which means there was no competition for the work. The deal was Mike’s for the taking!

The work Mike’s company was going to do involved gathering test data and reporting it to a regulatory agency. In the course of the discussions, Mike’s company realized that all companies in this industry had to gather this test data and report it to the same agency.

One of the senior executives in Mike’s company got what he thought was a great idea: let’s use this first client to create an “industry utility,” meaning a service open to other companies in the industry so they could drive down their costs. The conversations with the client quickly escalated to forming a joint venture.

Mike wanted some advice on how to structure the joint venture.

I said, “Mike, no two words will waste more of your time than ‘joint venture.’ In my career I have never seen a joint venture result in the benefits the parties sought, assuming they ever got it formed in the first place.”

Mike said, “No, no, we’re both aligned with this. It’s going to be a billion dollar business!”

“Mike,” I said, “The client asked your company to help them reduce costs. Here’s my advice: Don’t sell the client the deal you want. Sell the client the deal they need. Because even if you’re successful selling them the deal you want, the client will quickly try to find a way to scuttle the deal because they never wanted it in the first place!”

Mike insisted I didn’t understand and hung up.

Needless to say, the deal never came to fruition. The parties got into such a tussle about whose executives would run the joint venture and what the ownership percentages would be that they lost sight of the original deal. In the end, the client’s leadership found another path to cut costs and Mike lost a $200 million deal.

When I was a kid and complained my stomach hurt because I ate too much, my grandmother used to chastise me: “Your eyes are bigger than your stomach.” Sometimes in sales this is true as well. A client asks us for help and, before we know it, we are proposing a program we think will solve all their problems! Our eyes get bigger than what the client can stomach.

The moment we start proposing work that the client didn’t ask for, we have shifted from close advisor to self-interested sales person. And that tinge of self-interest destroys all the trust we worked so long to build. Focus on the deal that helps the client, not the one that helps you. That is how you will build lasting, trusted relationships.

You Were Always Going to Lose

“We decided to go with another vendor.”

Ouch! Those dreaded words. To a sales executive they are like a punch in the gut. After all the time and hard work on a proposal, you suddenly feel like the other guy at the end of the romantic comedy that the girl didn’t choose: “But you said you loved me! What did I do wrong?”

A good sales executive should know well in advance the chances of winning. If the likelihood of being selected is less than 50%, you shouldn’t be surprised when you lose. You were always going to lose!

And why you lose is not the inverse of why you win. In other words, if you did the opposite of everything you did on that path to failure, it doesn’t mean you would have been on a path to success. The reason why is simple: There was never a real chance to win. So different decisions would have changed nothing. Bidding on work that could be decided by a coin toss is a waste of company resources. That money and effort should have been spent on a deal you can win.

This is what makes rigorous deal qualification so important. Assess where you stand on:

• Relationships
• Trust
• Prior performance/reputation
• Competition

Those are the Big Four. Note that price is not on that list. Less disciplined sales leads often blame price for their failure to win. The truth is if you’re weak on one of the Big Four, your chances of being chosen are much lower even if you have the lowest price.  Who would buy from a company with the lowest price if it had a poor reputation for performance? Bad work doesn't get better because it's cheap.  

What can we do differently? Here are a few starters:

• Qualify with the help of an objective executive who will question your hype.
• Set expectations. If you’re going after a deal that’s a long shot, tell leadership, “This is a long shot.” Take the pressure off yourself. (And if you’re up against an incumbent, it’s always a long shot.)
• Be realistic. If your company had a major failure with this client, even though the CIO is saying “that’s all in the past,” you’re a stalking horse. The client will keep you bidding to the end to drive down price.

Finally, keep asking yourself “why?” Given all of the circumstance surrounding the proposal process, why would the client pick you? If you can’t think of a truly compelling reason, pack your bags and find a better deal to chase. You don’t want to end up all teary and heartbroken, like the losing guy in the rom/com.

Or We Could Do It the Right Way...

The legendary comic actor W.C. Fields famously said, “Never work with children or animals.” But not because he didn’t like them; because they are unpredictable.

Fields, who started his career in vaudeville as a juggler in front of live audiences, knew that unpredictability is not a welcome ingredient for a successful performance.

The same is true in sales. When making a presentation to a client, or going into orals or “yellow pad” sessions for an RFP, unpredictability or spontaneity are potentially disastrous. The path to a successful sale is built on rigorous preparation: mastery of the substance, understanding the process and lots of rehearsals with your team to find out strengths and weaknesses.

During a presentation for a software product some years ago, the company I worked for at the time put a highly-experienced technical lead at the front of the room to execute the demo. One of the client’s executives watched with interest, and then interrupted the presentation to ask: “Well, couldn’t you also do it by bringing the data through those other fields instead?”

Our technical lead paused, clearly displeased by the interruption, and said, “Well, yes. We could do it your way. Or we could do it the right way.”

In W.C. Fields’ world, that was the equivalent of the trained dog relieving itself on the people in the front row.

We did not recover from that gaff but I learned an important lesson early in my career that is part of my preparation for any major presentation: rehearse under stress. Before meeting with the client, put the presenters up in front of the room and subject them to a barrage of difficult questions. Get emotional. Yell. See how they react. Clients can always be unpredictable in their behavior, but I can’t have surprises from my sales team!

So I want to see how my team will deal with the worst I can throw at them. Will they wither? Falter? Or will they maintain composure under fire. We can’t always predict what clients are going to say. But as a sales strategist, I make it my goal to know how my sales team is going to respond.

You Can Only Sell Ice to Alaskans Once

A young sales professional once said to me, “You could probably sell ice to Alaskans.”

I said, “That might be true, but it could be the last sale I ever got in Alaska.”

People who are new to sales often have the perception that getting someone to buy something that they don’t need (like ice to Alaskans, get it?) is the hallmark of an effective sales person. Certainly, having the ability to make money selling useless products and services is a rare skill, but it’s not a sustainable business practice. Once buyers realize they have made a bad purchase, they will never buy from that sales person again.

Ultimately, clients buy from sales people whom they trust, and building a trusted relationship is the hardest task to accomplish in business. To build a strong, trusted relationship, a sales person first must sell himself, namely, that he is someone with integrity; someone with competence; and someone who cares as much about the client’s success as he cares about his own. This requires an uncommon level of character, experience and empathy to build a solid reputation in the industry. Once established, that reputation becomes the pre-sale: before walking into the room, clients already have expectations that they are going to deal with a trusted business partner, not a huckster.

Clients may forget the details of the last deal they did; but they will always remember how that sales person made them feel in doing that deal. And if they feel they were not treated fairly, such as being sold ice in Alaska, the client will freeze out that sales person from any future deals.

The Difference Between Gold and Silver

This past week I had the opportunity to hear a presentation by Charlie Houchin, who won a gold medal in the 4x200 meter freestyle relay with the US team at the 2012 Summer Olympics.

Charlie achieved the highest level of success anyone can reach in that sport. The world doesn’t recognize anything higher than Olympic gold.

So I asked Charlie: what’s the difference between gold and silver? To be the best at what he did, better than a whole field of outstanding athletes, what made him unique? Was it effort? Attitude? Talent?

Charlie’s answer surprised me at first: he said it’s “technique.” He explained that every athlete competing in the Olympics works hard, spends long hours practicing and had a highly competitive attitude. Those are table stakes. Without those elements an athlete won’t ever compete in the Olympics. To win, however, the athletes have to have the ability to execute the proper technique for the sport as close to perfection as possible.

When I thought more about Charlie’s answer I realized I should not have been surprised. In the language of sales, he was referring to “best practices.” The sales team that will win the gold medal is the one that executes as closely to best practices as possible. The difference is, in sales, there’s no silver medal! You either win the deal or go home with the other losers.

I don’t know the proper technique for swimming a leg of the 200-meter freestyle. But in a competitive engagement I know to focus on best practices in:

·         Preparation for the engagement

·         Building and managing a high-performing team

·         Establishing a strong, trusted relationship with the client

·         Achieving success for the client first

Adherence to those best practices in deal-making is the difference between us getting the gold (winning the deal) and silver (nothing).

Grow Your Client Like a Lobster

A rabbi on YouTube got me thinking how client relationships are like lobsters.

Renowned psychiatrist Rabbi Dr. Abraham Twerski posted a short video on how to deal with stress. Rabbi Twerski describes how a lobster grows inside of a rigid shell until the shell becomes constrictive. The lobster feels pressure, discomfort, sheds the shell and grows a new, larger one, which it will eventually outgrow and repeat the cycle.

Rabbi Twerski relates the growth pattern of the lobster to stress that people deal with daily. He notes that stress, like outgrowing the shell, is inevitable; but working through it leads to personal growth. The same is true of our client relationships.

Unlike the old adage, the client is not always right. The client is often wrong, and so is the service provider, and both can be wrong at the same time. Because they don’t want to make waves, however, undisciplined service providers will buy their way out of the dispute with concessions. They rationalize throwing money away saying they are "investing in the relationship."

The cost they assign to it is the amount credited back to the client. The real price is actually much greater because the relationship has failed to grow. In fact, it shrank a bit. The client lost a little trust, a little respect, because the client knows that the service provider had validity in its positions. This behavior also establishes a pattern with the client that, whenever there is a dispute, the service provider will buy its way out regardless of fault.

Instead, use conflict as an opportunity to test and improve your client relationships. The measure of the quality of a client relationship is not how the parties work together when things are going well; it’s how they work together to resolve disputes. In fact, when a relationship successfully endures stress, it grows larger and stronger. More senior people get engaged, maybe for the first time. The parties may see each other in a different light: vulnerable, facing the risk of failure. If we can be transparent, honest and unemotional in our resolution of a stressful situation, we will emerge from under our smaller shell and be ready to grow into a larger one.

To quote Rabbi Twerski: “If we use adversity properly, we can grow through adversity.”

Here is a link to the video: https: //www.youtube.com/watch?v=3aDXM5H-Fuw

Why Are You in the Woods?

“This is what the client is demanding. They have been saying this for months. I know we don’t usually do it this way, but if we say ‘yes’ now we might get the deal closed and make our quarterly numbers.”

These are words of deal desperation. We’ve all heard them. Some of you may have even said them. The last chance plea to management to agree to some wild concession that will make the deal happen and the world will be beautiful again.

But did you ever notice those words often come from the same source? The same sales lead ends up in the same situation, quarter after quarter, asking for a big concession to get the deal done?

It’s like the golfer who is standing in the woods, lying 3 on a par 4. He says to himself, “I have to hole it from here to make par.” Never mind that he has to hit between three trees, over a trap and roll uphill to the flag. He’s swinging for the hole instead of just trying to set up his next shot, which he will undoubtedly have to take.

And when he misses, he is frustrated that he’s still in the woods and blames everyone and everything without answering the real question: Why are you in the woods? How did you end up in a situation where you need to be successful on one desperate shot to make your number? Did you make a plan for the hole? Or just take out a driver and swing as hard as you could?

In sales, it’s called a “closing plan.” The best sales people make a strategic plan for getting the client from proposal to signature. Understanding buyer values/business requirements, building trusted relationships, generating options and setting expectations as to what is possible and what is not.

A client who wants a fixed fee or “not-to-exceed” price, for example, needs to know that such a price is possible provided the scope of work is defined and fixed. Allowing clients to change scope and not telling them immediately that every change can impact price is a fast path into the woods. You’ll be talking to your management about doing 20% more work for the same price and begging for a concession to get the deal done. Maybe you’ll get lucky one time; but without a change in behavior and better planning, your partners will soon find another player who doesn’t make the game seem so painful and frustrating.

I Hate My Client

“If you don’t walk into the client’s building every day, excited about the opportunity to help solve their problems and make them successful, then you should leave this company.”

I had the privilege of leading a sales training program with Paul Rudolph, a former colleague with over 25 years of experience in sales and client service. That was one of his opening lines to a group of experienced employees.

Not new employees. Experienced employees.

Because Paul knew that new employees are not jaded. They are excited. They have great expectations. They are filled with great ideas.

Experienced employees, who have been on a client account for three years or more, are tired. They are frustrated. And if you were to ask what they thought of their job, many might say, “I hate my client.”

Paul’s point was if you’ve reached a point where you don’t understand the purpose of being a service provider, then go do something else. The client is our lifeblood and the essence of our business was striving to take the client’s breath away with our attitude and performance. Every day.

Often, a long-term relationship between an existing client and a service provider can devolve into what feels like a bad marriage: the parties feel stuck with each other, can’t communicate well and wish there was a way out. In other words, the romance is gone.

To be successful in the services business means to be in the romance business. Keep the spark alive, always making the client feel special, important and loved. Because right outside the door is the competition, with a smiling face, joyful heart and readiness to make this relationship feel amazing.

If you don’t treat an old client like a new client, they’ll soon be an old client.

Does Donald Trump Look Under the Table?

Several times in my career I have been asked to help resolve a particularly difficult situation because the team said they needed “a tough negotiator.”

The notion of the “tough" negotiator has a cache to business folks, fostered by the likes of William Shatner on Priceline commercials, performing karate moves to get the deal he wants. My response has always been to say, “If you’re looking for a tough negotiator, you called the wrong guy. I am a disciplined and collaborative negotiator. I’m not tough.”

Frankly, I don’t know what it means to be a “tough” negotiator. I imagine what people equate with “toughness” is an undisciplined, stubborn, positional negotiator. One who thinks “win-win” means they win twice, and the other side loses twice. One who lacks the creativity and confidence to dig deeper and find hidden opportunity for collaboration in an engagement that would create more value. I have encountered that style at large manufacturing and retail companies that treat all vendors like they are selling commodities. All that matters is price. That shortsightedness is costing them dearly in the marketplace because it limits a service provider’s ability to bring innovation that might provide the client a competitive edge.

The latest poster child for “tough” negotiators is Donald Trump, who fancies himself as a master deal-maker. Mr. Trump has obviously had success. What we don’t know is how much more success he could have had using a different negotiation style. From his outward appearances, Mr. Trump seems to favor a bullying kind of style, one that drives the other party to concessions so he gets what he wants. He proudly stated that he would build a wall between the U.S. and Mexico and get Mexico to pay for it because he’s that good as a negotiator. If I were the president of Mexico, I would prepare my team for that discussion with one key caveat: we will never agree to pay for the wall.  I don’t know what Mr. Trump’s style is once he gets in the room. Perhaps this is an act he puts on and is highly collaborative at the negotiation table, sort of a one-man “good cop/bad cop.”

The potential problem with Mr. Trump’s style is it does not engender trust in the discussions, leading to lost value in the deal. People often talk of not leaving money “on the table.” I prefer to say “don’t leave money under the table.” It’s easy to see the money on the table. It takes a special deal team to bring trust to a relationship so that both parties work together to find the hidden value in the deal. That requires appreciation for the other party’s interests; creativity in generating options and legitimacy in the asks of either side.

“Tough” negotiators don’t care about the other party’s interests. “Tough” negotiators have only one set of options; their own. And with a “tough” negotiator, legitimacy or fairness in demands is always a test of the other party’s BATNA.

So while it might seem impressive to hear of “tough" negotiators who “break” the other side in a negotiation, ask yourself: where does such behavior leave the relationship? Has is maximized the value the parties could have built together? And next time, will the other side look forward to an opportunity to do business again? Or will they use it as a chance to “get even” based on their previous experience?

This Kid Just Keeps Failing

The other day I met with a young man named Tom who is graduating from college next May. He is interested in a sales career in the technology industry and has some job interviews next month. Tom asked if I would provide some help in preparing for those interviews.

Tom spent last summer selling technology services to small business owners. Every sales call was a cold call: walk in, strike up a conversation and see if he could sell them on the value of his offering. Turns out he’s pretty good at it. He closed over 30 deals in the 8 weeks he worked there and was one of the top performing salespeople in his office.

I started peppering him with questions he should expect such as “Why are you interested in our company?" and “Where do you see yourself in 5 years?”. I switched to the “weakness/strength” and “challenge and recovery” questions.

I said, “Tell me about a time you failed and what you did about it.”

Without hesitation, he replied, “I failed 39 times a day.”

“Oh?” I said, waiting for an explanation.

“In the eight weeks I was selling over the summer, I usually got turned down about 39 times before I finally got someone to say ‘yes,’” he explained. “At first, it was pretty draining because the experience was so negative.”

“So what did you do?” I asked.

“I turned each ‘no’ into a positive experience. I decided to start each day with 39 ‘nos’ to count down because it’s rare for me to have more than that before I get a ‘yes.’  So each time a potential customer said ‘no’ it meant I was one step nearer to getting that ‘yes.’ That made me look forward to every new business I walked in to pitch. Each failure was getting me closer to my goal.”

Perseverance is not an idea or principle we talk much about these days. Perseverance requires focus, commitment and a positive attitude which, in our world of instant everything and immediate results, just takes too long. But those who truly aspire to greatness in their chosen fields know that there’s a lot of failing to get through before achieving success.

Don't Get Caught Naked

A colleague once asked me how much negotiation contingency I have in my deals.

I asked, “What is negotiation contingency?”

“It’s the money set aside for making concessions,” he said. “For example, if a client said they wanted a lower price, how much do you budget for price reductions?”

“Oh,” I replied. “Zero.”

Needless to say, he was quite surprised. “You mean to tell me that you never make a concession on price?”

“No,” I said. “I never make a concession on anything. What I make is an exchange; an exchange of value.”

Many sales people make the mistake of thinking offering discounts or cutting the price is the fastest path to signature. They will rationalize it, saying they are “investing in the relationship.”

But what’s the return on that “investment”? In other words, if a sales person gives a discount on price, they better have gotten something in return. Otherwise, that’s not an investment. That’s giving money away and it’s called being a sucker.

Giving free money to anyone is not good business.  Reducing price without getting something in return is called a “naked concession” and it’s rarely a good thing to be caught naked in any context! Naked concessions signal to the client a lack of respect for one’s own business. They also create a lack of trust, and we need trust to build lasting relationships. How is a client to trust us if we say, “This is our best price” and then reduce the price because “they needed this concession to seal the deal.” Obviously, we were misleading them about our “best price” because we gave them a better one when pressure was applied!

In deal-making, you have to get when you give. Trade value. Work with your team and develop a list of options for the client which will allow you to reduce cost and therefore lower the price. For example, can the client perform a task instead of us to reduce cost? Can we reduce scope? Can we reduce risk? Can we extend time? If we don’t show the client the value we put on our products and services, then the client has little reason to value or respect our products and services.

"Light Fuse. Move Away." Rules For Improving Client Relationships

I was looking at a pack of firecrackers a few weeks ago and noticed the very clear and simple instructions on the back: Light Fuse. Move Away.

Those instructions are so fundamental it seems ridiculous to put them on the wrapper. In light of the injuries suffered recently by some professional athletes, however, maybe the idea of moving away from a lit pack of explosives is not obvious to everyone.

And this is not just true for firecrackers. Other products have similar “you’ve got to be kidding me”-type instructions on them to help people who may be deficient in common sense. For example:

• Iron: “Do not iron clothes on body”
• Frozen dinner: “Defrost”
• Bottle of rum: “Open bottle before drinking”

The same problem exists among professionals who are trying to generate new clients or grow the relationships they already have: we often lose sight of the obvious.

So if you want to keep your existing clients, generate more clients/referrals or build better client relationships, here are three fundamental “Care Instructions” to follow:

1. Keep your word: If you make a commitment, whether to return a phone call, set up a meeting or successfully deliver a $50M ERP integration, deliver on your commitment. Nothing erodes trust faster than not doing what you said you would do.
2. Be transparent: Don’t be afraid of sharing with the client how your business operates and how client decisions impact your success. If the client doesn’t care about your success it speaks volumes about the quality of your relationship and you have a lot of work to do to improve it.
3. Show appreciation: It never ceases to amaze me how often a vendor will complain about a long-time client: “They’re so demanding! They’re so difficult!” Yeah, but they keep you in business! If we don’t treat every client like a new client, they’ll soon be an old client. The competition is always ready to take your client away.

And this last bit of advice on the tag of a mattress: “Do not attempt to swallow.”

A Million-Dollar Coffee Cup

Recently I was buying a car and I was reminded of the story of the million-dollar coffee cup.

I first heard about the cup over 20 years ago when I worked for a large technology products and services company (I won’t mention the name but its initials are “IBM”). At that time, IBM was competing in the mainframe space against a company called Amdahl, which has since been acquired by Fujitsu.

The story was that Amdahl sales reps would try to displace IBM mainframes by undercutting IBM’s price. Because switching mainframes was the technical equivalent of a heart transplant, unseating the incumbent on price was usually a wasted effort.

The Amdahl sales reps would thank the client for their time and, before departing, offer them an Amdahl coffee cup.

“It’s worth a million dollars,” the sales rep would say.

“Why is that?” asked the client.

“Because as soon as the IBM sales rep sees the Amdahl coffee cup on your desk, he’ll know I was here and he’ll drop his price by $1 million if you ask him to.”

The coffee cup is a great example of the power of having an alternative; somewhere else to go to fulfill your interests. Imagine you are buying a car and, like in many cities, the car dealerships are all lined up in a row on a main commercial street. While you are negotiating for a Ford, the Chevy dealership next door and the Chrysler dealership across the street represent alternatives to closing the deal on the Ford. If you can’t get what you want at the Ford table, you can go next door and sit at the Chevy table. If the Chevy sales team doesn’t put enough on the table to keep you there, you can leave that table and sit at the Chrysler table and see what they’ll offer.

The table that represents the best alternative to the table you’re sitting at is your BATNA (best alternative to a negotiated agreement). When you can’t get the deal you want, you go to that BATNA.

In reality, the less expensive Amdahl mainframe was not really a good BATNA to the IBM mainframe because of the switching costs and effort. But that coffee cup provided a perception of a BATNA by having the Amdahl logo in sight. And that perception was enough to provide some economic leverage on pricing.

Remembering the coffee cup story came in handy for me when I negotiated recently for a new car. I went into a dealership, sat down at the salesman’s desk and said, “I am buying X Model car this weekend.” I casually rested on his desk the brochure for the Y Model car from the dealership next door.

It wasn’t worth a million dollars, but having that brochure created a perception of BATNA that made negotiating on price a lot easier.

One Word to Becoming a Better Negotiator

You are about to sign a deal after weeks of intense negotiations. The client, before picking up the pen, says to you, “I just got a call from the CEO and he said he wants another 10 percent off the price before I sign.” What do you say?

More importantly, how do you feel? This moment, that was to represent the culmination of months of work, is suddenly spoiled by an 11^th hour demand for a concession. Doesn’t this somehow feel… unfair?

We have all encountered that moment in our professional and personal lives when someone asks for something and we feel like they are taking advantage of us. Most people go through a rapid cycle of emotions: anger and frustration, then analysis and rationalization, so that they talk themselves into saying “yes” to the demand “for the relationship,” “for the good of the deal” or “to keep the peace in the family.”

This is a negotiation ailment called “accommodation” and even senior business executives fall victim to it. But there is one word that can provide the cure: Legitimacy. Among the seven elements in a negotiation, Legitimacy is perhaps the most powerful because it serves as the baseline for whether a deal is good for both parties. Legitimacy is what triggers our “fairness antennae” and makes us pause in our response.

The way to use Legitimacy in our negotiations is simple and, once done a few times, becomes quite empowering. When the other party, whether it’s a CEO or your mother, says “this is what I want,” pause and cycle through your emotions. This time, instead of saying, “Well, OK if that will make you happy,” challenge the Legitimacy of the request. Say something like, “I hear what you’re asking for and please help me understand why that’s fair.”

Introducing the notion of “fairness” into the exchange has a powerful emotional impact on people. The notion of “fairness” is built into us from childhood; to play fair and to treat other people fairly. So when you challenge the Legitimacy of a request by asking someone to justify its fairness, it sends the other party into an emotional cycle of trying to balance the behavior in making the request against the moral compass of “fairness.”

What you now have is an opportunity to work out a solution that both of you will find acceptable. You will feel empowered that you healed yourself of your accommodating behavior and have begun a journey to being a truly disciplined negotiator.

Whadja Get?

“Mr. Gitou, how much do you usually budget for negotiation contingency?”

Tyler Gitou looked up from his computer screen, a quizzical look on his face. “I’m sorry, Verdi,” he said. “I don’t understand the question.”

“Well, when you negotiate a deal, how do you decide how much money to set aside to give to the client as a concession?”

“Oh, I see.” Tyler said. “Zero.”

“Zero?” Verdi said. “You mean to tell me that because you’re the Deal Whisperer you never make a concession on price?”

Tyler laughed. “No, Verdi. I never make a concession on anything. What I make is an exchange.”

“An exchange of what?”

“An exchange of value. Let me give you an example. Last month I was working on a managed services deal for a large pharmaceutical client. They said their primary goal in doing the deal was to reduce their procurement costs by 30 percent. Our proposal reduced those costs by 32 percent, more than any of our competitors. They wanted to sign the deal with us, but they said our price was 10 percent too high. What would you say in response to that?”

“It depends. What did they say will happen if I don’t cut the price?” Verdi asked.

“They said they will give the deal to one of our competitors.”

“OK,” Verdi  said. “I wouldn’t cut the price by the whole 10 percent. Maybe I’d offer them five percent.”

“OK,” Tyler said. “And I would ask you, ‘Whadja get?’”

“Whadja… what does that mean?”

“It means ‘what did you get in return?’”

“I got the deal signed,” Verdi said. “Wasn’t that what I was supposed to do?”

“Sure it was,” Tyler said. “But why did you give the client free money on your way to signing?”

“I… well I had to…” Verdi sighed. “OK, I give up. What did you do?”

“I offered them options,” Tyler said. “I told them I could reduce the price by five percent to get closer to the competitor’s price if they would extend the deal by an additional two years. With an extra two years of revenue, I was able to make some cost reductions and pass the savings on to the client. It also means an extra two years that I keep my competition out of that part of the client’s business.”

“Wow, that’s like a win-win with another win!” Verdi said.

Tyler laughed. “It was a good outcome but the most important part of it was demonstrating to the client that my price was real by asking for an exchange of value. If I had just offered a five percent reduction, the client would have lost trust in our company and thought I was just padding my price.”

“An exchange of value. I like that,” Verdi said.

“Good,” Tyler said. “Remember, Verdi, a Deal Whisperer must always negotiate with respect for his own business. If we don’t show the client the value we put on our services, then the client has little reason to value or respect our services.”

Don't Do It!

“Mr. Gitou, you’re never going to guess who just called,” said Verdi.

Tyler Gitou smiled at Verdi. “You know, Verdi, I can’t ever figure out whether that phrase means I am supposed to guess, or I shouldn’t bother to guess because of the forecasted futility.”

“What?” asked Verdi, looking perplexed.

“Nevermind,” said Tyler. “Who called?”

“That was Sam Gamigan, the head of procurement for National Distributors. I’ve been trying to break into that account for three years.”

“I remember. What did he want?”

“He said they are putting all of the logistics operations up for bid again,” said Verdi. “Sam says they are unhappy with the services from Calax Systems managing their hardware and software so they want a new business partner.”

“Wow,” Tyler said. “That’s a surprise. And a big deal too. Didn’t Calax win that RFP two years ago for about $50 million over five years?”

“Yes,” Verdi said. “We came in second for that bid and now’s our chance to come back and win the work!”

“Hang on, Verdi. Before you start calculating your commission for the deal, let me ask a few questions.”

“Sure,” said Verdi, taking a seat in Tyler’s office.

“First of all, why did Sam say they are putting it up for bid?” Tyler asked.

“I told you. He said they’re unhappy with Calax,” Verdi said.

“What specifically are they unhappy about? Did you ask?”

“I did,” Verdi replied. “And he said he couldn’t get specific.”

“OK. Who is running the bid process?” Tyler asked.

“Sam is. I made some calls to Margaret Fringe, the head of operations, and she knew nothing about it.”

“Gotcha. And lastly, if Calax is in year two of a five-year deal, don’t you think there is a hefty early termination fee for National Distributors if they want to get out of the deal early?”

Verdi thought a moment. “There must be. We had a big fee in our bid because we had to back-load the deal to provide savings up front.”

“That’s what I recalled.” Tyler said. “My advice to you, Verdi? Don’t do it.”

“What? Don’t do what?”

“Don’t bid on the work. Sam is not offering you a legitimate opportunity to win this work. He is offering you and the other service providers a chance to submit competitive pricing so he can re-negotiate the deal with Calax.”

“No,” Verdi said. “Why would he do that? Do you know how much time and money that is going to take? He wouldn’t run an RFP process just to get pricing.”

“Why wouldn’t he? As a good businessman, he knows that if he can get a ten percent reduction in the last three years of the deal he can save the company up to $3 million. You just said Margaret doesn’t know about this and she’s the head of operations. If someone was unhappy with the service, wouldn’t it be her? And he hasn’t hired an advisor to run the bid, has he?”

“No he hasn’t,” Verdi said. “And he doesn’t have a big department to handle responses from five service providers.”

“So it will cost him almost nothing to modify the old RFP, reissue it to five bidders and get back the pricing to use against Calax. We’ve not heard about any problems with Calax’s performance and he’s making vague statements that they are unhappy. There is no way they are going to pay Calax a termination fee to go through the contracting process and transition all that software to a new vendor. Sam is playing a game with you.”

“But Mr. Gitou, it’s a really big deal! Almost $50 million!” Verdi pleaded.

“No it’s not. It’s an opportunity to waste resources submitting a bid for something we will never win. This is a commitment issue, Verdi. Sam has no intention of unseating Calax and he's giving you all the signals of that. A rushed bid. No involvement by the stake-holders. And an incumbent who is so entrenched that changing to a new provider would completely disrupt the business. Calax is in there for the next three years.”

“But if I don’t bid, he won’t hire us.”

Tyler laughed. “He’s not hiring if you do bid! Verdi listen to yourself. Here’s my suggestion. How much would it cost us to respond to this RFP?”

“Probably about $30,000.”

“OK,” Tyler said. “Call Sam back. Tell him you’re sending over our standard rate card as our response. Also, tell him our company is making a donation for what a full response would have cost us to the Canine Rescue Shelter. I know National Distributor is a big sponsor. If he’s as smart as I think he is, he’ll respect you for seeing through his charade and turning it into an opportunity to help others.”

“You don’t think he’ll be mad we didn’t play his game?”

“I don’t care, Verdi,” Tyler said. “I’ll be mad if we do play his game. I’m a shareholder in this company and I don’t want to see our money wasted on what is obviously a pricing negotiation with an incumbent. Trust me, Verdi. Don’t do it.”