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Day: March 28, 2018

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Do You Respond or React?

A little while ago, a German PhD student and I were discussing the dynamics of working in international or multicultural settings, when he asked me, “What’s the one piece of advice you would give to someone who was going to work in [that kind of environment]?”

It was a powerful question, since it’s hard to distill the 1,001 ideas that swirled through my head down to one single line item.

Finally, I said, “No matter what happens, don’t react.”

He looked at me, surprised. “So, if someone says or does something that you don’t like, you should just do nothing?”

“No, that’s not what I mean,” I replied. “You can respond; just don’t react.”

“What’s the difference?” he asked.

I went on to explain that a reaction is an instinctive reflex, often influenced by your “fight or flight” tendencies, whereas a response is a conscious decision.

A critical skill that separates bosses from true leaders is the ability to catch yourself when the reflex to react kicks in, and hit the pause button. Then assess the situation from what I like to call a “split-brain perspective” before deciding your course of action. Depending on the situation and your natural tendencies, you may be able to do this quickly, or you may need to take some time to think it through, and return to continue the discussion an hour or a day later.

Either way, the process requires three equally important steps.

Step 1: Acknowledge your feelings

The first step is on the “emotional side” of your brain – the one whose reaction is to be annoyed, offended or off-put by what the other person said or did. Start by identifying what you’re feeling and why. For example, you can say to yourself, “Whenever he asks for something, it always sounds like a command. It sounds like he thinks he’s my boss, and it really gets under my skin.”

Especially in intercultural encounters (but not unusual in any context), it’s common to perceive others as being rude or otherwise feel like their comments are insensitive or inappropriate. Here’s the thing: it is okay to feel this way. You don’t have to deny your feelings; just don’t let them drive you or your reaction. Acknowledge them, and then go to step-two.

Step 2: Seek alternative explanations

This is when the “logical side” of your brain needs to take over, giving the person the benefit of the doubt that there is a perfectly reasonable alternative explanation for what they did or said, and that their intention was not to offend you. Your job is to discover their real reason and intent.

Now, you can remind yourself, “He probably doesn’t realize how that came across. Let’s find out what he meant and go from there.”

You never know what might be under the surface. For example, in Russian, it is perfectly professional to say “do this now,” whereas in English it sounds extremely demanding, “bossy” and abrasive. The problem is that even though the person may be “fluent” in English, they could still be thinking in Russian and translating word for word into English, not realizing that while their statement is technically, grammatically correct, it is contextually inappropriate.

On the flip side, while it’s considered appropriate in English to say, “Can you get X to me by the end of the day? I can’t do my part until I have X from you and the deadline is tomorrow,” in Russian, such a statement sounds timid and wishy-washy. As a result, it might not have occurred to the person to frame it this way, subconsciously assuming it would be inappropriate.

Once you’ve had that quick check-in with yourself to regroup, move on to step-three.

Step 3: Respond thoughtfully

This is where the rubber hits the road, so to speak. Considering everything from steps one and two, you need to formulate your response to the person in a way that isn’t defensive (or offensive, for that matter), and shows that you want to reach a mutual understanding.

Whether you address the issue immediately or at a later time, perhaps when you can have the conversation in private, start by calmly and objectively identifying the comment/behavior. E.g., “I just want to clarify what’s probably a misunderstanding. Earlier, you told me to (XYZ), and the other day you said (ABC). I’m happy to help, but when you say it like that, it feels like you’re giving me orders. I don’t think you did it intentionally, so I wanted to ask you to clarify what you meant.”

At that point the person will have the chance to share their perspective and even apologize if necessary. They might be surprised or embarrassed, and this approach helps them to set the record straight, turning the exchange into a learning experience for both of you. In the end, you get clarity, strengthen your relationship, and allow them to rebuild their reputation with you and others moving forward.

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Leadership Marketing Personal Development Sales

How Economics Betrays Business Leaders Every Day

I hear even highly-respected consultants and business leaders express dangerous misconceptions about price and discounting. I suspect it’s because so many people took basic economics to heart without digging deeper into the underlying assumptions or learning the true role of pricing. No thanks to economics, we often mis-

apply the supply/demand relationship we learned in our introductory Econ courses. You could not make a bigger mistake.

The demand curve is a foundational concept in economics. The law of demand states that lower prices incentivize higher demand (in units). The principle is correct, but only under artificial conditions. Rather, my decades of work in pricing and value have driven a conclusion that most businesses grossly mis-apply supply/demand analysis in the real world.

I’ve met multiple sales people, sales leaders and CEOs who rationalize indiscriminate discounting. Presumably, they are relying on a misunderstanding of the demand curve. This is far more than mere misinterpretation of the law of demand; it kills businesses.

Let’s review: the demand curve represents aggregated behavior of for a commodity: as price falls, additional customers appear, willing to pay the lower price.

Does dropping your price really help win that deal?

The demand curve correctly states assumes that value for your offer is different for each individual. Prospective customers compare any given price against perceived value. As price drops, demand increases when a customer who formerly perceived inadequate value now perceives a positive value from purchasing. Unfortunately, when you capture a sale from that marginal user who perceives borderline value, you simultaneously just trained all of your higher-value users to expect discounts.

While the perceived value of a product or service can – and is – often individual, it isn’t fixed. Value is a perception, and perceptions change. Perceptions of desirability of an outcome, adequacy of substitutes, and environmental/extraneous considerations change constantly. In fact, this is why the sales profession exists.

Drop your price without knowing your value? Stop it!

The demand curve assumes that your product or services is a “fungible” commodity: all units of the same product or service are identical replacements for each other.. That is, it assumes that you have no differentiation. This is ridiculous. For instance compare the price of a one ounce pure gold bar from a no-name mint vs. a one ounce Krugerrand. The demand function you learned in school ignores differentiating features, branding, distribution, availability, support/service, durability, etc. This was done so that the math works more easily. While there is some great advanced economics work that incorporates differentiation, you probably never learned about it. Pity.

Another way that the real world differs from economic models: Customers don’t have perfect information. When your customers don’t know about all alternatives, don’t fully understand value-in-use, or all the ways that your offer provides value to them and their company, they don’t make “economically efficient” decisions. Imagine a prospect who hasn’t figured out that ROI for a contemplated purchase is over 500%. Discounting isn’t the missing selling behavior…it just creates a discount-accustomed buyer. Or worse, makes them question any value which they had placed in the service. Worst of all, there was no reason to discount, and that every dollar of price drop came out of the seller’s profit line.

For these reasons, you should shift a marginal customer who perceives inadequate value to tip in your favor. This avoids the collateral damage to your existing customers willing to pay your existing price.

Your price isn’t just the effect, it’s the cause.

Your price isn’t just a cost figure a customer weighs against your offer’s value. Because of the confusing plethora of differentiation in the real world, consumers use price as an indicator of value. Your price declares your value — or your lack of it. Imagine: you are the incoming CEO of a company that outgrew its peers for decades at a price premium and without discounting before you entered the job. When you encourage sellers to start discounting to “win” deals, what do you think you’re doing to the brand?

My work on value and price

Bottom line: discounting to gain sales is only a smart choice if you, your marketing group, your customer service people, your product group, and your sellers are all powerless to grow customer perceptions of value. I help under-powered clients.

When I work with clients, we usually find that their offers are priced well below the customer’s true value. This doesn’t necessarily mean we raise prices, but almost always helps them see that discounting is merely shipping profit dollars out the door to their customers.

Don’t be “that guy”. Or “that woman”.

The only kind of value there is: customer-perceived value. It’s impossible to have value that the customer hasn’t validated yet…you don’t have value; just a value proposition. Customer-focused conversations and interactions which get your prospects to validate value is the difference.

I’m happy to help you on your journey to understand how you can capture the value your company earns in the form of pricing power. Comment below or reach out to me directly to discuss in more detail.

To your success!

Categories
Personal Development Sales

How to Sell in an “On-Demand” World

When I was growing up in a big family during the 80s and 90s, we would gather around the TV once or twice a week to watch whatever sitcoms were popular.  It might have been Roseanne, Full House, Family Ties, Grace Under Fire, or the like.

We grabbed our snacks and whatever seat was available.  It was a family ritual, because that day and time was the only opportunity to watch the show!

Now, because of streaming services like Netflix and Hulu and online platforms like Youtube, we can watch shows whenever we want.  Our TV has become “on-demand” and we expect to be entertained whenever we want to be.

Buying is Now “On-Demand”

The internet has fundamentally changed more than just how people watch television.  It has changed how we access and use information in general.  This has had a big impact on the buying process, and it’s why the sales process also has to evolve.

The buying process used to be full of information asymmetry: The sellers has a lot more information than the buyers.  And therefore the buyers didn’t have easy access to the insights they needed to make the best decisions.

They were at the mercy of salespeople.  That’s why “interruption sales” techniques worked.  The buyer had to act when they had a salesperson giving them more or better information.  If you were a buyer, there was a legitimate chance that the person cold calling you might actually have a solution that you didn’t know about.

Since buyers can now get all of the information they need with a simple Google search, the playing field as been leveled.  They can now move through their buying journey at their own pace and when they want.  The buying process has become “on-demand” as well.

In fact, transactional sales where the traditional sales techniques worked is rapidly being overtaken by automation and AI.  Why should a buyer be at the whims of a salesperson when they can go to a robust web platform, get their questions answered, and place an order?

Buyers Buy When They’re Ready

Salespeople don’t have the control like they did in the past.  They don’t have the same ability to push and pull prospects like they did in the past.  The modern salesperson has to recognize this shift in the dynamic between buyer and seller.  It’s no longer effective to simply urge the buyer to operate on the seller’s schedule.

That doesn’t mean that the salesperson isn’t valuable.  In fact, they’re more important than ever.

But their role has shifted.  Now, it’s critical that they provide guidance for their prospects and customers as they go through their own buying journey.  Research shows that buyers are doing a lot more research before they ever engage with a salesperson.

In this world, salespeople don’t find success by pushing and bothering their prospect.  Instead, success comes when they position themselves as a guide: as a Sales Sherpa™ to lead them through the unknowns and obstacles in the buying journey.  They want to be seen as someone who can help give context and meaning to all of the information out there.  Buyers don’t necessarily know how to make sense of all of the blog articles, white papers, and review videos available “on-demand” to make the best buying decision.

3 Ways to Leverage the On-Demand Sales Landscape

To stay relevant in the on-demand economy, modern salespeople need to become the go-to resources for their prospects and customers.  Here are three ways you can find success in this environment:

1. Position Yourself as an Expert

If you are just a brochure-deliverer and order-taker, you aren’t adding to your prospects’ buying journey.  You want to position yourself as an expert in your field that can answer their questions.  Consistently add to your knowledge base and personal network so you have access to the connections your buyers need.  And offer that information freely and openly so that you are seen as a knowledgeable advisor.

2. Invest in Relationships for the Long-Term

When you first approach a prospect, they might not need what you are offering.  That doesn’t mean that they will never need your products and services.  The goal is to ensure that you are the person they contact when they are ready to make a purchasing decision.  Don’t dismiss a potential contact just because there isn’t an immediate and obvious need.  Cultivate the relationship over time so that you’ve built up trust with them when they’re ready to buy.

3. Stay Top-of-Mind

It’s important that you remain top-of-mind with your network so that you are a natural choice when people are looking for what you offer.  The goal is to create a consistent presence that keeps you on their radar. Use digital platforms like LinkedIn, Twitter, or Facebook to share content from your field.  Use offline relationship building opportunities like conferences and networking events to re-connect with people on an interpersonal level.  You don’t have to be their best friend, but you want to regularly remind them that you are there and available to help.