With the turmoil in global markets coupled with the economic uncertainty that has rumbled holidaymakers as they weigh up whether to book a summer holiday now or wait until the last minute in the hope of snatching a deal for a fortnight in the sun, it’s a worrying time for many businesses that depend on a high level of accuracy in their sales forecasting.
Apart from the impact that getting your sums wrong can have on profitability, it’s cash flow that’s King - particularly if you’re a small or not-so-small business. Knowing what cash is coming into the company’s bank account is also a question of survival. Driving sales takes on added significance, doesn’t it?
In short, we need to see things differently and do different things. Let’s park that thought and pick it up again in a few moments. When we have prospective customers or clients in our sights, how do we prevent them slipping through our fingers and into the arms of our competitors? Offer more bells and whistles? Deeper discounts? More financial incentives? Interest free credit? Better products and services at a lower cost? Well, the answer could be all of the above.
But then again, it may not. If you subscribe to the ‘old school’ of sales and marketing, then you’re likely to believe that negotiating and closing a deal is a competitive activity. Where the stakes are high, you may take a style of approach that’s more confrontational rather than consensual. For example, in your weekly sales team meeting you find yourself by the white board talking incessantly about customer or client “wins” and it’s all about the numbers.
And your company rewards the top performing salesperson on a quarterly basis with a bonus, goodies or a lot more besides in the hope this creates “sales envy” among the sales team and encourages the rest to get cracking. For extra effect, you refer to your competitors (boo!) and make sure your team know they’re on the winning side. You tell yourself this is good for morale.
In fact, you frequently talk about winners and losers. Nothing like shock tactics to get people to listen, right? You transmit the message, whether directly or subliminally, that the measure of success is whether you ‘kick ass’ and get what you want.
Your favourite DVD at home is Wall Street. “It’s a zero sum game, somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred from one perception to another,” said Gordon Gekko, played by Michael Douglas in the epic 1987 movie Wall Street.
You love that line, don’t you? But that kind of attitude isn’t sustainable in today’s global markets. Let’s return to the point earlier. We need to see things differently and do different things.
Social and economic factors have combined to create an interdependent world where it’s collaboration not competition that’s the name of the game.
And this requires sales and marketing professionals to have stronger negotiating skills than they may have acquired in the past, according to expert negotiator and lawyer Clive Rich who has negotiated for and with the likes of Apple, SanDisk, SycoTV, Vodafone, Sony, Yahoo and many others.
“Good deals don’t happen by chance. Effective negotiators need to have a conscious blueprint for success. Deal making has never been more important yet negotiating is rarely taught or talked about. There’s never been a more important time for effective negotiation given the uncertain economic climate in which we live – we are all linked by technology, by international trade and by a common economic vulnerability,” he says.
The good news, according to new research by YouGov and the Centre for Economics and Business Research (CEBR) is that with better negotiation skills, the average UK business can see an improvement in its profits by as much as 7%. Now that’s worth having, isn’t it?
Yet because of the ‘negotiation skills gap’, the UK is losing around £17Bn a year through ineffective sales negotiation. That’s the equivalent of funding the London 2012 Olympic Games twice over! Put another way, this is equivalent to £9M per working hour, £70M per working day and £350M per working week. Not to mention tax revenue that isn’t ending up building new roads, hospitals and schools.
The key to success, according to Clive Rich, is to re-wire our thinking when it comes to closing a deal and it’s less about what we want and more about what the customer or client needs.
“Needs are more important than ‘wants’ because it’s almost invariably the personal needs of the customer or client that will determine whether the deal gets done. And this applies to almost all three negotiations. That’s one of the reasons why the surface issues – the normal ‘content’ of negotiation – are the least important ingredients of the negotiation. That doesn’t mean that your ‘wants’ gets forgotten or ignored. What it does mean is that the best way to address your ‘wants’ is to work out the needs that underpin them,” he says.
A lot of sales professionals, and you may be one of them, struggle with the idea that negotiating should be about meeting the needs of the customer or client and leaving your ‘wants’ to one side as this is as far from the ‘old school’ as you can get. But this shouldn’t be confused with altruism or some New Age approach to the hard-nosed world of business.
If it was ever right to push people around and take advantage of them, that time has now passed and like Wall Street, it should now be consigned to being something that has passed its sell-by date. We inhabit a world where partnerships and collaboration are required and negotiation rather than ‘selling’ reflects this.
Moreover, there’s another – yes, more selfish – reason for focusing on meeting the needs of the customer or client you’re trying to sell to rather than focusing on your ‘wants’. And it’s this: the more you give, the more you get.
That’s a mind-set that even the most selfish of sales people should be able to understand. And it’s why traditional ‘selling’ is dead and negotiation is alive and kicking. In short, we need to change our attitudes, behaviour and approach to ‘selling’ by adopting the mind-set of a professional negotiator, where at the heart of the approach is the ability to create a win-win outcome for all the parties.
Failure to change our mind set will not just make us less successful in selling but will store up problems for us as an economy in the future. For example, by 2017, China will have overtaken the US to become the world’s largest economy. India will have overtaken Japan, Russia will have overtaken Germany and Brazil will enter the top ten largest economies in the world at the expense of Italy.
Despite all their individual differences, the BRICs are now seeking to strengthen their joint negotiating positions at a time when a future world system is being created. The growth rates in these countries represent an enormous opportunity for business.
However, if emerging countries are getting stronger and potentially more united, then we have to negotiate more smartly – working with deal partners in these countries, not against them.
Although it’s a generalisation, there’s more than a modicum of accuracy behind the observation that our US colleagues don’t always feel the need to particularly know or deeply trust the people they do business with. A bit like the fictional character Gordon Gekko, they rely on contracts to enforce a business dealing rather than the quality of a personal relationship.
But that’s no longer the way of the world. In countries like China, Mexico, India, Russia and Qatar, relationships are far more important in the scheme of things than the cold words of lawyers contained in the terms and conditions of a contract. The pre-sales phase of negotiation should therefore be about understanding the motivations of both buyer and seller and not about making assumptions about the customer or client’s needs or what you think they ought to need.
You need to genuinely put yourself in their shoes and work out where they pinch rather than guessing what they need because it’s more comfortable walking in your own shoes. In practical terms, what this means is that in the pre-sales discussions with the customer or client, you will test some of their assumptions about their needs that you may have made during the prep for your sales pitch.
Focusing on underlying psychological interests isn’t just a productive way of negotiation but it helps to avoid a number of pitfalls of negotiating based only on what you want.
About the author:
Ardi Kolah is author of The Art of Influencing and Selling (£19.99) published by Kogan Page.