The Price Increase Switching Game

By Mark Hunter

We’ve all had to deal with price increases in one form or another. Similarly, many of us have been faced with a belligerent customer who not only is unwilling to accept your price increase, but also threatens to switch to your number one competitor. When this happens, we’re often left with the feeling that our career is on the brink of imploding. But, don’t panic! Take a deep breath and relax! It’s not as bad as you may initially think.

In talking with a variety of salespeople, professional buyers, and purchasing departments over the years, the reality is that when a customer is presented with a price increase, they will only change to a competitor about 10% of the time. The reason is simple: the cost of switching to a new supplier is too great. When a customer threatens to make the move, rarely have they taken the time to think through what they’re really saying. Their goal is to get the weak-kneed salesperson to cave in and give them a discount, and many of them are successful in securing on-the-spot price reductions just because of the forcefulness of their veiled warning of switching.

When you are presented with the threat of a customer moving to another supplier because of a price increase, focus in on the cost of the conversion instead of allowing yourself to panic. Remember, the process is never as easy as they think it’s going to be. Start by looking at what they will have to go through to set up and to start receiving from a new vendor. Now, take this and multiply it by four. The reality is that the customer is not just setting up a new vendor, but also phasing out an old one in addition to dealing with the wide-range of conversion issues that will inevitably arise.

To better help you understand the risk involved in actually making the change, think for a moment about the hassle you go through when you try to alter a flight on the same airline or your cell phone plan even if you stay with the same carrier. Similarly, consider what is necessary to adjust your automobile insurance or to reschedule medical tests. With each of these same examples, think of the added work you would go through if you were not just changing plans, but also changing companies. Because of the significant amount required, you would probably think twice about making a switch.

Now put yourself in the shoes of a business and think for a moment about the work that would be required for them to change to another supplier. It’s easy for a business customer to say they’re going to drop you and go with someone else, but keep in mind that at that point, it’s only talk. Threatening you is not costing them anything. Carrying it out actually will. The decision to switch is not just about the absolute cost. On nearly every occasion, it takes time to make a switch, thus carrying an added element of risk.

The next time you are warned of a potential switch from a customer, be proactive and prepared. Do your homework. Research what it would take for them to actually make the change to a new vendor. After you’ve discovered the cost of the conversion, figure out how long it would take for your customer to get a payback, let alone a return on their investment. In most cases, it will be hard for a customer to realize any type of a return just from switching because of a price variance. Even if the customer could achieve a return on investment, could they guarantee the other company’s pricing structure wouldn’t change? Could the other supplier guarantee the same level of service you and your company provide? Could the other company provide the same level of sales leadership that you bring to them?

The vast majority of the time, the threat of a belligerent customer to change suppliers because of price increase dies quickly when they truly stop to consider the cost of making the switch. Once the customer realizes that there is more time, effort, and money at stake than they have considered, the change will definitely be less appealing. By doing your homework ahead of time, you can avert a problem situation by showing the customer it is not worth it.

Mark Hunter, “The Sales Hunter”, is a sales expert who speaks to thousands each year on how to increase their sales profitability. For more information, to receive a free weekly email sales tip, or to read his Sales Motivation Blog, visit www.TheSalesHunter.com.

Published in Networking Today December 2008

The Magic of Human Moments

By Barbara Bartlein

An unexpected outcome of computers and other technology is the loss of the “human moment.” A term coined by Harvard lecturer, Edward M. Hallowell, it refers to the psychological encounter that can happen only when two people share the same physical space. The human moment is a quality of interaction that you don’t get through technology, even phones.

Technology has been helpful for the most part; it makes our lives better. But difficulty occurs when the human moment is lost. Hallowell has amassed a large body of research to show that face-to-face interaction is essential for keeping our brains sharp. In order to really converse with someone, you have to keep reading their physical cues, a level of communication not available with computers. In front of a live person, our brains read visual cues every second with automatic responses from us.

In-person contact stimulates an emotion reaction, according to Hallowell. Face-to-face exchange appears to stimulate the attention and pleasure neurotransmitter dopamine, and serotonin, a neurotransmitter that reduces fear and worry. This explains why working at the computer or talking on the phone can be as exhausting as watching TV. Our brain gets fuel from human contact and gets overloaded from the torrent of data surging at us each day.

These human moments are so powerful in our lives that recent research has suggested that loss of human contact is a contributor to the development of Alzheimer’s. David Bennett and other researchers from the Rush University Medical Center studied 823 people in and around Chicago. With an average age of about 80, none of the participants had dementia at the start of the study.

Over a four-year period, researchers asked the participants about their social activity—whether they felt they had enough friends, whether they felt abandoned or experienced a sense of emptiness. They were given a score between 0 (least lonely) and 5 (most lonely). At the end of four years, 76 people in the study developed Alzheimer’s. Those who did were more likely to have poor social networks; the higher they scored, the greater the risk. Those with a score of 3.2 or more had double the risk of those scoring below 1.4.

“It turned out people who have this feeling of being socially isolated are at higher risk of developing Alzheimer’s,” says Bennett. “We are talking about a tendency to feel isolated and alone in the world,” he ways. “You can have a small network and not feel isolated; or you can have a large network but don’t know how to connect, and feel isolated.”

There are just two pre-requisites for the human moment: people’s physical presence and their emotional and intellectual attention. Yet, technological changes in the last ten years or so have made a lot of face-to-face communication unnecessary. Voice mail, email, teleconferencing are one-way, electronic means to communicate “more efficiently.”

The psychology of the mind changes when the human moment vanishes. At its worse, paranoia fills the vacuum. But for most of us, the human moment is replaced by worry. Electronic communication does not convey the cues that typically alleviate worry such as body language, tone of voice and facial expression. Human contact is like a safe place for the psych where we feel understood and grounded.

Little misunderstandings are common as the number of human moments decrease. Wrong impressions from a misunderstood email or voice mail are the result of vanishing human moments. People may take offense and question the motive of others when they discover they are not on a certain circulation list or included on a memo.

The human moment appears to be a “regulator.” When it is not present, people’s primitive instincts become more apparent. Just like calm, stable people can become road raged in the anonymity of their automobiles, so too can courtesy be thrown out the window at the computer keyboard.

Some things you can do to increase human moments:

• De-tether from technology. When you are feeling dragged out at work or at home, take a break and seek out a human moment. It doesn’t have to last long or even be intimate. It can be professional and brief. You just need to pay attention.
  
  
• Diversify your workday. Schedule your day with “interruptions” of human moments, exercise, and fresh air. Walk on your lunch hour, work out after work, and take a break with close friends. The variety will help you avoid “brain drain” and increase your productivity.
  

Barbara Bartlein is The People Pro. She offers keynotes, seminars and consulting to help you build your business and balance your life. She can be reached at barb@thepeoplepro.com or visit www.thepeoplepro.com.


Published in Networking Today December 2008

Sales Leadership Excellence: How to Recruit & Retain More High-Producing Sales Leaders

By Gregory Stebbins

As a sales leader, have you ever felt like you were at war in your business? No surprise there because modern business is based on a military model. However, today’s business environment is rapidly changing requiring sales managers to look at new and different approaches to leading sales organizations.

Now the question is: what will replace the old business model?

You have probably heard of the idea that everything is based on either fear or love.

If today’s business model is based on fear, then the answer to what will replace it is apparent.

How the World of Business & Getting Sales Became War
In the 1500’s Niccolo Machiavelli wrote The Prince where he answered this question: Is it best to be loved or to be feared. Machiavelli wrote, “The answer is of course, that it would be best to be both loved and feared. But since the two rarely come together, anyone compelled to choose will find greater security in being feared than in being loved.” He related this to military models, providing examples of Hannibal and others.

As time progressed new business models arose. The master/apprentice paradigm was created as business owners looked for ways to increase productivity with a largely uneducated work force. Frederick Winslow Taylor, author of The Principles of Scientific Management, proposed what was a thinly disguised military model. From then on, fear was injected into the workplace in continually greater ways.

Why Your Sales Leadership Style Must Change
As work becomes less about muscle and more about intellect, sales leadership styles need to change. Today, we have an ever-increasing number of “knowledge workers.”

We also have a new generation entering the sales workforce – The Millennials. These workers have loyalty to their manager and sales team, but not to the company. Managing them through fear usually results in them voting with their feet, and finding a different type of company to work for.

Now, with baby boomers increasingly leaving the sales workforce there is a rapidly growing shortage of qualified workers. So, how do you recruit more members for your sales team? And, how do you turn them into high-producing sales leaders.

How Showing Love Will Help You Recruit & Retain High-Producing Sales Leaders
Do you have employees who tell you they just love their sales job or the work they do? Do you have employees who complains loudly and constantly about how screwed up their sales job is and especially they work for including you? Which type of employees is more productive for your sales organization?

There are many reasons why people love their jobs:

• Some people love business because of the money they make.
  
• Others love business because of the recognition they gain.
  
• Some love the security it provides for their family and themselves.
  
• Some love their work because it allows them to contribute in making a difference.
  

Once you know what causes a worker to enjoy their work, you can provide that experience they want to motivate them to become a high producing sales leader. And, when people love their work, they’ll tell others. This means more people will want to work for your sales organization.

However, there’s a lot more to love than that. Love is unique in that it is a choice, an attitude, and an outcome all at the same time. So, regardless of a work situation or its circumstances, a person can choose to love. The trick is to create a work environment where this form of loving is at least allowed and at best, encouraged.

Here’s a step in that direction…

How to Create a “Loving” Sales Organization
The famous cartoon sailor, Popeye, had a great statement: “I yam what I yam and that’s all what I yam.” If more people followed that, there would be less fear—and more room for love in the sales organization workplace. However, most people, not having been trained otherwise, choose to serve their ego. This automatically perpetuates the fear-based Machiavellian model.

When a person adds an adjective to the words, “I am,” they are declaring an ego position, which inherently has fear attached to it. It looks something like this: “I am a sales manager.” If I have an ego position in being a sales manager, which I have declared by saying I’m a sales manager, then I will either consciously or unconsciously choose to protect that position. Inherent in the protection is fear, specifically fear of loss of my identity as a sales manager.”

Is it different if you choose to declare, “I am loving?”

No.

The same thing happens: You need to convince others about how loving you are, even if you’re not feeling particularly loving today.

The challenge for most people is declaring, “I am,” and not adding anything else to the declaration. It’s too amorphous. It has nothing others can relate to. Here’s the most interesting part. By stating “I am,” with nothing attached you have declared your freedom. You can choose to be love unconditionally. You could also choose to hate unconditionally. It’s your choice.

In today’s world of knowledge, workers who will job hop in a New York minute, which choice do you think would attract more qualified sales leaders to your sales organization? This is not a trick question. Support your workers and associates in knowing they are whole people doing a job, not being the job. In that awareness, fear falls away, job enjoyment and satisfaction increases and the whole company moves into the new paradigm of enhanced excellence, productivity… and loving.

Sales Psychology Expert Gregory Stebbins has helped more than 20,000 sales professionals better understand their customers so they can outsell their competition. Now with his book, “People Savvy for Sales Professionals” sales managers can help their sales team understand a simple, yet groundbreaking plan to winning your customers’ trust and business forever. Get your free sneak preview at: http://www.peoplesavvy.com/book.htm


Published in Networking Today December 2008

Release Brakes: How to Break the Fear Barrier in Business

Lt. Col. Rob “Waldo” Waldman

As I write this article at my favorite Starbucks, I can't help but hear the conversation next to me. A middle-aged woman is having a coffee meeting with a peer discussing job opportunities, the market, and their personal networks. It's obvious that she's lost her job due to cutbacks and is networking like mad, reaching out to her wingmen and exploring job opportunities.

Sound familiar?

We all know someone who recently lost a job or who is struggling with their business. The economy is tough today. Sales are down, credit is tight, budgets are being slashed, and jobs are being cut. We've all been affected. It's just reality. And while we can't control Wall Street, the only thing we can control is how we react to what's going on. As my friend and wingman John Harrington of OTR Consultants says, when adversity strikes, "we either fear or we lead."

If we fear, we crawl out of bed anxious, worrisome, and focus on what we don't have. We become strangled with doubt. We strap into our jet ready to take-off, but push up the throttle with the brakes on. Doubt prevents us from releasing our brakes and destroys the warrior spirit. It kills performance, which eventually leads to failure.

If we lead, we jump out of bed, acknowledge our fear (hey, it's normal to be afraid when adversity strikes!), and then give thanks for what we have. We gather our resources, plan the day's mission, and then take action. We focus on doing, not doubting…on performance, not philosophy. We understand that we’re in control of our jet and are ultimately responsible for results.

Here’s the question you have to ask yourself during adverse conditions: Will you fear or lead?

In turbulent times like today with the missiles being launched, we have to be warriors, not worriers. Warriors confront the reality of their fears, and then lead by taking action. When I flew in combat with my wingmen, sure we were scared. Sure we had doubt. But when it came time to execute, we prepared relentlessly and then took action as a team. We felt confident because we weren't flying solo and knew we could count on each other for mutual support. Most importantly, we focused on our actions, not on our attitude.

In business, attitude alone won't get you to take off. Yes it’s important, but ultimately you have to take action for change to occur. Attitude gives the thrust, but action provides the vector. You have to release the brakes on your jet and roll down the runway with a target and a plan, knowing full well what the stakes are. I know it can be overwhelming and it isn’t easy. But let’s face it; the greatest results in business often require the greatest effort and risk.

I want to emphasize that being a modern day warrior isn't about combat. It's about commitment, courage, and accountability. It's about fighting for a cause that means something. Warriors fight for those they serve, but they also fight for freedom, peace, family, and love. Warriors work. Warriors live by the credo "the more you sweat in peace, the less you bleed in battle." They plan and train with discipline and intensity and put forth the effort so that they never have to go to battle. As the great Chinese General and military strategist Sun Tzu wrote in “The Art of War,” the greatest victories in war are the ones that are never fought.

Most importantly, warriors are a beacon of hope for those in need. In essence, warriors are wingmen. Warriors are your friends who refer business to you, who share their best practices, give feedback on your sales performance, and who take your keys when you've been drinking. They give their love and advice freely, but also help you be accountable to the most important wingman in your life...yourself!

Warriors are wingmen who will do what it takes to help you turn your fear into courage, push up your throttle, release your brakes and take-off. Warriors want you to win.

As we deal in these uncertain economic times, I would ask you to lead rather than fear. Be thankful for the warriors in your life who fight the good fight and who give you the courage to release your brakes and take-off in turbulent conditions. And last but not least, pray for the strength to be a warrior for your customer, your co-workers, and for those less fortunate who can't release the brakes on their own.

Be a wingman – a warrior with a heart.

Lt. Col. Rob “Waldo” Waldman is a former combat-decorated fighter pilot with corporate sales experience. Known as “The Wingman,” he is an inspirational peak performance speaker and uses fighter pilot strategies to build teamwork, leadership and trust in highly competitive environments. Waldo’s clients include Aflac, Hewlett-Packard, Nokia, Bank of America, John Hancock, and Home Depot. To download his Top Gun Motivation mission briefing, visit Motivational Keynote Speaker or call 1-866-925-3616.

Published Networking Today December 2008

When Clients Want a Discount

By Andrew Sobel

Especially in a difficult economy, clients may ask you for a discount. There are at least five reasons why a client will pressure you to reduce your fees, and you need to understand which of these is at the root of the discount request in order to effectively respond. I've named a client type for each of these reasons:

1. "Red Ink": This client is under extraordinary budgetary pressure due to a decline in profits, and really is having trouble funding your work. Right now, there are a many companies out there which are in this predicament. In this case, try in earnest to structure your work to help the client meet internal budget pressures. Make recommendations for ways that your clients can become more efficient and productive in the way they are spending their budget for your particular service. One of the firms I work with, for example, was told by a large Fortune-500 company that it was cutting the budget for all external service providers by 50% across the board. My client spent serious time developing a very cogent business case which showed that the company could save more by consolidating around just a couple of suppliers, and they were able to retain the same level of fees while increasing their share of the company's total spend.
   
   In the midst of one of the toughest economic environments in history, now is the time to be creative and flexible – without completely abandoning your economic model – as you work with cash-strapped clients.
   
   
2. "Competition Czar": Your client has solicited proposals from a number of your competitors, and says you are more expensive for what appears to be the same service. In this case you need to invest in a value-added proposal that illustrates how you are different from the competition. Provide multiple options in your proposal. Treat your prospective client as if they were already a client.
   
   
3. "Bargain Hunter": This client always likes to dig around for the best deal, irrespective of who you are, the service you offer, or the degree of competition. You might satisfy this client's bargain-hunting instincts with a small concession on price or an extra piece of value-added work.
   
   
4. "King Commodity": The client perceives your service to be a commodity or near-commodity, and buys mostly on price. You have three options: Avoid them, add value to show that your service really isn't a commodity, or lower your delivery cost and compete on price.
   
   
5. "Chicken Little": This client likes to fret about how expensive everything is, including you. I've had a handful of these clients in my career. They value the work I do, but they love to make comments about my fees and how expensive I am. I suggest you sympathize but hold your ground. Describe the quality ingredients that go into your delivery, and frequently communicate the value you are adding. Emphasize that you are indeed best used for those issues where extremely high quality and thoroughness is required, and make a point of turning down some work that could be done more efficiently by someone else.
   

In every case, be sure to:

• Always link your proposal to the client's critical issues, needs, and objectives. · Clearly articulate the value of the work you are proposing. · Make an effort to identify what the client truly values about your proposal. You may have five elements to your proposed program, but it could be that two or three of them represent 90% of the perceived value.
  
  
• Respond to fee pressure by offering lower-cost options that restructure the work without destroying your profit margin. Propose doing less than what is in the original proposal, suggest that the client take on some of the tasks itself, or start with a small diagnostic phase.
  
  
• Talk about the integrity of your fees and don't cave in mindlessly. One senior executive said to me, "If I challenge an invoice, I actually don't want the firm to immediately knock 20% off it. If they do, it makes me think I should question every invoice, and then the whole billing process loses integrity."
  
  
• Propose discounts, rebates, or other pricing mechanisms that are tied to creating a larger, stronger relationship with the client as opposed to just cutting current prices.
  
  
• Reduce the client's risk of doing business with you rather than cut fees. For example, break a large engagement down into small pieces with checkpoints along the way.
  
  
• Don't chase down every lead or RFP – if you cannot invest the time to develop a highly tailored, value-added proposal, don't bother. That's hard to do in a difficult economy, but it's usually the best strategy.
  
  
• Because of the economic contraction, you may need to be especially thoughtful about how you set and structure your fees. The one approach I don't like is to simply reduce fees on a blanket basis because a client tells you they are suffering a profit squeeze. You know that they will not pay you a premium when times are good, so why should you give a deep discount when times are bad? However, as noted above, you may need to consider delaying your billing; providing one or two value-added services at no additional charge (producing an assessment of a particular issue, facilitating a workshop for the client, providing some training for in-house staff, etc.); agreeing to use more of the client's own people on an engagement; accelerating a project's timescales; and so on.
  

Finally, don't take it personally if you're asked for a discount. If someone questions your fees, respond with some thoughtful questions about his or her concerns and try to understand why the subject is being raised to begin with.

Andrew Sobel is a leading authority on client relationships and the skills and strategies required to earn enduring client loyalty. He is a consultant and educator to major services firms worldwide. Andrew is the author of the business bestsellers Clients for Life (Simon & Schuster/Fireside) and Making Rain (John Wiley & Sons). He can be reached at andrew@andrewsobel.com (Tel: 505.982.0211). http://www.andrewsobel.com

Published Networking Today December 2008