Are your salespeople headed to a knife fight with fingernail clippers?
By Frank Hurtte
I travel for a living. Delta Airlines loves me. Over the course of the last decade of travel, the fine folks at the TSA security checkpoints have managed to confiscate over a dozen of the fingernail clippers I inadvertently left in my computer bag. Dangerous weapons? Somehow, I have my doubts, but the point is to the TSA Security team they fall into the same category as a 17 inch Bowie knife. Would I want to take on someone armed with a real knife, switchblade or anything thing else? Heck, no! This brings us to the question, are we sending our sales teams into a virtual knife fight armed with a measly manicure set?
Allow me to get real. Our salespeople go into negotiations with professional buyers on a daily basis, most without real negotiation training. Further, many sellers and their managers don't really believe negotiations play a role in their world. But they do. Allow me to present a couple of points.
Have you ever called on a person with the CPP credential behind their name? This stands for Certified Purchasing Professional. In order to maintain the accreditation, the individual must meet the following minimum continuing education requirements as listed on their website:
"Reapplication must be made every five years in order to keep certifications valid. A minimum of 15 additional points is needed for an approved updated status. Also, anyone who has not taken and completed the self-running online courses "Business Ethics for Buyers and Sellers", "Essential Law for Buyers and Sellers", "Managing Inventory - Maintaining the Proper Level", "Math for Purchasing and Business" and "The Science and Art of Negotiation" will be required to do so."
Remembering these are the minimum, the list of the other 28 course options includes 6 which are negotiation-centric, including one little tidbit which reads as follows:
"Body Language - Make Buying and Negotiating Easier and More Successful, a new online course to help you deal with suppliers. This course will give you an insight on how to read the gestures, body positions, and movements that reveal what the other person is feeling and how he or she is reacting. It will help you determine if the person is telling the truth, if the person is sincere, or if the person is hiding their opinion and motives. Being able to properly access a salespersons body language is an important skill that every buyer and negotiator should know."
For those still wondering, let me throw in another detail. I asked well-known negotiation trainer Tony Perzow of SPASigma, an organization dedicated to improving sales negotiation, to elaborate on the issue. Tony said, "During the years of the Great Recession we saw a change in the mix of our classes. As companies worked to reduce their costs, I saw classes full of purchasing and procurement guys. These companies realized the easiest way to drive cost out of their system was to apply pressure to their suppliers." Putting ourselves back in the time, sellers were desperate to get sales; at almost any cost. My experience with distributor sales organizations shows many companies are still trying to work some of these poorly negotiated deals back to profitability.
Our customers don't believe negotiation is a bad word. As a matter of fact, they have made good use of the process. Our sellers were ill equipped to even begin playing the game.
It is time to even the playing field
For the past couple of decades, distributors have been focused on "Value Adds" as their differentiator. Extra service, extra work, extra product and other free stuff became the lexicon of the field sales team. In an environment like that, any thought of real give and take negotiation was pushed to the side. Is it any wonder distributors struggle with margin squeeze?
Distributors need to revisit the lost art of negotiation. Finding the right deal for both buyer and seller is the game we have elected to play. Further, negotiating allows distributors to push their margins forward. With this in mind, allow me to share another valuable point from my conversation with Tony Perzow, it simultaneously has everything and nothing to do with negotiating.
Mr. Perzow pointed to a philosophical difference between street names in North America and Europe. Very generally speaking, European streets are named for artists, philosophers, places and scenes (The famous Abby Road with tons of Beatles references was named after a farm.) American streets are named after persons of power. A quick walk through River Height Consulting's "headquarter city" of Davenport, Iowa illustrates the point. Presidents Washington, Jefferson and Adams intersect with General Pershing and Grant with a diagonal named for Iowa Governor Samuel Kirkwood. We love power and it spills over into the selling world.
Salespeople want the power to negotiate the whole deal. But, this power works against them. Distributors who limit the negotiating power of their sales teams score better in profitability and margin. Why? Selling is an emotional sport and even experienced sales guys can find themselves in that "make a sale at all costs" mentality.
Saying "I don't have the power to commit to that price" slows the process. It gives the seller time to develop strategies, time to understand all of the costs associated with the concessions, time to understand the value the distributor provides and time to think about what commitments the customer needs to make in return.
If you are a sales manager, ask yourself these questions:
- Do your salespeople really need to make the deal instantly?
- Have your sellers ever made a deal and later determined it wasn't as good as they thought? Did your company make less money than deserved?
- What would have happened if the seller could have stepped back and evaluated it or sought management feedback?
- Are your salespeople willing to give up a bit of ego for more money?
Let's get some training…
I don't believe it's a matter of if distributor sellers (and purchasing teams, too) need training. From my point of view the real question is: What is the best training and how soon can you get your folks into the course?
After reviewing the work of SPASigma, I heartily recommend their work. Why? First, the fundamentals are sound. Secondly, classes are geared towards distributor selling. This is a major difference. SPASigma's parent company has experience with over 400 distributors. They understand the selling engagement at distributors is different than that used selling insurance, real estate and other one-of kinds of interaction.
Finally, allow me one final point. The very thought of negotiating may be a turn off to some of your salespeople. In interactions with very successful distributor sellers, I have seem pushback on the topic of negotiation, and almost every type of skills based training. Expect to hear one or more of the following:
- Negotiating is for sleazy used car guys. People hate car guys for this exact reason. I will not bring myself to this level.
- I have worked hard to build a trust-based relationship with my customers. Using cheap tricks to squeeze out a few more dollars will ruin everything I have worked hard to develop.
- Customers in my territory are upstanding honest people. They tell it like it is. They don't lie to me and I don't lie to them. This negotiation hocus-pocus is unnecessary.
- I have been doing this for years. I get paid on gross margin. I know how to get the best deals. If anything, I should be teaching the class on negotiating.
- I sell solutions. This is for commodity salespeople.
I don't believe any of these issues reflect the real world. But perception is reality. Some of your salespeople actually believe that negotiations are not part of their job. Explore the situation with them. Review previous instances of "deals" gone wrong. Look for areas where just a bit of negotiation would have provided extra profits, better defined projects and real win-win opportunities for everyone involved.
I believe possession of negotiation skills at the seller level is… Well, not negotiable.