Friday, December 7, 2012

Who Cares?

 “Verdi, this is the second time you have delayed closing this deal for another quarter,” said Tyler Gitou. “What seems to be the problem?”

“I don’t know,” Verdi said. “The client shows all the indications that they are ready to buy. They need the software, like, yesterday, to replace their old system. The system is out of compliance and the regulators are getting antsy. I guess it’s just caught up in the purchasing bureaucracy.”

“The ‘bureaucracy’?” Tyler laughed. “If their building was on fire, how much bureaucracy would they wade through before they called the fire department?”

Verdi shrugged. “None. They’d make a call.”

“Yes, because if they had to save the business they would act. It sounds like they need to save the business here as well. So let me ask you a simple question. Who cares?”

Verdi furrowed his brow. “I don’t understand.”

“This is a question that is core to your ability to achieve a commitment and make a sale. Who in the client organization cares most about solving the problem that has been identified? If this software does not get installed, who gets fired?”

“That’s probably Jenna Connell, the CIO.”

“And who is your key contact at the client?” Tyler asked.

“I am working with Tim Luizza, the procurement lead.”

“How often have you met with Jenna Connell?”

Verdi thought for a moment. “Never.”

“So what I am hearing is you have spent the last six months talking to procurement and all you have to show for it are a bunch of ‘what-if’ scenarios and specifications and modifications, but you don’t have a deal.”

“That’s… accurate. But I don’t think it’s fair.”

“Why isn’t it fair?” Tyler asked.

“Because I have also built a good relationship with Tim in that time. And he tells me we are the leading contender for the business.”

Tyler nodded. “Building a strong trusted relationship is a positive outcome. But how much have you spent in your budget to get that relationship? And has Tim committed that your investment will pay off?”

“No, he can’t.”

“Why not?” Tyler asked.

“Because… he’s not the one making the decision.” Verdi sighed. “OK, I get it now. I need to develop a strategy to speak with the decision-maker, and not the facilitator.”

“Exactly,” Tyler said. “One of the key elements in a healthy negotiation is a commitment. A Deal Whisperer knows how to tell the difference between learn, churn and earn. The parties first must go through a process to learn about each other and the issues. From there, one has to be careful to control the amount of churn as the client comes to a decision. If not managed, churn can burn your budget! But if done well, you’ll have just enough churn to earn the client’s trust and their commitment. The three have to be balanced so don’t rush one and don’t waste time on another. Balance your ‘learn and churn’ and you’ll have a much more efficient ‘earn’.”

Sunday, October 21, 2012

He's So Wrong!

 “So was I right or was I right?”

Peter Pompel gestured to a chair for Tyler Gitou to sit down. “Isn’t Frances Forte the most emotional and challenging executive you’ve ever encountered?” Peter asked.

Tyler paused for a moment to gather his thoughts.

Tyler had met with Frances Forte, the COO of a large manufacturing company, at Peter’s request. Peter and his Tech Team colleagues had been hired by Frances to install a new finance and accounting system. Peter called Tyler for advice because Peter thought Frances was overly emotional, which made communication difficult. (See: “She’s So Emotional!”)

Tyler met with Frances and found her to be a calm and reasonable businesswoman. The problem was with Peter: he did not understand how his own communication strategy was actually frustrating Frances and causing her to seem “emotional”.  (See: “She’s So Logical!”)

Tyler now had the challenge of telling Peter that he needed to adjust his behavior, not Frances.

“Actually, Peter, Frances is a pretty direct and balanced businesswoman. From my conversation with her I think you are the victim of a misperception.”

Peter sat back in his chair. “Really?” he asked. “Are we talking about the same person? This is the woman who I told you gets upset when I tell her everything is going well. She accuses me of hiding information. Sometimes it borders on her questioning my ethics!”

Tyler raised a hand to calm him. “Peter let me ask you a question. Is everything going perfectly?”

Peter shrugged. “Well, no, of course not. There are always issues in these types of projects. But we get them resolved.”

“I understand. Do you convey those issues to Frances? Tell her where you are facing challenges and solving the problems?”

Peter laughed. “Oh goodness no! The last team we had in here struggled and Frances ordered them off the premises! That’s when they brought me in here. I’m not going to let her think that we aren’t doing our job well. She’ll get all riled up and get me fired.”

“So you are concerned that if she knew there were delivery problems, even though you solve them, she would perceive you as failing in the engagement?” Tyler asked.

“All I know is the last team got thrown out for poor performance. I am not going to let that happen to me.” Peter folded his arms across his chest.

“Did you know that Frances championed Tech Team in the bidding process because she thought you were the right company for the job and she basically put her career on the line for you?”

Peter relaxed. “Really? No I didn’t. Frankly I had wondered how we won a deal of this size.”

“So she has a vested interest in making sure you succeed,” Tyler said. “If she throws out your team, she’s finished. Your destiny and hers are tied together.”

“That explains why she is so focused on what we are doing,” Peter said.

“When you do run into problems, who on her team do you work with?” Tyler asked.

“Our direct contact is Michael, who reports into Frances.”

“So Michael knows there have been issues which are getting resolved?”

Peter nodded. “Absolutely.”

“Don’t you think Michael tells Frances about those issues? Or do you think he is telling her everything is going off without a hitch?” Tyler asked.

“No. He understands that we are ultimately going to succeed here, but I guess he probably keeps her up to speed on how we are progressing.”

“So put yourself in Frances’s shoes,” Tyler said. “You advocated for a company that failed on the first try. Your career is at stake. The new team keeps telling you everything is going well, but your own people are reporting issues every week, though they eventually get resolved. What would you think of a team that is not being open about the challenges on the program?”

Peter thought for a moment. “I suppose I would not trust that team because it feels like they are hiding something.”

“And as the deadline for completion draws near?”

“I probably would get frustrated every time I heard that ‘all was well’ because I knew it was not,” Peter said.

“Exactly,” Tyler said. “Your perception of Frances as an emotional executive came from her frustration with your behavior. While trying to protect your company by trying to make her think you were not encountering any problems, you actually created an environment of distrust with her because she thought you were hiding something. Couple that with her stress because of her personal interest in the success of the program, which you did not know about, it’s no wonder you had a misconception about her.”

Peter shook his head. “That’s great insight, Tyler. Thanks. So what do I do now?”

“Open up to her about the program. Have a meeting with her and Michael every Tuesday and Thursday and provide her updates, warts and all, and what the plans are to resolve the warts. She knows there will be problems. What you need to do is demonstrate to her you are anticipating and remedying those problems to limit the risks to the program’s success. You will find her demeanor will change. A Deal Whisperer tries to be open and transparent with the other party so that both sides will share challenges and collaborate to solve them. That builds trust and lasting relationships.”   

Monday, August 6, 2012

She's So Logical!

“So tell me about your experience with Tech Team,” said Tyler Gitou. “What do they do well and what can they improve?”

Tyler picked up the coffee cup that Frances Forte had placed in front of him on the conference table.

Tyler had asked Frances, the Chief Operating Officer of a large manufacturing company, to meet with him to discuss issues around the installation of a new finance and accounting system.

Tech Team, the service provider, had made some errors early in the project and Peter Pompel, the project executive for Tech Team, claimed Frances was difficult to work with because she was always “so emotional.” Peter called Tyler Gitou, the Deal Whisperer, to see if he could bring some “calm” to the relationship.

Tyler told Peter that he might be the victim of “persistent perception”; wrongly believing women in business are more emotional than men.

Frances sat down in a chair next to Tyler and sighed.

“Honestly, Mr. Gitou? Tech Team has provided an excellent group to work on this. But they frustrate the heck out of me,” she said.

“Really? How so?”

“Well, Tech Team came on site five months ago to replace our in-house finance and accounting software with a commercial product,” said Frances. “We don’t usually work with companies as small as these guys, but I got good references on them so I threw my weight behind them winning the bid.”

“So to some extent your reputation is tied to the success of that decision?” Tyler asked.

“No,” Frances laughed. “Not ‘to some extent.’ It is completely tied into that decision! If this is not successful, I am out of a job. Once the original Tech Team staff showed they couldn't get the job done, a more senior group, with Peter Pompel, was sent in.”

“Are you concerned that Peter and this new senior group from Tech Team may not be successful?” Tyler asked.

“I’m not sure,” Frances said. “And that’s what frustrates me. When I talk to Peter and ask how are things going, he says ‘All is well.’ But I know that’s not true because my team tells me things that are going wrong.”

“Do you think Peter is lying to you?” Tyler asked.

“I just don’t think he’s giving me the full story. Whenever he says to me ‘all is well’ I get annoyed because it feels like he is trying to keep something from me. So I start asking questions and digging deeper into the progress of the schedule. Then he tells me more and I get irritated that I have to work so hard to get the information I need.”

“So these are problems that are lingering and not getting solved?”

Frances sipped from her coffee. “That’s what makes this such a challenge. They are solving the problems, but they are not telling me that. So basically I have a situation where Peter and his team want me to think everything is going perfectly. And I understand why they would want to do that after the first team messed up. But I know a project like this has mistakes and issues. I’d rather hear about the issues and how our teams are working through them together rather than have to interrogate Peter to get the real story on the project’s progress.”

“Especially because the success of the project has such important personal implications for you,” Tyler said.

“Exactly,” Frances said. “If this is all going to be a big failure I’d rather be a part of it, not a bystander. Peter seems to think keeping me out of the loop will bring me peace of mind. He knows how important this is to me and that I am behind him. But he needs to be more transparent. Frankly, he needs to trust me more.”

“That is a very valuable message for him. Your point of view on this is completely logical and your frustration regarding his lack of communication is perfectly understandable. I would also be frustrated if someone was handling something for me of such great importance and not providing me data on how it was going.”

“What would you recommend I do?” Frances asked.

“I would suggest a set communication plan where Peter provides an issue list and the action plan to resolve those issues. What would your schedule allow for?”

“I could do something every Tuesday and Thursday morning early. Let’s say 30 minutes.

“That’s a good idea,” Tyler said. “If he knows that you expect issues to arise and are prepared to discuss the remediation plan twice a week, he will likely be more forthcoming on the data.”

“That would be great,” Frances said. “I am sorry, I have to prepare for a meeting with the board of directors now. It was a pleasure to meet with you.”

“Thank you, Ms. Forte. I will share with Peter your well-reasoned approach.”

Next: See "He's So Wrong!"

Saturday, July 7, 2012

She's So Emotional!

Peter Pompel stood up and extended a hand to Tyler Gitou.

“Mr. Gitou,” Peter said. “Thanks for coming to visit with us. I hear you are the Deal Whisperer. I hope you can whisper some calm to this deal.”

Tyler shook Peter’s hand and sat down. “It’s my pleasure, Peter. I understand you are having a dispute with the client’s Chief Operating Officer.”

Peter sighed and shook his head. “Every day,” he said. “We have been trying to get this new finance and accounting system up and running and frankly it’s been a struggle.”

“This is something your company does all the time,” Tyler said. “What’s the problem here?”

Peter shrugged. “It’s really our fault. We put the wrong team on the ground and they did not manage the project well. The client had a lot of tasks and our team was not forthcoming enough to keep the client on schedule. Plus, we overestimated the efficiencies of some of our tools in this environment so we had to add more people. That slowed things down as they had to come up to speed on the project.”

“Have you explained all that to the client?”

Peter waived his hand. “All water under the bridge. We explained it, the client understood and we have a new schedule. The client wasn’t happy, but she understood. Mistakes happen. I was brought in to lead a whole new team and we’re laser focused on making this successful.”

“Well it sounds like everything was worked out. What’s the problem?” Tyler asked.

“The client's COO, Frances Forte, has gotten to be very difficult to work with.”

“How so?”

Peter sighed. “She’s so… emotional. Every time we meet to discuss the project schedule, she seems to get upset with us. I go in to tell her what I think is good news and she gets angry.”

“Why do you think she’s angry?”

Peter gave a half smile. “Maybe it’s personality?”

“Ah, I see,” Tyler said. “You mean maybe it’s because she’s a woman?”

Peter quickly backtracked. “I don’t know. That’s probably an overstatement but… you know.”

“Don’t be embarrassed, Peter. Your perception is one that women in business have struggled with for a long time. In my experience, though, I have yet to find a successful woman executive whose business judgment was overshadowed by what men like to view as irrational thinking driven by emotion.”

“Really? Have you dealt with a lot of women executives?” Peter chuckled. “Because I’ve been in this business for 20 years and…”

“And,” Tyler interrupted, “I would suggest you have been a victim of persistent perception for those 20 years. At some point some male manager or executive put it into your head that women in business were more emotional than men. As a result, you project that perception onto every woman executive you meet. You are blinded to their business reasoning because you keep waiting for the emotional reaction to validate your projected perception.”

Peter thought for a moment. “I can see what you’re saying and maybe my perception needs some adjustment. But in this case, trust me. She’s just too emotional.”

Tyler looked at his watch. “Well, I am meeting with Frances now in her office, so why don’t I hear what she has to say.” Tyler stood up. “There are three sides to every story, Peter: your version, her version and the truth. Let’s get together for dinner afterwards and I’ll tell you what I’ve learned and we’ll see if we can get closer to the truth.”

NEXT: See "She's So Logical!"

Monday, May 14, 2012

Send Paper Send People

The Deal Whisperer posted its 50th article in September, all based on my ongoing experiences leading sales teams in pursuit of outsourcing, BPO, SI and consulting engagements. My goal is to help business people drive greater value and stronger relationships in their deal-making. For the next 10 weeks I am offering a retrospective, posting the 10 "Most Widely Read" pieces from the last several years. Here is "Send Paper Send People". As always, your questions and comments are welcome and appreciated.

Verdi ended his phone call and slipped his cell phone into his pocket. He walked into the coffee shop, saw Tyler Gitou, and sighed.

“What is it Verdi?” Tyler asked.

“My client is so difficult.” Verdi sat down. “We have been negotiating this contract for three weeks now and some of the things they are asking for are outrageous.”

“Really? What kinds of things?” asked Tyler.

“Oh it’s too much to explain. Milestones, liquidated damages, guarantees. It’s like they don’t understand the nature of the deal.”

“Maybe they don’t,” Tyler said. “When was the last time you had a conversation about the substance of the deal?”

“Just now. I called to tell them our lawyer had sent our markup of the agreement back to them. This is the fourth version we’ve sent to them. I don’t know how we get this done.”

“So you have exchanged a draft contract four times now. How many times have you sat down in a room to discuss it?” Tyler asked.

“We met when the process started and our lawyer has been talking to their lawyer so we’ve been talking a lot,” Verdi said.

“Have you been understanding?”

“What’s that supposed to mean?” Verdi asked.

“You may be talking but it doesn’t mean you’re hearing each other. It sounds like your deal may be suffering from a business disease called documentum negotiatis.

Verdi cocked an eyebrow. “You’re kidding right?”

“Yes, I made up that name,” Tyler laughed. “But the actual ailment is real and commonly occurs when parties choose to negotiate by document rather than by discussion. It starts when one party sends a contract to the other party and the other party marks it up and sends it back. What’s missing is a step in the middle where the parties get together and discuss the substance of the contract, ask questions and seek to understand the intent and outcomes the contract is trying to produce.”

“I hear what you’re saying but this is the way we always do it.”

“And what usually happens?”

Verdi paused. “Documentum negotiatis.”

“Exactly. So if you want achieve a better outcome?”

“I need to change the process,” Verdi said.

“Here is my suggestion. Schedule a meeting with both legal teams and all the business stakeholders and walk through the contract changes. Seek to understand what the other side is trying to achieve. Often people mark up an agreement with perceptions or assumptions about the language that completely miss the actual intent. Get everyone re-focused on the goal of the deal and work toward the mutual goal.”

“That’s a good suggestion, thanks.”

“And from now on remember this: Send Paper Send People. A Deal Whisperer never responds to a document with a document. He responds with a meeting request to seek to understand the intent of the document. Only after he understands does he respond, at which point there is another meeting to explain and understand those proposed changes. Meeting like this builds collaboration, allows for transparency and gradually builds trust as two parties who are trying to accomplish something together build a lasting business relationship.”

Friday, April 20, 2012

What is the Client Buying?

“So Verdi, at our last lunch you told me you were struggling with a request from your client for a price cut,” said Tyler Gitou.

“That’s correct, Mr. Gitou,” said Verdi. “We designed a new procurement system for a large manufacturing client. We focused on quality because that was what the client said he wanted. When we were ready to sign, however, the procurement lead suddenly told us we were ten percent too high and had to cut the price.”

“So now the question is how to respond, correct?”

“Yes,” Verdi said. “I am concerned that if we don’t reduce the price the client may offer the deal to our competition. So what do I do?”

“I asked you some questions about why you bought your car,” Tyler said.

“Yes, and it confused the heck out of me. What was that all about?”

“Let’s go back to that question,” Tyler said. “You said you bought a Dodge Charger and I asked ‘Why did you buy that car?’”

“Because I needed a new car. I have to drive something to get to work.”

“But you didn’t need a Dodge Charger,” Tyler said. “You could have bought a Smart car. Smaller, cheaper and less expensive to maintain.”

“That’s true. But my girlfriend would not be impressed with a Smart car.”

“Aha!” said Tyler. “So your decision was not just about transportation. You also had an interest in the type of car because of the image it bestows on you.”

Verdi looked slightly uncomfortable. “You make it sound silly.”

“I don’t mean to, Verdi. My point is this. Every word of that question highlights a different interest you had in completing that transaction. I asked why you bought the car. Someone else could have bought it for you, right?”

“I guess,” Verdi said. “But I don’t want to have to ask someone to buy a car for me.”

“Fair enough. I also asked why you bought it instead of renting a car or leasing one.”

“Buying was the cheapest route.”

“Good,” Tyler said. “Then I asked why that car and you said you liked the Charger because of its image. Then I asked why you bought that car, as opposed to riding a bike or taking the bus.”

“My job requires a lot of travel. The bus can’t get me where I have to go,” Verdi said.

“I understand. But do you see how many different interests the purchase of this car had to meet for you to close the deal? When our clients engage for a potential transaction they also have interests. Maybe a client wants a flexible system; a more reliable system; a more robust system or a cheaper system. Some of those interests may be mutually exclusive. For example, a client shouldn’t expect to get the most reliable, state-of-the-art procurement system from you and also get the lowest price.”

“That’s fair.”

“Just like when you bought your car,” Tyler said. “Could you get a Cadillac at the price you paid for the Charger?”

“No, but the issue is he is now saying he wants a Cadillac system for the Dodge Charger price.”

“Are you sure? Or is he just testing you. Let me ask you this: how have you done business in the past? When you present a price for a project, what does this client do?” Tyler asked.

“They ask for a discount,” Verdi said.

“And what do you do?”

“We see if there is room to move and we cut what we can.”

Tyler nodded. “So you have trained this client that this is how you do business! ‘I give you a price, you push my buttons, and money comes out of the slot.’”

“You make us sound like we’re being… stupid,” Verdi said.

“I don’t want you to feel that way, Verdi. But if you do that’s a good thing because it is a stupid negotiation strategy! How will you ever build trust with this client if every time you say ‘This is my best price’ you’re not telling the truth and you prove that by reducing the price!”

“I see what you mean. So how would you respond to the request for a price cut?” Verdi asked.

“Go back to the interests. You said the client was focused on a quality system. That dictates a higher price. Give him the option to buy a lower quality system at a lower price, or a high quality system at the price you quoted. His reaction will tell you how important quality is.”

“I know it’s important. That’s all they’ve talked about,” Verdi said.

“Good. Just like I asked you the question, ‘Why did you buy that car?’ you should be asking your client, ‘Why do you want this system?’ Focus on what the client is buying. If he's buying quality, focus on how quality can get hurt. Does the client want ‘this system’ as opposed to a different system that might still be sufficient for its business needs? If he is asking you for the price cut just to make sure he has not left money on the table, he will quickly understand that this is your best price and you can’t reduce the price without changing something else in the offering. If he is asking because of new budget constraints, you can offer to discuss options that might retain the key elements of quality but you can reduce costs in other areas that are not as important to him and provide a lower price. That, Verdi, is what a Deal Whisperer does to take the first step in building trust in your client that you really are providing the best price when you say it’s your best price.”

Thursday, March 1, 2012

Why Did You Buy That Car?

“Thanks for meeting me for lunch, Mr. Gitou,” said Verdi. “I have been working on this bid for a new procurement system for one of my clients for six months. Yesterday the director of procurement said his company values the quality of the solution we have offered, but our price is ten percent too high. He said we have to ‘sharpen our pencils.’ I don’t have ten percent; I could move some things around and give him five percent.”

“So tell him ‘No,’” Tyler said.

“I can’t do that,” Verdi said. “He’ll walk away and give the deal to my competition!”

“So tell him ‘Yes,’” Tyler said.

“I can’t do that either. If I cut the price by ten percent I have to reduce a whole bunch of operational costs that we built in to ensure the success of the implementation. We have a whole change management program that’s required to train everyone on the new system. If they’re not trained they won’t use it and the client doesn’t realize the savings.”

“So give him five percent,” Tyler said.

“Really?” Verdi said. “Just like that? I can’t believe you, the Deal Whisperer, would make such a concession so easily!”

“Why not?” Tyler said waving away Verdi’s concerns. “That’s what the client wants, right? So give them what they want.” Tyler paused, a smile creeping onto his face. “What will happen next?”

“If I offer him the five percent? Well I hope he takes it and we sign the deal.”

“OK,” Tyler said. “What if he takes it and then says, ‘Thanks, now give me the OTHER five percent or I am going to walk away and go to your competition?’”

“I guess I’d have to say no,” Verdi said. “I can’t do ten percent.”

“So let me ask you this: if you are ready to say ‘no’ to ten percent and see if he will exercise his BATNA to go to the competition, why would you say ‘yes’ to five percent and ‘no’ later? In other words, why not say ‘no’ now? Isn’t the outcome potentially the same?”

Verdi thought for a moment. “I am getting the feeling that you’re trying to show me that the answer is not ‘yes’ or ‘no’ because neither one produces the ideal outcome for both parties.”

Tyler clapped his hands. “Exactly! The answer to a demand for a price reduction is rarely ‘yes’ or ‘no.’ The challenge for a Deal Whisperer is to figure out what the right answer is.”

“So how do we find the right answer?”

“We ask questions,” Tyler said. “First, why is the procurement director asking for a price cut?”

“He said our price is higher than the competition’s price.”

“Are you ever selected because you have the lowest price?” Tyler asked.

“Not often,” Verdi said. “We really focus on quality. We are typically selected because when looking at the risks of these projects, the scope of the work, and the time to get the system running we provide the greatest value on overall price.”

“So we are struggling because we are trying to answer a demand for a low-cost solution which we cannot provide.”

“Yes,” Verdi said. “So I guess that’s the end of the deal. I can’t be the low-cost provider.”

“Hang on, Verdi,” Tyler said. “Don’t give up so easily. A potential solution is right in front of you!”

“It is?” Verdi asked. “Where?”

“The problem is you don’t have an answer to the question being posed, correct?”


“But you do have an answer to another question which has not yet been posed, correct?” Tyler asked.

“I guess.”

“So if two parties are trying to reach agreement on a shared goal, namely, getting the best, most reliable solution in place, and one party doesn’t have the right answer to a question, maybe the parties need to change the question to get to the right answer.”

“I feel like I am following you… but not really.”

Tyler laughed. “It’s all about how you sell, Verdi. What kind of car do you drive?”

“I just bought a new Dodge Charger. Have you seen it, by the way? It’s awesome…”

“WHY did you buy that car?” Tyler asked.

“Why? Because I need a car to get to work…”

“Why did YOU buy that car?” Tyler asked.

“Me? Who else would drive it?"

“Why did you BUY that car?” Tyler asked.

“I am getting really confused.”

“Why did you buy THAT car?” Tyler asked.

“Now you’re starting to scare me.”

“Why did you buy that CAR?” Tyler asked.

“What am I supposed to do, ride a bike?”

Tyler looked at his watch. “When you have the answer to all of those questions, you’ll have the answer to your problem. Let’s get together for breakfast tomorrow and see what you come up with.”

Wednesday, February 15, 2012

The 'Five Hows' of Sales

“Mr. Gitou, my team worked really hard on this proposal,” said Verdi. “It was a huge disappointment when the client chose our competitor. But our team did really well going from last place to second. Do you really think we could have known we were going to lose before we made our proposal?”

“Yes, Verdi, I do,” Tyler Gitou said. “As I mentioned last time, being told you finished in second is meaningless if in the end you don’t get any business. Second place is last.”

“I get it,” Verdi said. “So help me understand how I predict in advance the outcome of a selection process involving multiple bidders, multiple decision makers and millions of dollars at stake.”

“It requires detailed analysis, Verdi. But a great way to start that analysis is by asking the ‘Five Hows’. If you don’t know the answers to the ‘Five Hows’ it is not likely you will make a sale.”

Verdi pulled out a pad and a pen. “OK, Deal Whisperer, let’s hear the ‘Five Hows’.”

Tyler laughed. “I appreciate your enthusiasm, Verdi. The ‘Five Hows’ are:
1. How does the client buy?
2. How does the client decide?
3. How else can the client achieve its goals?
4. How can we compete?
5. How can we win?

“Let’s start with the first,” Tyler said. “‘How does the client buy?’ This is a question about the buying and contracting process. Who runs that process? Is it procurement? Do individual executives have the authority to buy directly? Do those individuals have limitations on the sizes of deals they can commit to? These are all important questions because if you do not understand the process, you don’t know the rules of the game.”

Verdi nodded. “That seems pretty logical.”

Tyler continued. “The second is ‘How does the client decide?’ While this is another process question, it is focused on the client’s internal process as to how selection decisions are made. For example, does the client have a culture of consensus? If so, you need to understand who those decision makers are, their relationships and how that consensus decision gets made. If the client has a more entrepreneurial or hierarchical environment, key executives may be the final decision makers without the use of advisory committees. Also, it is important to know whether board approvals are required. You don’t want to hit the end of your sales quarter and discover the board meets in two weeks to approve your deal.”

“Oh, I have lived that nightmare before,” Verdi said.

“The third is ‘How else can the client achieve its goals?’ This is a BATNA question: what alternatives does the client have to signing a contract with you? Can they perform the work you are pitching on their own? Or can a competitor do it just as well as you? This can be a vital question if your solution is unique in its ability to achieve the client’s goals. If the client does not have a strong BATNA, that should influence your negotiation strategy, particularly around legitimacy.

“The fourth is ‘How can we compete?’ This question is tied to BATNA and probes how well we understand the client’s interests or ‘buyer values’. It also asks what levers we can pull to make ourselves more competitive. What are the limits for us on price, scope, risk and time? If we need to move one lever, how will it affect the other levers?”

“That’s a great question,” Verdi said. “Client’s always pull on the ‘price' lever and we often fail to consider the impacts on scope. We are so focused on ‘winning’ that we make price concessions without seeking some form of relief from the client on another lever.”

“Exactly,” Tyler said. “The last one is ‘How can we win?’ This is a complex question that really pulls in the answers to the other four questions and tests the level and quality of relationships with the client. Let’s talk about your last proposal. You said you started in last place and finished in second. Why do you say you were in last place?”

“We really had no track record with this client,” Verdi said. “We were trying to get a foothold against the incumbents.”

“What you’re really saying is you had no relationships with the decision makers,” Tyler said.

“At first,” Verdi said. “But I developed a great relationship with Larry, the head of procurement. In fact, Larry’s sister went to the same college as me and he’s a huge Jets fan like me, so we had a lot in common.”

Tyler nodded. “Building affiliation with a decision maker or influencer is a great way to start. Did Larry trust you? Did he trust your company?”

“I think he trusted me. I mean, I didn’t give him reason to not trust me. But my company? I don’t know.”

“That’s the point when you needed to ask yourself ‘How can we win?’ Not having relationships, not having trust, not knowing the buying process or decision-making process suggests you were destined to lose the bid. Larry may have liked you, but do you think that was enough for Larry to award you with a $5 million project?”

“I see your point,” Verdi said.

“Lesson learned,” Tyler said. “Unless you can use the ‘Five Hows’ to build an aggressive strategy that is going to result in a realistic chance of being chosen, you may be better served spending your sales pursuit budget on other potential clients.”

“Thanks for the advice,” Verdi said. “I never realized how much analysis I should be doing on my sales opportunities.”

“You’re welcome,” Tyler said. “Being a Deal Whisperer means being outcome driven. It’s important to have goals in closing deals with clients. It’s more important to know in advance how those deals will get done.”

Friday, January 20, 2012

No Prize for Second In Sales

Verdi passed by Tyler Gitou’s office looking dejected. Then he passed again. And again. Tyler smiled and got the hint.

“Verdi, is there something you’d like to talk about?” he called out to him.

Verdi came into the office sat down. “I thought you’d never ask. I just needed someone to talk to.”

“What’s the problem?” Tyler asked.

“Well, we lost the deal to a competitor. I just got the call this morning and I’m trying to figure out how to break it to the team. This was a three month process and they all worked so hard on the proposal!”

“That is tough,” Tyler said. “You had a great team too.”

“Oh, the best in the firm!” Verdi said. “In fact, the client even complimented me on their performance. He said when we started we were in last place in a field of five. But our proposal and presentations were so good we jumped the other bids and finished in second.”

“No kidding! What do you get for second place?” Tyler asked.

Verdi was confused. “What do you mean?”

“You said you started in last and finished in second. The bidder who finished in first got the deal. What did you get?”

Verdi was taken aback. “We didn’t get anything.”

“So what’s the difference between finishing in second and finishing last?”

“Well, it shows how well we did.”

“But not well enough to win,” Tyler said. “The only bidder who got anything from the process was the one who finished first. They got the deal. Everyone else got nothing.”

Verdi was getting annoyed. “What’s your point? Our team worked really hard on this.”

“My point is you started in last place and you finished in last place. In sales, there is no such thing as ‘second place’ if the result is no business.”

“But we built our relationship with the client. Before this the client really didn’t know who we were. We had no business. Now we have credibility.”

“Terrific,” Tyler said. “At what cost? How much time and effort did you spend for ‘credibility’ that could have been done with some focused meetings? How many opportunities did you sacrifice elsewhere to focus resources on this deal?”

“You know Mr. Gitou, everything is clearer in hindsight. No disrespect intended but I don’t need a lecture telling me this was a waste of time.”

“I appreciate that, Verdi, and I am sorry if I am being too direct,” Tyler said. “But if you can’t derive some lessons learned from this loss, then it really was a waste of time and money.”

“That’s fair,” Verdi said. “So how do we analyze the loss?”

“Go back to the beginning. How did you make the decision to submit a proposal?”

“I told you,” Verdi said. “This was a new client and we wanted to try and get some business. Our main competitor has been in there for 10 years and controls the infrastructure so we were looking for a way to get into the account.”

“And how else did you qualify the deal?” Tyler asked.

“I don’t understand what you mean.”

“You had a brand new client that your competition owned and you decided to bid? That’s it?”

“We have to start somewhere! Are you saying we should never pursue a deal unless we know we’re going to win?”

“No, I’m saying you shouldn’t pursue a deal unless you know HOW you are going to win. Let’s go over your sales strategy and see if we can figure out what we might do differently next time to get a different outcome.”

Thursday, January 5, 2012

I Hate My Client Part 2

“Mr. Gitou, I am dealing with a difficult CIO at a financial services company. What does a red car or green car have to do with that?” Verdi asked.

“Verdi, what color car do most people drive?” Tyler asked.

“What? I don’t know. I guess I’d say blue.”

“Really? And what color car do you drive?”

Verdi shrugged. “Blue.”

“Perfect,” Tyler said. “You are a great example of Self-Affirmation. You drive a blue car. As a result, your perception is oriented to look for other blue cars because it affirms your decision to buy a blue car. I myself never realized how many people have gray cars until I bought my first gray car.”

“That’s interesting but what does it have to do with my client being a jerk?” Verdi asked.

“When people reach conclusions they often seek out data that support those conclusions,” Tyler said. “They want to confirm they were right. You, for example, notice more blue cars than any other color because it confirms for you that blue was a good choice. Likewise, once you decided that your client was a jerk, which is a difficult conclusion to reach about someone you work with every day, you become oriented to look for jerk-like behavior to confirm you are right.”

“I can see how that would happen,” Verdi said. “And as a result, I probably don’t pay attention to the positive behavior.”

“That’s right. You seek the supporting data for your conclusion and disregard data that might indicate you are wrong. Self-rationalization also plays into the problem. We are always hesitant to admit we are wrong or made a mistake. Until you are willing to really question your own performance and behavior, you will always be content to blame the problem on the client.”

“I am willing to try,” Verdi said. “How do I start the process?”

“Go back to what I said: get out of your red car and get into a green car. The ‘red car’ represents a negative mind set and while you drive that red car you see many more red cars, or more negativity. When you get into a ‘green car’ mentality, or a positive state of mind, you will see more positive actions on the part of your client.”

“So this is about changing my frame of reference with regard to my client?”

“Exactly. Instead of thinking negatively about your relationship, start to focus on the positive aspects of the relationship. Every time you have a negative thought, you are back in the red car. A Deal Whisperer knows that if you change your attitude, you’ll change your relationship. Tell me, what do you like about this client as compared to other ones?”

“Well, he does hire us for a lot of consulting work and appreciates our people,” Verdi said. “But he always challenges me on the rates. He’ll ask for a discount every time.”

“Why does he do that?” Tyler asked.

“Either he perceives we are more expensive than other vendors, or he feels like he has to ‘win’ something.”

“Why don’t you ask?”

Verdi paused. “Ask why he wants a discount?”

“No, ask why he is asking for a discount. The answer is bound to be interesting. Maybe he will say, ‘because I think you are overcharging me compared to other vendors’ and then you can show him how you compare. Or maybe he says, ‘because I think you have room to move’ in which case you can share some of your own business challenges with him and why this is the best price you can offer. Either way it is going to start a dialogue where you are trying to understand his point of view rather than thinking of him as a jerk because he asks for a rate cut.”

Verdi nodded. “That’s a good suggestion. Thanks Mr. Gitou.” Verdi stood and was about to leave, and then stopped. “By the way, did you ever think that maybe the reason I see more blue cars is because blue is the most popular color?”

Tyler laughed. “It’s white. Blue is the sixth most popular.”