Today’s post is by Richard Barkey, founder and CEO of Selling Power Top 20 training company Imparta. Richard is an expert in sales, negotiation, leadership, and account management, and is a sought-after keynote speaker who has run Webinars for more than 15,000 sales leaders and professionals since the beginning of the pandemic. Connect with him on LinkedIn.
In the middle of a crisis, should you add training to an already-heavy sales workload?
I’m not impartial, because I run a training company. But I can tell you that, for my team, the answer is emphatically yes. New buying behaviors are creating intense new sales challenges around the whole buying cycle, and salespeople are busy precisely because they are fighting fires they are not fully equipped to put out.
Let’s take a couple examples.
Dealing with Requests for Price Cuts and Extended Payment Terms
Even organizations that have done well through lockdown are limiting budgets and saying no more often, in advance of the likely recession. That has an effect on new deals, but it’s also driving procurement teams to issue repricing letters, and to demand extended payment terms from their existing suppliers.
For a company with a 10 percent net profit margin, an across-the-board 5 percent price cut would slash profits by 50 percent. And, for many organizations, a 5- to 10-day increase in days’ receivable can cut cash headroom in half. So, resisting these pressures is business critical.
The fundamentals of positional negotiation remain unchanged: Power comes from how good your BATNA (best alternative to a negotiated agreement) is, relative to the BATNA your customer enjoys. It’s critical to assess what alternatives they have – and, at a time when supply chains are changing fast, those alternatives may not be as good as they were. These requests are often sent out as blanket emails, and procurement only expects 60-70 percent compliance.
On its own, though, positional negotiation can destroy trust. Salespeople also need to create value for both sides through principled, insight-based trading. Give things one side cares about more than the other, and get things where the reverse is true. The pandemic has created new opportunities to do this, because those priorities are being driven by new needs, new decision priorities, and new risks.
You can see more details on our Website.
Unlocking Stalled Deals
Your customers are on a journey – from their initial reaction to the crisis, through a stage of brutal prioritization, to adapting to the current normal, to planning to take advantage of the changed environment, and finally toward recovery. If you’re selling to a customer who is still at the start of that journey, you may well struggle to get much traction. But, once an organization has started to adapt, you can unlock stalled deals.
However, to do so, your teams need to understand the psychology of how decisions are being made right now. Daniel Kahneman, the Nobel Prize-winning psychologist, developed a theory that we have two systems of thinking: System 2 (the conscious, reasoning self) and System 1 (the faster, more intuitive thinking that actually governs much of what we do – but calls on System 2 when it needs help).
At times of stress like a pandemic or global recession, decision makers (even very senior ones) use System 1 thinking even more than usual. If we try to influence them using only System 2 thinking (facts, figures, and logical arguments), we may fail to achieve our goals. We also need to understand and work with their intuitive decision making, with all its flaws.
One example of this is loss aversion. Buyers make decisions with an eye toward avoiding a loss two to four times more often than they do to achieve a gain. So, we need to frame deals in those terms, and to contrast the pain of not acting directly with a compelling vision of the future.
Equally, research shows that buyers are averse to being given a single option. You can drive successful outcomes by offering at least two choices as a way forward, even if there was a single solution on the table before.
You’ll find more insight here into how to unlock deals.
These are just two examples of the business-critical issues your sales teams face right now. Across a wide range of companies and sectors, we’ve identified a total of 12 common ones, from mastering virtual presence to virtual sales management.
We’ve created business-critical interventions for all of them to help you address these very current challenges. How many of these do you recognize?