Rainmaker Handbook Sales Negotiation Selling 166p

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Copyright 2007 by Richard C. Wilson All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means without permission by the author.
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Dedication
I dedicate this book to my parents Tom and Sue Wilson.
Introduction
You might have read the 1st edition of Rainmaker. It was printed in hardback in included information on Game Theory as well as extra business examples and a complete dictionary of sales and game theory terms. I have decided to create this Rainmaker handbook to concentrate on communicating only the real meat of each issue discussed. Live as if you were to die tomorrow. Learn as if you were to live forever. Mahatma Gandhi Relationships drive business. Everyone sells and negotiates ideas, products and services on a daily basis. Sales responsibilities are moving more from one-stop sales calls to consultative or relationshipbased sales processes. This shift and other fads and trends have been taken into consideration while writing this book, and the lessons contained within are mostly targeted towards those in investment marketing and sales positions. The three largest influences that led to the writing of this book include my experience running an online textbook business, best practices and models from Thomas D. Wilson & Associates, and over 200 Harvard Business Review articles. The three most influential academic influences on my life and this book have been Dr. Jonathon King from Oregon State University, and Dr. Bharam Adrangi and Dr. Robert Peterson from the University of Portland. The About the Author section is at the back of this book. My contact details are always on www.RichardCWilson.com.
Table of Contents
Chapter 1: Stimulating Growth 1 Chapter 2: Relationship Cultivation 9 Chapter 3: Investment Sales Toolbox 19 Chapter 4: Sales Team Develop Chapter 6: Leading Edge Practices 67 Chapter 7: International Sales Expansion 79 Chapter 8: Sales Ethics 101 Chapter 10: Networking 501 106 Chapter 10: Negotiation Tools 111 Chapter 11: International Negotiation 126 Chapter 12: Competitive Intelligence 146 Conclusion 153 About the Author 156
Chapter 1:
Stimulating Growth
selling is the process of moving goods and services from the hands of those who produce them into the hands of those who benefit most from their use Hopkins (Selling for Dummies page 9)
I'm a believer in momentum. - Lance Armstrong
People love to buy, but they hate to feel like theyve been sold. - Jeffrey Gitomer
The Investment Sales Cycle Selling involves person-person communication with a prospect. It is a process of developing relationship; discovering needs; matching the appropriate products with these needs; and communicating benefits through informing, reminding or persuading. (1) A 16 century religious group, in instructing its field men in the art of making converts used this pattern: 1. 2. 3. 4. 5. Make contact Gain confidence Establish conviction Gain conversion Work for continuance (2)
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After over 500 years, the process of convincing others to buy something has remained the same. Another version of the sales cycle is presented within Percy Whitings 5 Great Rules of Sales. He describes the five stages to each sales engagement; attention, interest, conviction, desire, and close. Most sales processes also known as cycles, go through each of these stages although advertising sometimes assists a sales person with the first few stages of the process. 1. Attention You must get your customers attention. If you do not stand out, you have struck out on your whole sales process. 2. Interest You must quickly gain your customers interest. If someone is interested in your product or service, they will gladly listen to your sales pitch.
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3. Conviction The next step is convincing the prospect that it would be wise for them to purchase your product. 4. Desire- After convincing someone that your product is great, you must make them desire ownership of it. 5. Close A customer can experience all of the above and not purchase a product or service. You have to close the sale to make it happen. (3) *For another version of the sales cycle used for relationship cultivation efforts see the 6 Is model in Chapter 2. Buyers typically want to deal with sales people who: Are their friends Are honest Understand business trends and their specific company Provide advice during the decision process around the sale Present a good professional image and friendly personality Help the buyer find solutions to real problems
To begin working on your sales development program, you must know some basic elements of what you would like to achieve. Work with your sales team to answer the following questions: How are you going to achieve your goals by promoting the benefits your company provides to customers? What are the true identifying characteristics of your business? What would you like them to be? Who is your target market? What is your niche within that market? What marketing weapons will you use? What is your marketing budget? Why?
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Unless you love everybody, you can't sell anybody. - Dicky Fox (from the movie "Jerry Maguire") Knowing your customer is as important, if not more important than knowing your own companys goals. Your customers are the core reason for your existence and the more familiar you are with their needs and pains, the better you can serve them. Out of the world of consumers, some people are your customers, while others are not. Within your group of customers, some are highly profitable to serve, while others might be costly to maintain. How much are each of your customers worth? Over their lifetime of commitment, what is their value to your business? How much does it cost to obtain those customers? If you do not know these numbers or know which customers are the most and least valuable or expensive to obtain or maintain, you have some homework to do. These numbers are vital to making your sales force more efficient, and your company more profitable. Figure out how you can focus your resources on the most profitable types of clients, and discern why they are so profitable. Use this to build a new sales approach that targets these clients. The fruits of life fall into the hands of those who climb the tree and pick them. - Anonymous Everything comes to those who hustle while they wait. The secret to patience is always having something to keep you busy. In other words, you must have enough irons in the fire that you will always have ongoing projects, while you are simultaneously scouting potential
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clients and managing current clients. Most Senior Vice Presidents within professional service firms should be spending 70% of their time on managing clients and 30% on obtaining new ones. If you are the principal of a firm and you are billing 20 days a month, you are probably falling behind on sales. Sometimes your second or third project at a firm will not come immediately after the first. Stay in touch; invite your contacts to conferences and client gatherings. If they were satisfied with your work, and are open to staying in touch, you will realize the rewards for the management of the relationship. When you start a project, actively note what solutions you might be able to provide the client in the future. Specifically, it is important to: Assure the client of their decision to hire you Constantly over deliver and make them feel like they got a great return on their money. Constantly manage change and project scope. Develop relationships using the 6 Is model described in Chapter 2.
Until you have over delivered on what a client has already hired you to do, you have not earned the right to sell them additional work. The best sales teams sell through execution, and position themselves to be the next obvious choice when the client is ready to bring somebody on. Take note of what types of vitamins or painkillers you can provide, but do not freely offer to perform this work or submit unsolicited proposals for projects. Instead, focus on building respect, trust, and confidence in your teams abilities and the work will flow from there. Any selling involved in a professional service has just begun when the contract is signed. All that has been sold up to that time is a promise. The major sale comes in delivering on that promise.
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- Warren J. Wittreich Part of executing on the quality of the product or service you have already sold, is making sure the client is happy. Even when you are wrapping up a project with a client that you will probably never do business with again it is very important to keep them happy. Why should you make sure your customer is always happy? Ninety-six percent of dissatisfied customers never complain directly to the salesperson. But 91 percent of those unhappy customers will not buy from that salesperson again. The average unhappy customer will talk to at least 9 people about their negative experience. While 13% of those unhappy customers will tell over twenty other people what happened. (4)
Your most unhappy customers are your greatest source of learning. - Bill Gates What should you do if you already have a group of unhappy customers? Use it as a learning opportunity. Understand if the customers that are unhappy are profitable and worth keeping, and if they prove to be so use the situation as a chance to show them that you care about their business. Find out why the customers are unhappy, and experiment with different methods of both preventing unhappy customers in the future and winning back old customers. Tinkering with these strategies can help you create and maintain more long-term relationships. If you're not making mistakes, then you're not doing anything.
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- John Wooden (Hall of Fame basketball coach for UCLA) Dr. Robert Peterson, a business professor at the University of Portland, has developed a list of five distinct ways that you can build credibility with your customers. Presenting yourself in a way that shows your strengths in each one of these five pillars of selling will help build rapport, trust, and long-term relationships. 1. Expertise: Selling skills; knowledge of the customers products, and industry, as well as your own. 2. Contribution: Ability to assist the customer in reaching their bottom-line goals and objectives. 3. Representation: Commitment to the customers interests; ability to provide objective advice, counsel, and assistance. 4. Trustworthiness: Honesty, reliability, consistency in actions, and overall ethics 5. Compatibility: Match between representatives interaction styles and the personality traits of the customer. (5)
Evaluate every presentation you make to ensure that you are convincing the client or potential client why you are trustworthy, knowledgeable, compatible, etc. Covering all of these areas within each presentation will help you cover the pillars of credibility that are most important to them. Summary Whitings five stages of selling are attention, interest, conviction, desire, and close. Knowing your customer is as important, if not more important than knowing your own companys goals. Figure out how you can focus your resources on the most profitable types of clients
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you serve and discern what makes them so profitable in the first place. Until you have over-delivered on what a client has already hired you to do, you have not earned the right to sell to them again. Everything comes to those who hustle while they wait.
References 1. Manning & Reece Selling Today p. 6 2. Kurzrock The Sales Strategist page vii 3. Whiting, Percy, The 5 Great Rules of Selling Copyright 1957 McGraw-Hill Book Company. 4. White House Office of Consumer Affairs Study 1985. 5. Peterson, Dr. Robert and Lucas 5 pillars of selling credibility Copyright 2001 University of Portland.
C h a p t e r 2 : C u l t i v a t i o n
R e l a t i o n s h i p
Hard work made it easy. That is my secret. That is why I win. - Nadia Comaneci (Olympian Won 6 gold medals during the winter Olympics of 76)
People buy for their own reasons, not for yours. - Author Unkown
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The 6 Is of Relationship Cultivation It takes as much energy to wish as it does to plan. - Eleanor Roosevelt (U.S. First Lady) Relationships are at the core of everything in business. The smarter you work and more efficiently you use your connections, the more successful you will be. You may use the model described in this chapter to cultivate new partners, employees, and clients. It helps segment the relationship development process into distinct steps that ensure a thorough understanding of your customer before you ask for the sale. There are three ways ramp up your sales development program: 1. Solicit new clients 2. Increase the frequency of client purchases 3. Raise the average purchase of each client (1) Using the 6 Is model you will be able to do all three as it focuses on the relationship and solving each customers real problems. This model has been used to raise hundreds of millions of dollars in the fundraising field, and the core ideas behind it have been around for generations within virtually ever industry. There are two core sales tasks to manage
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Understanding the customers situation Adapting your solution to their needs (2)
Use this model to help improve these two core tasks and as a relationship cultivation roadmap to train young sales professionals or remind senior executives of what steps are necessary to develop strong longterm sales relationships. The model serves as an hourly or weekly tool, or something that you use as a theoretically base while creating your sales strategy. The 6 Is of Relationship Cultivation
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1) Identify & Qualify Market Research Potential Client Identification Internal Knowledge Assessment Due Diligence Qualification This part of the process does not involve any client contact. Extensive client identification should be conducted upfront using past success factors. If this type of knowledge bank does not exist, create one. 2) Introduce & Interact Initial email or phone call, create awareness of what you do Educate your potential customers. i. Send the contact articles or a book written by a third party around an area of service that you offer. Invite them to a seminar, free training session, or send them a value added newsletter to help get your foot in the door. Ask questions but more importantly, listen. Build rapport. During this stage of the 6 Is take your selling hat off and start getting a feel for who you are working with. Interact with them and find common ground that you can work use later, noting their hot buttons and sore points. 3) Interests & Needs (listen)
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Listen to client, do further research, identify areas of service for later. Qualify (the opportunity for both parties). Discover the clients hot buttons (WIIFM What is In It For Me). Listen for both personal and organizational details such as birthdays, personality differences, past project successes or failures, and issues related to corporate politics. Schedule a quarterly breakfast or lunch with your primary contact to discuss the service you are providing and gain the opportunity to listen to their current needs. Use the list of 20 Listening Questions from Chapter 9 on Connecting with Clients. This is the most important step of this relationship cultivation process. At this point you must listen closely to what is and IS NOT being said and practice Stephen Coveys method of understanding before being understood. 4) Inform & Deepen Understanding Confirm your understanding and articulate the specific information relating to the customers business, establishing trust. Develop credibility and a valuable long-term relationship. Present yourself using Petersons 5 Pillars of Credibility discussed in Chapter 1. Now that you have pre-selected this contact, gained rapport, and listened to their needs, inform them of the value you could deliver. Customize your approach based on everything you know. 5) Involve & Acknowledge
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Confirm your understanding. Work together to create a win/win plan for both organizations. Allow the client to create or think of the final solution first, or gain their approval along the way to build their level of understanding and final buy-in. This step represents the point where the client is processing your idea, and you are engaged in selling the details of it. You confirm your understanding of their problem and try to create solutions that fulfill all of the interests involved from both parties. 6) Invest Resources & Execute the sale Move forward with action items for the partnership. Send the client important referrals and ask for referrals. Evaluate responses & results (positive/ negative). Affirm decisions (minimize buyers remorse). Place an initial phone call to confirm all of the project objectives and future steps that should be taken into consideration. Seek additional opportunities to serve & sell this client. Following the first five steps of this process makes this last one much easier. Move forward with the agreement, formalize it, and conduct your post-agreement evaluation of the process and lessons learned. Take monthly or quarterly pulse check as to the level of value each of your clients receives and perceives. Conduct either formal or informal feedback surveys or meetings to learn how your firm can serve its clients better and improve the specific relationship at hand.
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Vision without execution is a hallucination. Thomas Edison Your 6 Is Pipeline To improve your sales program you will need to first assess its current health and identify areas of improvement. Start this process by reviewing the latest quarterly performance results, and identify what the inputs were that drove those results. Identify how much revenue was realized, the number of new customers brought on, the number of units or projects sold, and the total growth over the same quarter of last year. Performance should be transparent and owned by the whole team, in spirit, and compensation. It is possible to have outstanding sales results while spending too much to obtain customers or draining the employees working on new clients. Make sure you are cognizant of the number of inputs being invested throughout the process. How many sales solicitation, public relations, presentations and follow up phone calls were made last quarter? How many calls need to be made tomorrow and every business day to improve that number for next quarter? Identify where your sales team has been effective in cultivating relationships and how it might move forward to ensure the cycling of clients in a way that will be resource efficient for the firm. The 6 Is tool will help you keep a constant view of your overall sales activities and help ensure a constant stream of new clients. If you download the 6 Is model, you can use it to watch clients move through the 6 Is pipeline and it will provide you with tips on how to move forward at each stage. This is useful for cold calling type sales, or relationship-based selling initiatives. Sales Knowledge Management
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Most companies do not utilize their employees to their full potential. One great way to harness their abilities is by mobilizing them through small sales-focused groups. This can serve as an extra source of income, inexpensively market your business through the people who know it best, and ensure you are selling the right products at the right places to the right types of customers. Every employee should work within a team where their skills compliment other members abilities, and all personal networks should be sifted for additional partnership and sales opportunities. There are dozens of specific areas that individuals or groups of employees can focus on improving sales including: Formal Client Qualifications Potential Client Identification and Due Diligence First Contact Meetings, Cold Calls, and Networking Sales and Contract Material Creation Internal Knowledge Assessment and Best Practices Analysis of competitor sales initiatives
Once this is complete, work on creating an explicit sales tracking system that rolls up individual efforts into group and department-based performance tracking. This should tie together your long-term sales goals with each weeks new potential client contacts, calendar additions, new customers, current targets, and items to tackle over the following week. The knowledge management system can executed be within a sales program or a simple Excel spreadsheet, and should focus on action items and results. Usually these materials will be most effective while visible to everyone on the sales team. Team and individual compensation should be structured to entice employees to work on the area where their natural strengths will be best utilized.
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Knowing is not enough; we must apply. Willing is not enough; we must do.
- Johann Goethe (German poet) Explicitly developing strategic sales plans, no matter how dynamic the environment, is invaluable to a company seeking extraordinary growth. Without a plan, you will drift from client to client, relying on luck to keep your company moving forward and your resources fully utilized. If you do not have any competition, you have your head in the sand, and you need to redefine your market. If you do not have enough customers, ask yourself, what new niches could we carve out of the market with our current resources? What are the most profitable competitors in the market doing? Now that we have discussed employing the 6 Is client cultivation program it is important to address how it will fit into your overall sales development plan. Success for many companies comes through trying dozens of ideas and keeping what works. While fighting off competition is about market and business intelligence, agility, and dynamic strategic plans. It is not the fastest, biggest, or strongest that excel, but the most adaptive. The 6Is of Relationship Cultivation model can you help you competitively adapt to market dynamics and change in customer preferences. Summary Three ways to ramp up your sales development program 1) Solicit new clients 2) Increase the frequency of client purchases 3) Raise the average purchase of each client Cultivate more major clients using the 6 Is model. The 6 Is are 1) Identify & Qualify 2) Introduce and interact 3) Interests & Needs (Listen) 4) Inform and Deepen Understanding 5) Involve & Acknowledge 6) Invest & Recognize
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Create an explicit sales tracking system that rolls up individual efforts to group and department level cultivation assessments.
References 1. Fifer, Bob, Double Your Profits Copyright 1995 Collins Publishing. 2. Peterson, Dr. Robert PowerPoint University of Portland Professor of Sales & Negotiation. 3. Smith, Buck, Moves Management This model was adapted from Thomas D. Wilsons 6 Is of Fundraising.
Chapter 3: Investment Sales Toolbox Models & Strategies

There's a way to do it better -- find it. - Thomas Edison
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This chapter will help you use tools around the 6 Is of Relationship Cultivation model described in Chapter 2. There is a saying that goes, If the only tool you have is hammer, everything looks like a nail. Not every problem is a nail, so this section of the book is a sales toolbox with several models and practical applications to help you improve your sales development program. It focuses around improving the effectiveness of your sales force. Investment Sales Tool #1: Sales Systems Your sales effectiveness can be thought of as a system affected by many variables, and made up by of several pieces. These pieces can all be improved to enhance the performance of the whole. It is easy to compartmentalize these different areas and try to maximize each without paying attention to the whole system. This would be a mistake, as a decision for any one area should compliment the others, and not get in the way of their implementation. The following four areas of your business are all interconnected: Strategies: Define how you will meet your goals and vision for the company or sales division. What methods and paths of action are you going to employ and follow to complete your mission? Selling Skills: What capabilities do your individual sales employees or groups have that can be used to find new solutions or ways to sell more business? Know yourself. Leverage what you have into a winning team and you will attract A players down the road.
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Resources & Support: What resources do you have in place that help members of your team communicate and share knowledge? Ensure that everyone is held accountable, and that management is truly a supporter and cheerleader rather then a slave driver or micro-manager. Focus on coaching, training, principal based leadership, and performance-based rewards. Systems: What systems are you using to combine your skills and resources into core competencies that your firm will use to execute its sales strategy?
Opportunities multiply as they are seized. - Sun Tzu Investment Sales Tool #2: Strategic Tools There are a number of strategic tools your firm can use to solicit new sales. These include: Strategic Philanthropy Public Speaking Article and Book Publication Satisfied Clients Internet related marketing Alliances and Partnerships Advertising Surveys and Research Written and broadcasted publicity management When you are sending out press releases, make sure you have captured some sort of vital industry shifting news that people need to read about. Forget about selling and talking about yourself or you might kill your chances of getting any publicity. Focus on information that will affect the targeted audience. You want to project an image of
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being well informed and having valuable insights, not as a selfpromoter or a group that is desperate for new clients. Remember the importance of relationships while seeking to get a story published. Who knows someone within the organization whom you would like to connect with? Who should be cultivating these relationships within your organization? Destiny is not a matter of chance, it's a matter of choice; it's not a thing to be waited for, but a thing to be achieved.
- William Jennings Bryan (Secretary of State) Investment Sales Tool #3: Four Strategic Rules to Create Excessive Profits Rule #1: Do Things Today Focus on quarterly goals, not yearly. Move fast. Execute. How are you investing your time, and what is the hurdle rate that you employ when gauging the return on an activity? Always ask yourself, what is the best use of my time right now? Time is money. Rule #2: Strategically Use Time and Money Strategic time and money management involves investing resources in ways that promote your businesss competitive advantage and helps develop new or existing core competencies. Cut non-strategic costs to the bone, and outspend the competition on strategic costs. Do the same for time spent on strategic vs. non-strategic projects or initiatives. Constantly re-invest excess profits in areas that produce the largest strategic returns. Overhead is not an investment! The enjoyment of the overhead perks or norms that employees take for granted should
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be overshadowed by the greater financial rewards for those same individuals and other shareholders. (1) Rule #3: Never Compete on Price Focus on what the customer gets out of what you are selling, not what you put into it (Benefits vs. Features). Competitive, but not lower prices. Over-delivery. Robust advertising. A high level of quality and service. Challenge and change your internal metrics or the assumptions that your business runs on. (2)
Rule #4: Carefully Differentiate Ensure that your company has a unique offering that customers are willing to pay for. In the March 2005 Harvard Business Review article Market Busting, Rita McGrath and Ian MacMillan discuss how many companies have successfully changed themselves to take market share and increase their sales effectiveness. The areas they suggest considering when deciding how to differentiate include: Transforming your customers experience. Transforming your offerings. Redefining your businesss profit drivers. Anticipating and exploiting industry changes. Creating a radically new offering. (3)
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believe that something inside them was superior to circumstances. - John Barton Investment Sales Tool #4: The 4-Square Planning Model Every day when you begin working on your sales program, draw four boxes on a piece of paper. In the top box, write what you want to accomplish over the next year. In the next box, write what you would like to accomplish this quarter. In the third box, describe in more detail would you would like to accomplish over the next week. In the last box, write down what you will have to accomplish today to meet all of those objectives. Directly tie this to do list with your long term goals and then execute it. This exercise takes less then 2 minutes and allows you to really focus on what is crucial for moving forward towards your definition of success. Example: This Year Sell $3M in new business. Grow the sales team by three people.
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This Month Close four new accounts worth at least $50,000 each. Conduct a needs assessment meeting to determine what type of sales person we should hunt down. This Week Sell one account worth at least $25,000. Arrange for an inexpensive and timely Myers-Briggs psychological test for your sales team.
Todays To Do List Call back Clients A,B,C. Schedule sales interviews with companies X, Y, Z. Research Myers-Briggs tests online. Investment Sales Tool #5: Top Five Sales Objections
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There are hundreds of excuses as to why someone would be indecisive when making a decision about a purchase. You should be cognizant of different excuses when trying to overcome them to make a sale. The following is a list of the five most common reasons for a customer to be indecisive: 1) They may lack financial or personnel resources to purchase or make use of the offering. 2) They may believe that it is politically safer to take no action then risk resources or a reputation on a seemingly risky or unconventional purchase or investment in service. 3) There may be political issues between internal business units or managers. 4) There may be an absence of any sense of urgency in moving the sale forward. 5) There maybe a lack of clear superior value when your offering is compared to a competitors offer. Review this list and note which objections come up most often during your sales pitch. What others variations on these objections do you often see? Come up with at least two responses to each of these objections based on the rapport and type of product being sold to the customer. (4) Investment Sales Tool #6: Request for Proposals Request for Proposals (RFPs) are used internationally to solicit bids on contract, consulting, and government based projects. Most industries have some version of an RFP for on area of business or another. Usually you will be up against 4-10 other companies who are all submitting similar information on the potential project that you are applying to work on for the company releasing the RFP.
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While responding to an RFP or submitting an informal proposal to a potential client, it is helpful to have a guide for your response. If you are not told exactly how to respond to a RFP you can follow this format: Introduction o Opening email or cover letter o Title page o Table of Contents o Executive Summary Confirm your understanding of the RFP. Review your planned solution. Match your solution with their needs. Assure them of your competence and superior value, ROI (Return on Investment). Your Prescribed Solution o Details of the solution Pricing/ROI. Differentiation of your solution. o Work Details Microsoft Project Schedule. Implementation team, resumes, references. Case studies, differentiation. Subcontractors. o Objective Compliance Discuss the value they will realize for their investment. Compile a detailed report on how you will fulfill their needs. Tool #7: ABCs of Sales Campaigns The following model is a tool for efficiently moving your company through the four stages of a sales campaign. Use this to ensure your company conducts the proper preparation while still focusing on what is going to give you the greatest return for your time.
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ABCs of Sales Campaigns
Initiation: Articulate goals, objectives, and the companys sales mission.
Market testing: Test your product or service offering, pricing strategy, and internal knowledge collection on the execution or possible improvement of the product or service.
Sales Campaign Preparation:
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Create all of the potential client identification lists, sales materials, strategic plan, contracts, follow-up notes, and thank-you emails. The first step within the 6 Is would be done during this stage. Sell everyone on the sales campaign before it begins. Gather three customer references for each type of service or product you offer, and place them within your marketing materials. Compose two solid responses to each of your top three sales objections. Define at least three points of valuable differentiation from your competitors. Create in-depth profiles of your top 3 competitors for each product or service.
Execution Stage: Focus on maximizing your effectiveness during the money hours of the day (9-5pm). Develop relationships and focus on daily results and actions. The planning is over, game on. This is the point at which you realize the value of all the previous work you have done. 6 Is steps 2-6 would all occur during this execution stage (5)
Your company might move through this cycle several times for different divisions or market needs. This model suggests spending more time upfront then most sales models, which in turn provides a strong foundation and framework for extraordinary levels of sales. Set aside time every day for client cultivation and sales planning objectives, regardless of the number of fires raging at the office. The plan should simple and flexible; you want to spend a lot of time selling not managing your efforts to sell. A tenacious, systematic, and customer focused approach will lead to a full pipeline of clients. Focus on results and solving real problems, listen and then provide what was
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asked for. While managing your personal selling time, create urgency each day, setting goals for the total number of outbound sales calls, sales introductions, and signed contracts per week. The next short section of this chapter can help you improve the use of your selling time. It covers the use of decision-making strategies to enforce a common productive cultural that is open and results-oriented. Decision Making Systems In an article entitled Great Escapes in Fortune magazine, Michael and Jerry Useem refer to tools that can help you effectively manage decision-making processes. These tools are applicable to managing yourself or your sales team and should assist you in analyzing your own decision-making systems or processes. Burn the Boat "No matter how far you've gone down the wrong road, turn back." - Turkish proverb In the 1960s, Symour Cray ran two unrelated businesses, selling both sailboats and supercomputers. His supercomputers were unique having several designed-in extras such as decorative fountains. While he spent much time customizing his supercomputers, he realized that they would be obsolescent within a year or two. To help remind himself of this reality, and drive the point home to his team, he builds a beautiful sailboat every spring and burns it the following fall. It can be very hard to throw away something one has invested time, money, or personal image into. In the 1920s, Henry Ford wrote, My
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advice to young men is to be ready to revise any system, scrap any methods, and abandon any theory if the success of the job demands it. Ford followed this strategy himself until sticking to his own original strategy lead to his companys decline and General Motors jump in market share. What is your sales team spending time on that is no longer effective? What are you still doing in the name of tradition or because it was profitable yesterday? Ensure that you are burning your boat every fall and not proclaiming innovation while resting on laurels of past success, as was in the case of Henry Ford. I try to learn from the past, but I plan for the future by focusing exclusively on the present. - Donald Trump Voice Questions Good managers want employees to voice their opinions. Managing conflicting ideas is how you extract value out of a diverse sales or management team. If you walk into a room as a senior person and innocently say, Heres what Im thinking about this, youve already skewed peoples thinking, says Marine Gen. Peter Pace, who was nominated to become the next chairman of the Joint Chiefs of Staff. He recommends to start with a question and dont voice an opinion. This way no one can line up behind you reinforcing your original idea instead of stating his or her own perspective on the situation. If you are looking for answers, ask the question, advises Pace, and you ought to be the first person to self-critique. Be cognizant of how your own views are affecting the actions of your teammates. Strive towards excellence in decision-making and execution, not unanimous agreement on all decisions. Let the battle rage
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Similar to the lesson suggested above, another tried and true value of competitive competencies is letting conflicts work themselves out. Arguments based on principles of the decision, and not political camps are healthy and push everyone to analyze the true merits of each case. In the 1980s, Gillette experienced some beneficial internal conflicts while debating whether to meet Bic, Inc. in the market with cheap plastic razors or invest millions in developing a higher quality metal version. CEO Colman Mockler let the divisions fight it out. For nearly two years, Mockler played a neutral position until finally declaring the new metal razor camp the winner. Educate your instincts Should you trust your gut? That depends on what you are made of. What experience and education have you been exposed to that makes your instincts more robust? The instincts of a veteran police officer have been shaped by years of experience, so when his gut tells him that something is wrong it is usually right. Research shows that others with less experience in similar situations perform poorly because the unconscious intuitions have not been developed. Your mind calls upon hundreds of resources every minute that you are not even aware of. In Malcolm Gladwells book Blink he refers to thin slicing. This is his terminology for the second analysis of situations or ideas that we conduct while making a decision. If you or the person making the decision is cognizant of the important variables at hand and has made similar decisions their gut reaction should probably be trusted. Keep this in mind when managing your sales team. What sales and industry-based newsletters have your employees subscribed too? What books do you recommend to them and how can you support further education on their part? The minute you have to manage anyone, you
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have made a poor hiring decision. Identify people with great instincts, a thirst for knowledge, and a hunger for learning. (6) Summary To reach optimal sales effectiveness you should focus on the 4 levers, 1) strategies 2) selling skills 3) resources and support 4) systems. Remember the 4 rules of excessive profits 1) Do things now, today. 2) utilize strategic cost and time consumption 3) Never compete on price 4) Carefully differentiate. Start everyday with the 4-Square Planning Model. Use the ABCs of Selling, working through all of the stages including; initiation, market testing, sales campaign preparation, and execution. Effectively manage decision making use the Great Escapes prescribed by Michaela and Jerry Useem. Educate your instincts.
References 1. Fifer, Bob Double Your Profits Copyright 1995 Collins Publishing. 2. Guerilla Consulting Newsletter Copyright 2005 http://guerrillaconsulting.com. 3. Mcgrath, Rita and Macmillan, Ian, Marketbusters 40 Strategic Moves that Drive Exceptional Business Growth. Copyright 2005 Harvard Business School Press. 4. Fifer, Bob Double Your Profits Copyright 1995 Collins Publishing. 5. Wilson, Thomas The ABCs of Fundraising, Copyright 2005. th 6. June 27 Fortune Magazine page 97-102 Great Escapes Time, Inc. Copyright 2005 Volume 151 No. 13.
Chapter 4: Sales Team Development

The task of a leader is to get his people from where they are to where they have not been. - Henry Kissinger (Secretary of State)
For a man to achieve all that is demanded of him he must regard himself as greater than he is. - Johann Goethe (German poet)
My philosophy of life is that if we make up our minds what we are going to make of our lives, then work hard toward that goal, we never lose... - Ronald Reagan (40th President of the U.S.)
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If your sales efforts are successful, it is likely that you will eventually need to expand the capabilities and size of your sales team. Managing a team of sales people, especially young professionals, involves an additional set of skills on top of managing the sales process itself. The first step in creating a stellar sales team is hiring the right people. Acknowledge and take notes of who possesses the most skills and experience but hire talented, energetic super-connectors, rather than the person with the checklist of experience. A well-known hedge fund manager once told me that he only hires people who are hungry, humble, and smart. If you are going to employee someone for the long-haul, hire people based primarily on traits that you cannot teach or instill within someone through training. Your best employees will have to be ambitious and hungry enough to overcome obstacles and break sales quotas. Conflict is inevitable. When new sales professionals join your team, bring their past knowledge to the table, and combine their old ways with your new ones. Do not structure the team or put policies in place that limit all conflict, as this decreases the value of their experiences. Every idea should be constantly challenged, and if you have hired someone who has been successful in your field in the past, their approach to the sales process will be different in at least one material way. Cultivate these differences into a more robust team, and create a sales approach that draws off what has been successful within other organizations. If it
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does not work well today, cut it off. If it is producing high returns, feed it more energy and resources. Ensure that your sales team knows what is expected of them. You should aspire to know what each employees passion is. Have them create a personal career plan that integrates their current responsibilities and goals within your company with their long-term goals. Coach them to include specific periods, dollar amounts, and targeted selfdevelopment investments. Try to understand why each person comes to work everyday, what his or her goals are, and what their dream job description would be. Once their plan is complete, have them create a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of their own professional life, and create a personal mission statement to work off of. Be creative and draw off each employees strengths while challenging them to use their personal strengths to accomplish more then they ever have before. Differences of trait and talent are like blood types: they cut across the superficial variations of race, sex, and age and capture each persons uniqueness. To really be a great manager, you need to know each team members strengths, the triggers that activate those strengths, and how they learn. Great sales managers discover, develop, and celebrate what is different about each person and develops roles around the capabilities and competencies of the team and organization. You must learn as much about each individual team member as possible. Give them Myers-Briggs (personality) tests, invite them out to group and one-on-one lunches when possible, and pick their brain for clues about what makes them tick. Find out what their best and worst days at work have been and why. (1) Congratulate yourself when you reach that degree of wisdom which prompts you to see less of the weaknesses of others and more of your own, for you will then be walking in the company of the really great. Author Unknown
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Contact Management It is a rare situation when you will be working as a sales person by yourself. Contact Management is crucial to managing your own meeting records and transmitting knowledge to others such as partners, clients, or members of your sales team. After each sales presentation or phone conversation with a potential client, create a contact report of the event stating the purpose of your conversation, why you talked, what you learned, and what the next action items are moving forward. After it has been created, the report should be stored within a central depository and the necessary people should be notified that one has been created for that specific client. A sample contact report is shown below. Name: Chris Wells Name of Contact: Buck Rogers Date: 9/1/05 Method of Communication: Phone Purpose: Check on program approval progress Notes/Results: He was out of the office so I left a message to call one of us later this week.
Taking your Monthly Sales Pulse
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Even after you have done a great job of constructing your dream team sales force, you will still need to manage their work efforts to balance their strengths and weaknesses, while aligning their goals with your overall department and companys mission and goals. Create forms to analyze the work behaviors and actions of everyone on your team. Focus on getting your employees fired up, motivated to learn from their mistakes, while using their strengths to accomplish more as a team. Try to mold that approach into positive criticism while giving them feedback on their sales process results over the past time period. Every time you meet with a customer, figure out what the best and worst deal that you could get from them. This will help you determine if it is still worth the investment of your time. Design the way you ask for each sale and client selection priorities around both the best and worst situations. Managing International Sales People Groups and teams are used in different ways, with unique characteristics in different regions around the world. Many groups and teams whether they are organized in the traditional sense or in a virtual way, will be multicultural and/or multinational. This poses the complicated task of assessing what cultures are represented on your team and how these will affect management practices and sales performance. A more collectivistic culture is more group focused, and the dynamics of how a group works within the whole of the organization will be different than you would typically find in the United States. Similar to our previous discussion on personal and experience diversity, differences within your international team or division can be an advantage. Intelligently managed conflict can keep ideas fresh and current with the realities of the market. There is a famous saying in business, If everyone agrees to a proposal right off the bat no one has done their homework. You want different ideas to be worked out while keeping the best aspects of all of them. This is how you can turn diversity into a competitive advantage. Employees from different
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cultures have different perspectives, assumptions and business experiences. Tapping their knowledge and insights adds value and should be sought out. (2) Let us not be blind to our differences but let us also direct attention to our common interest and the means by which those differences can be resolved. John F. Kennedy (38th President of the United States) Most experienced sales people are knowledgeable about their products, customers, and market. Within an international sales position, an employees breadth of experience becomes even more critical because they must be familiar with the cultural nuances of partners and competitors from different countries. This tolerance can make or break a deal. When hiring for an international sales position, a premium should be placed on international sales experience and cultural awareness. Ideally, a sales person should have a solid grasp on the fundamentals of selling practices, your product, the target customers, and the cultural differences between their own country and other areas that they will be selling. Advanced classes on cultural analysis or management or some international experience should be sought out before bringing someone on to an international assignment. (3) Dr. Meckler, a well published cross-cultural management professor at the University of Portland suggests creating a knowledge bank within your company by interviewing all expatriates upon their return, and adapting training policies, personnel selection, and even compensation packages based on the best practices used in other countries. This applied knowledge could lead to more successful expatriate assignments, seasoned managers who stay with your company, and a more robust global presence due to superior management practices. An example of one area that could be analyzed for your companies benefit
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could be the shock cycle experienced by expatriates at your firm.
Culture Shock is the adverse or confused reaction to what is normal behavior. Recently assigned expatriates often experience similar adjustment experiences while adapting to new norms. What might be acceptable in the society a manager grew up in, could be seen as irrational, exotic, or meaningless within a new culture. The following graph shows what the cycle looks like and the average timeframe it takes expatriates to experience the different stages within it. The more an expatriate can learn about or experience what a culture is like, the better. Simply being cognizant of some of the differences and expecting more as you progress through an international assignment can make the adjustment process more manageable. Understanding how diverse cultures have an impact on organizational impact is a critical management skill for managers within multinational corporations. (4) Group incentive plans operate differently in different parts of the world. The primary means of recognized achievement changes from region to region. One example is the use of group incentive plans in the United Sates vs. Hong Kong. Research has shown that Hong Kong employees had stronger beliefs that the required performance targets of the group incentive plan could be achieved and they could receive a payout from the plan. (5) There are many skills that managers need to acquire to take their sales force international. Interpersonal skills may be the most important asset while attempting to learn the idiosyncrasies of a new market. Most studies have shown that performance is based more on who the person is rather than their analytical abilities. Using effective communication and solid relationships to expand into new cultures is a necessity for international expansion. (6) International Development Executives
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Stephen Green, the CEO at HSBC runs a truly international organization employing over 215,000 people across the globe, while operating in five different languages. HSBC has a reputation for developing global leaders. The culture of the company strongly supports international experience to broaden the minds of their employees. Green noted in a recent interview that when making hiring decisions, HSBC does not look so much at what or where people have studied but at their tolerance for change and difference, their ambition, and their view of the world. An effective international manager must have the traits that can not be easily taught to someone. Other leading CEOs have noted that many interviewees may be able to speak three or four languages and have studied cross-cultural management, but have a very narrow view of the world. Many hiring managers are looking for a passion and curiosity about the world, and an attitude of exploration. The company bets on the fact that although their workforce is highly diverse, their common experiences working abroad will bring them together and teach them to cooperate within cultures and groups different from their own. Jeffrey Immelt, CEO of General Electric believes that a good global company must be number one with customers all over the world, it must have products, technologies, and factories for products to be sold around the world, and it must be a global people company. He focuses on obtaining brains and markets to get better every year. He notes in interviews that he spends time tracking his top performing employees, and that he runs the 300,000-person company so they feel like the CEO might stop by at any time. He also supports cross-training and personal network building for everyone in the company, to form informal support systems across the organization. As Immelt puts it, You cant be a lone ranger and also be a global manager. (7) Motivating Your Sales Team
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While establishing objectives for your sales team try to remember the SMART method. Specific Measurable Action Realistic Timebound (8)
In addition to motivating your sales team using your compensation systems and management techniques, I have compiled a list of books and movies that you might want to use or add to your companys employee resource library. Books Think and Grow Rich, Napoleon Hill Maximum Achievement, Brian Tracy The Purpose-Driven Life: What on Earth Am I Here For?, Rick Warren The Other 99%: How to Unlock Your Vast Untapped Potential for Leadership & Life, Robert K. Cooper Mans Search for Meaning, Viktor Emil Frankl Live Your Dreams, Les Brown Failing Forward: How to Make the Most of your Mistakes, John C. Maxwell Dont Sweat The Small Stuff, Richard Carlson Awaken The Giant Within, Anthony Robbins Swim With The Sharks, Harvey Mackay The One Minute Sales Person, Spencer Johnson Over The Top, Zig Zigler Leadership, Rudolph W. Giuliani How to Win Friends and Influence People, Dale Carnegie How I Raised Myself from Failure to Success in Selling, Frank Bettger
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Movies Vision Quest Wall Street Stand By Me Patton Remember the Titans Varsity Blues Rudy The Rookie Gandhi Henry V Friday Night Lights The Family Man Meet Joe Black Alive Ali 8 Mile Braveheart Defending Your Life Forest Gump Gladiator Jerry Maguire Rocky On the Waterfront
Sales Job Interview Questions Why do you like sales? How are you a good sales person? Tell me about your most productive sales day.
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Do you ever attend networking events? Have you ever conducted an informational interview? What parts of the sales process to you thrive off of? What parts of the sales process do you dislike? What sales knowledge, experience, or contacts do you have that would be valuable to this team? Why would you like to sell this product? What have you done outside of formal education in terms of professional development? How many field related books have you read in the past three months? Do you subscribe to any online newsletters or business magazines? Do you have any examples of how you creatively achieved success within a sales position in the past? Describe a situation where you were almost fired at a past job and how you reconciled the situation. What three skills do you think are most important for succeeding in selling this type of product? Describe your experience in lead generation or prospective client research. Describe your experience in the areas of cold calling and initiating contact through email or fax. What is the highest number of sales calls that you have made in one day? How many people have you presented to at one time? Give some examples of how you overcome objections while selling a potential customer. What has been your biggest mistake within a sales position? What have you learned from this? What are your long-term career goals? What are your short-term career goals?
Sales Aptitude Tests
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While sales aptitude tests are a viable option for any organization with a sales division in-house, they are not often used. The three benefits of administrating sales aptitude tests include improving your selection process, aiding supervision and training, and facilitating promotion. There are dozens of tests that have been used, but the most popular ones include: o o o o o Meyers-Briggs Personality Test Otis Self-Administrating Test of Mental Ability Social Intelligence Test, by F. A. Moss, T. Hunt and K. T. Omwake How Perfect is Your Sales Sense, by Canfield Interest Inventory for Sales People, from The Personnel Institute, Inc.
All of these tests tend to agree on traits that described the successful salesperson. The following list of successful salesperson traits is derived from Robert Hilgerts Harvard Business Review article on the use of sales aptitude tests: o Emotional stability: This refers to the ability to take turndowns without losing self-control or getting depressed. Self-sufficiency: A salesman possessing this trait is resourceful in meeting new situations and in attacking problems; he is a person who can work without direction on his own Objective-mindedness: This implies that the salesman has the ability to read events, unaffected by his own action or feelings, and the power to express facts without distortion from personal prejudice or self-interest.
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o Dominance: This is the opposite of submissiveness; a salesman possessing dominance has fighting qualities and has the ability to control and direct interviews. Self-confidence: This is a self-defining term; specifically it means that a person with this trait has the confidence in his own ability to achieve what he undertakes. Social-mixing qualities: These qualities simply show that the person desires and needs human companionship in groups Tact and diplomacy: These two very important qualities indicate that the person has the ability to handle delicate interhuman situations with such smoothness as to instill a maximum of good feeling in others. Sizing up people in situations face to face: This refers to the ability to recognize during the course of an interview, the mental and emotional state of others from what they say, their facial expressions, and their actions. Sense of humor: This refers to the persons ability to see humor in situations in which he himself is involved. Sales aptitude (a specific term, not to be confused with sales aptitude in general): This means that the person has an interest in selling and at the same time has a natural flare for convincing others. Mental ability: This is evident in speed of thinking, quality of thinking, and manner of following instructions, which are definitely factors significant in selling. (9)
o o
For a man to achieve all that is demanded of him he must regard himself as greater than he is. - Johann Goethe (German dramatist, poet & novelist)
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Summary Establish objectives for your sales team using the SMART system. Hire based primarily on innate traits like ambition. Value diversity and conflict.
References 1. Buckinham, Marcus, What Great Managers Do Copyright 2005 Harvard Business Review Publishing, March 2005, Volume 83 Number 3. 2. Francesco, Anne and Gold, Barry, International Organizational Behavior,Pages 121 and 208 Copyright 2005 by Pearson Education, Inc. 3. Mintu-wimsatt, Alma, and Gassenheimer, Jule. The Problem Solving Approach of International SalesPeople: The Experience Effect. Journal of Personal Selling & Sales Management; Winter2004, Vol. 24 Issue 1 P19, 7p, 4 charts. 4. Francesco, Anne and Gold, Barry International Organizational Behavior, Copyright 2005 by Pearson Education, Inc. 5. Fong, Sonny and Shaffer, Margaret The dimensionality and determinants of pay satisfaction: a cross-cultural investigation of a group incentive plan International Journal of Human Resource Management 2003. 6. Yamazaki, Yoshitaka and Kayes, Christopher. An Experiential Approach to Cross-Cultural Learning: A Review and Integration of Competencies for Successful Expatriate Adaptation. 7. In Search of Global Leaders - A Changed World Copyright 2003 Harvard Business Review August 2003 pages 38-44.
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8. Peterson, Dr. Robert PowerPoint University of Portland Professor of Sales & Negotiation. 9. Hilgert, Robert, Use of Sales Aptitude Tests Harvard Business Review.
Chapter 5: Prospecting
Shotgun, net the wounded, nurse them, sell them, maintain them - Author Unknown
In any moment of decision the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing. -Theodore Roosevelt
The way to get started is to stop talking and start doing. -Walt Disney
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Think of your sales efforts as a war, with each day being a separate battle. Yes, there are many differences between wars and business competition, but its useful to think of business in these terms for time management and priority setting purposes. You should act as a sales commando, fulfilling the role you are trained to perform while working with your team to complete your mission. If you have someone who is great at identifying and approaching new sales prospects, have them focus on that effort, and spend less time creating sales presentation materials, so you can focus on areas where you provide the most value. In other words, do not put your best sniper on half time as the cook. This is a simple idea, but one often overlooked while expanding sales teams. Every morning in Africa a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death. It doesn't matter whether you are a lion or a gazelle -- when the sun comes up, you had better be running. - Author Unknown Each days battle is waged from 9AM-5PM, or whenever the typical hours of client cultivation are within your industry. Organize your day to take advantage of the hours when the battle is being waged. Either you are executing on sales opportunities or your competitors are. Complete all non-revenue generating preparation activities before or after the battle hours. Dedicate segmented times within your week for cultivating clients who are moving along each of the 6 Is steps towards a completed sale. Try to mix up the scheduling of these
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activities to keep yourself on your toes and improve your ability to attract clients that are more profitable. An example of doing this would be switching your call times from 10-11am to 2-3pm so that you will catch a different set of people who are available at that time. The more thorough you are in systematically cultivating major clients, the more successful you will be. Try to schedule non-battle hours for improving industry, product, or sales knowledge. What can you outsource or minimize to use your time more effectively? Example: Mary Ellen knows how to fight sales battles and win. She dedicates seven hours of phone time every business day at her recruiting desk in North Carolina. She brings in over one million dollars a year for her firm by completing all research outside of her calling hours, and then calling all day long, moving business forward. She is a great example of someone who consistently maximizes her use of time. Be aware of the number of battle days within each month and quarter and what you expect to get out of him or her. Know where you are and where you should be within your sales goal timelines to get the most out of each day. If you do not work full time on sales, try to choose a reasonable amount of time to dedicate towards it each day. Every halfhour a day of sales work, adds an extra days worth of sales work every month. Use all of your down time efficiently, and in a way that promotes the productiveness of your battle hours. Always have something on hand to review or read while waiting for a client or waiting in line somewhere. Have a collection of sales CDs to listen to or lists of people you can call while driving so that you use your commute time as a competitive advantage against those who listen to music while on their way to work. The average U.S. worker spends at least thirty minutes in the car on the way to and from work. Using this time for phone calls and professional development can make a significant difference on your level of sales performance over the course of a quarter. How are you investing your time? (1)
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The future depends entirely on what each of us does every day. -Gloria Steinem (Founder of Ms. Magazine) Sales team managers need to come up with creative strategies, and make confident decisions that are timely, yet not perfect. Results are what counts, and time is always in low supply. Many sales managers or team leaders are afraid to make bold decisions. It often seems that if the wrong decision is made it may ruffle someones feathers, or simply add risk to your otherwise safe position. Many decision makers do not know how much positive information is enough to take a risk. The Marine Corps addresses this issue with the 70% Execution Solution. Meaning if you have 70% of the total information targeted as valuable, have done 70% of the analysis, and feel 70% confident of the answer, then move forward with a decision. Intelligently designed execution is more valuable then no execution. Endless analysis is a drain on company resources. Apply this lesson to your decision-making process and standards. Agile sales forces can reposition themselves on profitable ground, while less agile ones will make sure you could have been reaping above average profits before they join the party. (2) Task Management The top 2% of sales people follow-up with 98% of their prospects. These same top 2% earn 80% of all available bonuses. Phone calls are the most personal way of following up, while hand-written notes are the most unique. The following table can be used by your sales team to identify where you are and where you should be spending most of your time. Is it
focused on the right activities? Are all these tasks assigned to people 5 5 who really own them and excel and fulfilling them? Prospecting for new business Telemarketing Canvassing Mailing Networking Growing & expanding Non-selling activithe business ties Follow-up calls (on the phone and in person Referrals New ideas Maintaining relationships Reports Proposals Administrative work Follow-up letters Thank yous General paperwork
(3) Cold Calling and Prospecting Guidelines Don't judge each day by the harvest you reap, but by the seeds you plant.
- Robert Stevenson (Scottish poet)
There are three main phases to a sales call: Getting information Giving information Getting commitment
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Whenever possible, have a clear view of your intentions when contacting a potential client. More importantly, know how they will benefit by talking to you. Google the company and person you will be speaking with to identify their interests and possible areas of common ground. Having this knowledge will impress the other party and can give more meaning to a short phone conversation, which may in turn give you a foot in the door down the road when you call on them a second time. How do your clients specifically benefit when they make a purchase from you? When calling a potential client for the first time communicate your value to them in a concise way that perks their interest. Make sure that your whole sales team has an understanding of this and constantly tries to increase their understanding within this area. Engaging a New Prospect While some phrases should be used to increase your effectiveness others take away from creating an immediate need, and making the best use of both parties time.
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Words to Use Maximize, increase, grow [sales, customer retention, productivity, etc.] Minimize, reduce, decrease, eliminate [expenses, customer service challenges, diversions, etc.] Profit from Specific, specifically Save, conserve Accumulate, acquire Prevent Fully Immediate, now Words Not to Use How are you today? Id like to learn a little more about your business to determine Were the leading provider of We work with several of your competitors Id like to see if there are some ways we might work together Is now a good time to talk? Did I catch you at a bad time?
(4) Create sales prospecting statements for your team for every situation imaginable. Include written statements for catching a potential client on the phone, being screened by a gatekeeper such as a secretary, or being left with a voicemail message. Ensure that your value is apparent within the first six seconds of your message to the potential client. Ensure that every pause, word, and question has a specific purpose and positive effect on engaging this new potential client. Example Prospecting Statements The following is a set of example prospecting statements for Jack Farmer, an investment salesman trying to connect with hedge fund managers who might want to buy his companies database product.
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Chris Schmit will be the name of the business manager that is trying to reach in these scenarios. Decision Maker Script Hi Chris, my name is Jack Farmer and I work for Investment Databases Inc. We specialize in providing industry specific capital markets research to hedge fund managers such as yourself. What does your company do to conduct or confirm research on your prospective investments? Gatekeeper Script Hi Barbara, my name is Jack Farmer and Im with Investment Databases, Inc. I would like to connect with Chris to discuss capital market research and database technologies. Is there a time that I could try calling back to speak with him? Decision Maker Voicemail Script Hi Chris, my name is Jack Farmer, I am with Investment Databases, Inc. and I would like to set up a time for us to discuss your hedge funds capital markets research. Our firm offers a unique segmented database product that most managers find surprisingly customizable and affordable. I can be reached on my mobile at (555) 555-5555. (555) 555-5555. Thank you. Life begets life. Energy creates energy. It is by spending oneself that one becomes rich. - Sarah Bernhardt (French writer)
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Listening and Asking Questions It is important to listen, but to do so, you have to ask good questions. Asking great questions can help you establish rapport, understand your competition, understand your customers specific needs, and help you construct a solution to their specific problem. There are five types of questions you can ask customers: 1. Confirmation: Confirm your assumptions or research. 2. New Information: Clarify their needs and real business challenges. 3. Attitude: Identify the customers opinion of your product or company. 4. Commitment: Gain a feel for how sold they are at any one point in time. 5. Concerns: Identify and address concerns or objections that could block the sale. Dr. Robert Peterson from the University of Portland suggests using a trick he calls golden silence during a sales talk. The golden silence is a pause for three solid seconds after your customer has answered a question that you have asked. He believes that this is beneficial because: It increases the comfort level of the relationship. The length of responses usually increases as the customer fills the silence with extra information. It tends to enable the customer to ask more questions that are formulated during these few seconds while they are analyzing the situation. It will encourage speculative open-ended thinking. (5)
16 Listening Questions
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The following list of questions should be used in conjunction with the 6 Is model discussed within Chapter 2. These questions will help you generate conversation over the phone with potential clients at every stage of the relationship. These are open-ended questions that should prompt the other party to talk while you gather knowledge about their current needs and resources. 1. Have you used others services/products like this in the past? 2. How was that experience? 3. How did your company first know there was a problem?(if there was one) 4. Was there anything you wish had happened? 5. What requirements do you have internally for this type of a service/product? 6. Is there a timeline your firm had in mind for making a decision? 7. What is the culture of your company like? 8. How is your company different from most in terms of service/product needs? 9. Can you elaborate on that last point? 10. What do you think about this? 11. What would you like because of this conversation? 12. Are there other services or products that you would like to talk about? 13. What stage in the purchasing process is your firm in? 14. What is your firms budget for this service/product? 15. What has changed since the last time we spoke? 16. Who else is working on the selection of this service/product? The most important thing in communication is to hear what isn't being said. - Peter Drucker (Austrian-American economist)
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Building Rapport Tom Caddy, a Portland, OR based sales trainer, has trained hundreds of professionals in improving their ability to gain rapport with customers. He provides them with the following list of ideas to do so: Always stay in the same body position as the customer. Watch the customers gestures and communicate in a similar way Match the customers tone of speaking. Use the same choice of words if possible. Match their breathing with yours if possible. Listen for their values and emulate them in your speech and actions.
Caddy believes that everyone has a home-base of communication, it is their primary way of communicating their thoughts, feelings and ideas. There are four different types of people you will have to adjust your sales approach for: 1. Visual They talk very fast, require constant eye contact, and respond to pictures and drawings first. 2. Auditory They usually talk with melody and respond to sounds and words first. 3. Kinesthetic They talk slow and soft and respond to touching and feelings first. 4. Digital They are very controlled and emotionless, respond to logic and facts. Ask them what they think, not what they feel. Everyone uses these bases of analysis while making a decision. Your job is to figure out which way they run through these bases, and what their primary base is. Presenting information in the same way they run
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the bases ensures success in decision-making and building rapport with them. (6) The top five reasons people are reluctant to move forward on a sale is their perception that they do not have enough: 1. 2. 3. 4. 5. Money Desire Trust Urgency Need (7)
Throughout your sales process, turn boring descriptions of your product into excitable demonstrations as to why they should purchase from you. Instead of rattling off specifications, conduct demonstrations. Instead of listing capabilities, tell stories about proven results. (8)
Appointment Setting Guidelines Define your selling responsibilities. Define your customers responsibilities. Explain the purpose of the meeting from the customers perspective. Identify who will or should be present at the meeting. List the materials or resources needed to conduct the meeting. State your valid business reason for meeting while asking for the appointment and again at the start of the meeting.
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The following chart should be used for major sales calls to help the salesperson remain cognizant of the goals, tips, and strategies of the sale at hand. Sales Call Guide
Account__________________________________
Prospect/Customer: __________________________________________
Single Sales Objective:__________________
Customer Concept tion
Action Commitments
Getting Informa-
Giving Information Valid Business Reason ment Credibility Getting Commit-
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Have your sales professionals review this form and be able to talk about each section of this sales rehearsal plan. The following definitions explain what each section refers to as part of the total sale. Concept: What is this person trying to find a solution to or avoid? Is this a vitamin or painkiller for them? What motivation does this person have to recommend or take action on my solution? Action Commitments: Establish your best and minimum action commitments as discussed earlier and ensure that they are realistic for this specific customer. Valid Business Reason: Does the reason for them to talk or meet with me really line up with their core problem or pain? Credibility: Know if and why you have credibility and communicate it to the client through your expertise, contribution, representation, trustworthiness and compatibility. Getting Information: Validate what you have learned about this customer or their business to show that you have been listening. Identify their attitude, new information about their needs, and their commitment level and desired results. Giving Information: Present to them your unique strength regarding their core problem or pain and give them the reason as to why you are different from your competitors in a meaningful way to them. Getting Commitment: Which one of the five objections are they most likely to use? What creative solutions exist to accommodate that concern? A no is not a no. It is a yes, cloaked in concern over a specific issue. (9)
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While developing your sales team, advise them to associate with role models, invest in education and self-development, and learn from every failure. Make sure they know what customers really want, and that they are not required to do things that are not sales related. If someone on the team fails at something, teach them that success can be the greatest form of revenge. Preparation and action are fears greatest enemies. Learn from problems and then move on. One who fears limits his activities. Fear is only the opportunity to more intelligently begin again. - Henry Ford
Summary Be aware of the number of battle days within each month and quarter and what you expect to get out of each of those. When calling a potential client for the first time communicate your value to them in a concise way that sparks their interest. It is important to listen, but to do so you must ask good questions. Use Petersons golden silence tactic during sales talks. The top 2% of sales people follow-up with 98% of their prospects.
References 1. Guerilla Consulting Newsletter Copyright 2005 http://guerrillaconsulting.com.
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2. June 27 Fortune Magazine page 97-102 Great Escapes Time, Inc. Copyright 2005 Volume 151 No. 13. 3. Peterson, Dr. Robert PowerPoint University of Portland Professor of Sales & Negotiation. 4. Guerilla Consulting Newsletter Copyright 2005 http://guerrillaconsulting.com. 5. Peterson, Dr. Robert PowerPoint University of Portland Professor of Sales & Negotiation. 6. Tom Caddy http://www.nmscorp.com. 7. Peterson, Dr. Robert PowerPoint University of Portland Professor of Sales & Negotiation. 8. Heiman, Stephen, Sanchez, Diane, and Tuleja, Tad The New Conceptual Selling Copyright 1999 by Warner Books. 9. Fitz-Gerald, Sales: What your professors wont tell you.
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Chapter 6: Leading Edge Practices

Do not follow where the path may lead. Go instead where there is no path and leave a trail. -George Shaw (Irish playwright and critic)
Only the limits of our mindset can determine the boundaries of our future. Keith D. Harell
You cannot fix what you will not face James Baldwin
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Many lessons can be learned from taking best practices from one industry to another. In the academic world, these universal or at least multi-industry applicable strategies are sought out and analyzed within large studies. This chapter highlights the key lessons from five leading books from both the academic and professional domains, and shows how they relate to improving the sales program in your business. In Search of Excellence In Search of Excellence, by Peters and Watermans, was written based on a study of 47 of the greatest companies in America. They found the following 8 themes common among the group of companies. All of which revolve around people, customers, and action. The 8 themes or principles the companies were grounded on include: 1. A bias for action getting on with it 2. Close to the customer learning from the people served by the business 3. Autonomy and entrepreneurship fostering innovation and nurturing champions 4. Productivity through people treating rank and file employees as a source of quality 5. Hands-on, value-driven management philosophy that guides everyday practice management showing its commitment 6. Stick to the knitting stay with the business that you know 7. Simple form, lean staff some of the best companies have minimal headquarter staff
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8. Simultaneous loose-tight properties Autonomy within shop-floor activities plus centralized values and visions. Rate your company, sales division, or personal sales efforts against this list of eight characteristics. Do you sense a bias for action or a strong sense of autonomy while conducting sales? Are all of the characteristics prevalent in your work? Out of the ones that are clearly not present, which ones make sense to implement for your line of business? (1) Built to Last Jim Collins is arguably the most well read professor at Stanford University. His two most well known publications Built to Last and Good to Great both have valuable lessons that can be applied to fast growing companies and sales teams alike. In his first widely read book, Built to Last Jim Collins recommends that businesses do a number of things to improve the management their business. Here are some of the main ideas that you should consider for your business when creating or managing your team or division. Clock Building Imagine that someone could look up at the sky and instantly tell the exact time, night or day. This is a great skill to have, but how much more useful would it be if you could build clocks that could always tell everyone the time? The analogy that Collins uses sheds light on how successful companies develop processes, cultures, and visions that focused on the long haul. Do you have a visionary leader who tells you the time? Build a clock based on what he or she does and ensure his or her best practices live on long after he is gone. BHAGS
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Big Hairy Audacious Goals are something that your team may use to help motivate everyone towards a goal that is just barely reachable. You should challenge everyone with goals that they probably only have a 60% chance of meeting. Stretch the limits of what has been done and make your work atmosphere fun and intense. Jim Collins noticed that large corporations set BHAGS at the corporate and divisional/group levels. This weaves in nicely with modern motivational theories and models, which consistently focus on creating goals that are measurable and just barely attainable. What types of short and long-term objectives have you set for your sales efforts? Are they big enough? Push the limits. I like thinking big... if you're going to be thinking anyway, you might as well think big. - Donald Trump Preserve the Core/Stimulate Progress General Electric is one of the companies that Jim Collins has recognized as being extraordinarily successful over a large span of time. When Jack Welch, the most well-known CEO of General Electric, handed over his position to his successor he told him the same three words every CEO has in the history of the company. Blow it up. In essence, to change everything imaginable within GE except for the core ideology. What does your company stand for? What ideology does it rest upon? Define these things and create tactics and strategies that revolve around the non-negotiable items that characterize your company. Keep the sacred, but throw out routines or traditions that are not effective or competitive in the market.
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Its not the biggest or strongest competitor that survives but the most adaptive. - Author Unknown Good Enough, Never Is One trait that Jim Collins saw among all of the companies he studied was consistent strives towards excellence. Whether it be strong cultures, understanding of vision, BHAGS, or compensation structures, every company showed tendency to never settle for good enough. Not surprisingly, he found that companies that strove to improve what was currently in the market and being used within their company, yielded above average returns on their investments. The lesson here is to always strive towards perfection. If there is a way to make your sales process better or a way to improve your divisions sales efficiency, then do it. It is never good enough if there is a way to make it better. Its a funny thing about life: If you refuse to accept anything but the very best, you will very often get it. W. Somerset Maugham Try a Lot of Stuff and Keep What Works This principle is tried and true, even if it is not always apparent. Many companies seem to have designed great solutions to problems, as if they were given the perfect product ideas in their sleep. The reality is that most of these companies market tested ideas and built prototypes for dozens or possibly hundreds of different products before selling
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their hit product. What is your division testing or tinkering with? Your internal processes? Customer management systems? Lead generation efficiencies? Sometimes companies simply stumble over new ideas or products but you can not stumble if you are not moving. (2) I'm a great believer in luck, and I find the harder I work, the more I have of it. - Thomas Jefferson Good to Great Jim Collins states in his book Good to Great that almost any organization can substantially improve its stature and performance, perhaps even become great, if it conscientiously applies the framework of ideas found and used by Good to Great companies. The book touches on the following themes, which were found throughout companies that have gone from good to great: Good is the Enemy of Great This idea is similar to the good is never enough concept from Built to Last. In this section of the book, Collins urges companies to focus equally on what to do, what not to do, and what to stop doing. He
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believes that most companies focus too much on what to do and ignore what not to do or what they should stop doing. What are you doing based on tradition or industry standards? What assumptions or processes have you rested on because they were good enough? Good should be viewed as horrible because neither great. Level 5 Leadership This term Level 5 Leadership is used to describe a certain type of leader who was seen among many of the companies, which made the leap from good to great. They were more than just clock builders, they had unique characteristics such as humility and professional will towards excellence. This type of a leader is known for taking credit for bad performance while giving credit to others when things go well. First WhoThen What Collins says, People are not your most important asset. The right people are. He uses the analogy of a bus driver to while describing how to create a winning team within your organization. He recommends that you first get the right people on the bus, and then you get the wrong people off the bus, then the right people in the right seats, and then figure out where you want to drive that bus. Hire people with characteristics you cannot easily instill. Focus on who you are paying, not how. He also recommends analyzing someones character, work
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ethic, intelligence, and dedication to their values before deeply analyzing credentials and practical skills. Confront the Brutal Facts Collins found that companies that made the leap from good to great, had a consistent belief in their ability to succeed in the end. He believes that if companies do their due diligence and gather all of the facts, the right path will often unfold in front of them. He recommends the following four ways to build a culture where the truth is always heard: Lead with questions, not answers. Engage in dialogue and debate, not coercion. Conduct autopsies without blame. Build red flag mechanisms for turning information into information that cannot be ignored.
The Hedgehog Concept Every morning the fox wakes up and starts crafting elaborate plans on how it will finally catch its nemesis, the hedgehog. It uses creative strategies, combining old ideas and trying to catch the hedgehog off guard. Yet every time the fox approaches the hedgehog, the small animal simply rolls up into a ball and waits until the fox leaves it alone.
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It does this on a daily basis, without fail. If it tried to run or use one of the foxs tactics it would die, however it can consistently rely on its hedgehog strategy to save its hide and move forward with its life. Your companys hedgehog concept is the one big thing for your organization to understand and stick to. What does or can your organization do, understand, or use as your core solution to competitive threats and changes in the industry? The concept itself is similar to your core ideology (which never changes), differing only in the sense that it can be slightly less permanent. Your hedgehog concept must be something you are deeply passionate about, best at in the world, and are able to make a profit by doing. Figure out what falls into all three of these categories, and obtain an understanding and strategy based on it. Behold the turtle; he makes progress only when he sticks his neck out. James Bryant Conant A Culture of Discipline Hire people who are disciplined in their own right. The second you need to manage someone, you have made a hiring mistake. Manage systems, not people. Collins believes this is superior to managing people because:
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When you have disciplined people, you do not need hierarchy. When you have disciplined thought, you do not need bureaucracy. When you have disciplined action, you do not need excessive controls.
The Flywheel Concept A flywheel takes relentless pushing to get it to turn over even once, but after a while of pushing in the same direction it starts to gain momentum until it is a very powerful force. Collins contends that Good to Great transformations never happen all at once. They are the result of years of persistence. It might look dramatic and revolutionary from the outside, but on the inside it is more of an organic development process. (3) Tipping Point The Tipping Point was written by Malcolm Gladwell and describes how you can segment the types of people in your organization into buckets. He argues that there are three types of useful people you should be
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identifying, tracking and developing on your sales team. These people are connectors, mavens and salesmen. Connectors bring everyone together. They are the social glue and thrive off spreading messages and networking. Mavens are human knowledge banks. They know the facts, gossip, and have the social skills to inform others. Salesmen persuade others to action. (4) Whom is your team made up of? Based on your ideology and Hedgehog Concept for your division or sales team, what types of people are going to be most useful for you to contact? How is your sales team reaching connectors, mavens, and salesmen outside of your organization to promote your company? Summary Score yourself or sales team against Peter and Watermans 8 characteristics of excellence. Use BHAGS, never settle, always innovate, and change everything except your core ideology. Understand your Hedgehog Strategy. Are you a connector, maven, or salesmen? What type of people are you working with or hiring?
References 1. Peters, Tom and Waterman, Robert In Search Of Excellence, Lessons from Americas Best Run Companies Copyright 1988 Warner Books, Inc.
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2. Collins, Jim C. and Porras, Jerry I. Built to Last Harper Business Copyright 1994. 3. Collins, Jim Good to Great Why some companies make the leap and other do not. Copyright 2001 Harper Business, Inc. 4. Gladwell, Malcolm. The Tipping Point How Little Things Can Make a Big Difference Copyright 2002 Back Bay Books, inc.
Chapter 7: Expansion
International Sales
Make sure your positive seeds are planted in positive ground. Keith D. Harrell
The best compensation for doing things is the ability to do more. Author Unknown.
Progress is impossible without change; and those who cannot change their minds, cannot change anything. George Bernard Shaw
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Conventional wisdom argues that domestic competition is wasteful: It leads to duplication of effort and prevents companies from achieving economies of scaleDomestic rivalry, like any rivalry, creates pressure on companies to innovate and improve. Another benefitis the pressure it creates for constant upgrading of the sources of competitive advantage. Ironically, it is also vigorous domestic competition that ultimately pressures domestic companies to look at global markets and toughens them to succeed in themlocal competitors force each other to look outward to foreign markets to capture greater efficiency and higher profitability. And having been tested by fierce domestic competition, the stronger companies are well equipped to win abroad. -Michael Porter (The Competitive Advantage of Nations) (1) International trade has gained much press and strategic importance for growing corporations over the last ten years. It currently represents 30% of Americas Gross Domestic Product compared to less than 10% in 1970. (2) Near the turn of the 21 Century, several nations were starting to make ground on the major industrial powers of the world including the United States, France, Germany, Japan, and the United Kingdom. The rate of international trade by France only grew at 1% and the United States by 2.1%. Many smaller, less developed countries had international trade growth rates that were much higher. The healthy growth of companies in the future will depend upon their ability to capture market share internationally. When expanding internationally you should analyze how your sales process will work overseas and confirm that there are labor, capital, and technological resources available to support operations. (3)
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Good ideas can come from anywhere, and good products can be sold anywhere. The more places you are, the more ideas you will get. And the more ideas you get, the more places you can sell them and the more competitive you will be. Managing in many places requires a willingness to accept good ideas no matter where they come from which means having a global attitude. (4) Why do companies expand into foreign markets? The reality of todays business world lets almost any type of company operate on a global level. Potential customers and competitors can be found in virtually every country in the world. Firms generally expand globally for the following reasons: Raw Inputs: Many companies expand internationally so they may secure cheaper or higher quality inputs to create their products or run their business. Other Resources: Many firms have found that certain types of labor or other factors of production can be found at lower total costs in less developed markets. Political/Economic Situations: There may be subsidies, legal structures, or other political or economic situations that provide a fertile business market for a growing business. New Markets: Some companies expand simply by seeking additional markets that they can market their refined products or services to. Economies of Scale: Many companies are forced to expand internationally to meet the requirements of production at an efficient scale, meaning they need to produce their products for a global customer base to reach the volumes required to turn a profit on that area of their business. Domestic Life Cycle Factors: Sometimes firms are forced to look outside their domestic borders to survive as local markets become saturated and intense competition lowers the attractiveness in their home market.
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Economies of Scope & Learning: Some companies expand, seeking economies of scope, and learning between different international business centers.
While stereotypes can help give you a starting point for what to expect in other cultures they can undermine management decisions. Conduct your own primary research and interviews to find out what the norms and unique attributes of the target countries are that your firm might expand into. Managers often pick up the impression that the Chinese are good at this, the Germans are good at that, and so on. But I have learned that in every place we operate, in every country, the people want to do a good job. They simply need training. There is not place where people cant do a world-class job. (5) While deciding how to manage an international sales organization, a manager must decide between the centrist vs. non-centrist approach. The centrist approach is more controlling. It saves some costs, but obviously lacks some necessary adaptation required for success in some countries. With this approach, the needs of the home country are often the primary concern, and foreign subsidiaries are treated like domestic branches of the parent company. The noncentrist approach is when foreign sales offices are allowed to do their own thing. As long as the foreign offices create returns within the expected levels and meet growth targets, they are left to design their own sales strategies and programs. The view of the home company is seen as just as important as the foreign company under this model. Many companies drift towards one of these policies without ever consciously choosing to be organized as a centrist or non-centrist company. Until the company has new management come in, or is bleeding so badly that the company might face major layoffs or a change in senior management, most companies practices the centrist way of international management and never change. The widespread
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nationalism and growing number of management education institutions around the world means that local subsidiaries will have more power in deciding how they are ran. Many of these managers have a growing pride and consciousness of their rights and are starting to refuse to bow to policies made in some faceless and distant head office. (8) One of the advantages of running an international corporation is the insight gained into a diverse range of best practices. Some Asian cultures including Korea adopt new technologies much faster then as in America. A cell phone company that is considered innovative in America might be years behind the competition in Korea. If that same firm had operations in both locations they might be able to move up the learning curve to offer the best technology in Korea and then adapting it with the best practices of the industry to the American market as it is adopted down the road. You can also learn a lot by analyzing the marketplaces you operate in. Even if your company is not the leader in each area of operation, the moves of your competitors can help you firm dominate globally. (10) Risk of Entering New Sales Markets More and more companies are finding that international business opportunities are becoming just as competitive, and in some situations saturated, as their home markets. Tight margins and fast-paced innovation in already popular places of international expansion push the search on to smaller less developed countries. This brings up several questions; what are the principal management problems that exist today? What can international companies do to increase the effectiveness of their management approach? The following issues are some of the most important international management problems: 1. Local Profit Distribution: Better tools and processes are needed to keep affiliate management focused on profit goals. 2. Multiproduct Difficulty: More practical ways to estimate product and cross-segment profitability.
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3. Incremental Investment Flow: Profit planning and capital budgeting techniques are needed that point the way towards higher returns on international company assets. 4. Political, Economic Risk: There needs to be a meaningful model created to translate broad economic, market, and political risks factors into applicable hurdle rates and sound decisions made about opportunities that exist around the globe. 5. Staff Contributions: In large groups of staff members, it is hard to pinpoint each individuals effect on profitability. A better system of rewarding for performance and profitability in large organizations is needed. There are not answers for all of the problems of international managers face, but below is a five-point course of action for those who need a better way of evaluating different markets and products on a global level. 1. Once a year, affiliates and divisions should be asked to assign full costs and total capital employed to major product groups. 2. Once a year, the product costs and product investments that are related to sales made within the divisions investment area should be transferred to each division from affiliates and other divisions. 3. Use this same information to develop realistic productstream profit and return on capital employed for major customer groups. 4. Individual products should be lifted out for special study
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5. The relative contributions of customer groups by product should be rated, coupled with revised operating goals that would lead to improvements in operational efficiency and return on capital. (6) Top Ten Barriers to Trade Many companies experience barriers to providing services in new countries. A recent Danish study showed that the top ten most common trader barriers: 1. Technical Barriers within the company. 2. Corruption within the government and business practices of targeted foreign countries. 3. Difficulty in accessing information on and/or changes in legislation and rules. 4. Unannounced and frequent changes in rules. 5. Barriers linked to taxing of income in other countries. 6. Hindrances linked to public procurement. 7. State subsidies for local companies. 8. Administration of rules discriminating against companies. 9. Barriers of entry for labor and problems in acquisition of work permits. 10. Restrictive rules on investment. Over 70% of the Danish companies surveyed experienced significant barriers of entry while trying to expand internationally. Although each home countries expansion experiences may differ, the list above provides a good example of what types of barriers exist and how often growing companies run into them. (7) Managing Global Affiliates It is important to rate international affiliates whether they be internal or externally owned divisions on a qualitative and quantitative basis. In Butler and Deardens Harvard Business Review article entitled Manag-
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ing a Worldwide Business, they suggest the following checklist for managing global affiliates: Market penetration or market share trends, by product and class of trade. Affiliate export sales results. Number of days credit outstanding compared with average in industry. Spot surveys of services standards. Salesman work load appraisals of the time spent with customers and dealers in promoting merchandising programs. Periodic post-completion audits of capital budget projects to confirm the credibility of the financial and operating forecasts that are made by local management. General attitude of distributors, dealers, and large consumers toward company. Comparison of unit manufacturing yields and production times in affiliates with corresponding standards in U.S. plants. Productivity gains resulting from methods and systems improvements Training and management development the availability of executives in the organization who are ready to assume greater responsibility. Trends in manpower reduction and employee turnover. Extent of exchange exposure in countries where inflationary pressures are great and there is risk of devaluation. Quality of affiliate managements relations with local government and community leaders. Worthwhile new ideas or new proposals that have been advanced in the last year by local management. Productivity trends that are a reflection of the efficiency with which capital and labor are employed the suggested index
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being the ratio of sales volumes are on key products to labor costs (inside and hired) plus depreciation. (8) International Distributor Management Most companies entering new global markets realize that they must work with local distributors that are used to doing business differently. A great deal of international expansion failures can be attributed to a lack of cultural awareness and adjustment of business processes and standards. David Arnold, a professor at Harvard recommends the following 7 rules of international distribution: 1. Select distributors, dont let them select you. 2. Look for distributors capable of developing markets, rather than those with a few obvious customer contacts. 3. Treat the local distributors as long-term partners, not temporary market-entry vehicles. 4. Support market entry by committing money, managers, and proven marketing ideas. 5. From the start, maintain control over marketing strategy. 6. Make sure distributors provide you with detailed market and financial performance data. 7. Build links among national distributors at the earliest opportunity. (9) Multinational Financial Sales Management Studying of the best practices and business models within multinational finance as a science is a relatively new area of study. Best practices change every couple of years and there is still much to be learned. International financing, working capital management, capital budgeting, and regional risk assessment are all areas that companies should strive to manage more intelligently. While international expansion poses obvious growth prospects, there are also inherent complexities and risks that come along with the territory.
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International business works within financial markets that aide the transfer of funds and currencies. The most important international agencies include the International Monetary Fund, World Bank, International Financial Corporation, International Development Association, and the Bank of International Settlements. International firms must have a system in place to constantly monitor exchange rates because their cash balances and total returns can by wiped out by them. The Foreign Exchange Market aides firms in obtaining and selling foreign currencies. It is important to consider government policies and how they might affect exchange rate movements within a country. Governments often attempt to affect economic conditions in their country by adjusting the exchange rate. For example, a weak currency can stimulate the home countries economy and might be sought after in times of recession at the expense of possible inflation. At the same time, a strong currency can dampen inflation and sometimes lead to higher rates of domestic unemployment. Other tools used to manage international currency receivables and payables include the currency forward futures and options markets, which let financial managers hedge their receivables and payables against possible foreign currency fluctuations. Both futures and options are used by people who have expectations about future currency movements, but differ in that holders of currency futures contracts are obligated to buy the currency on a set settlement date, whereas owners of currency options have the right to buy or sell a currency for a predetermined price with no obligation. Both futures and options can prove to be very useful for multinational corporations, while being either profitable or expensive for investors and speculators. Short, medium, and long-term investing or borrowing is facilitated through the Eurocurrency, Eurocredit, and Eurobond markets. The recent growth of these markets have made it easier for firms to expand
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internationally. All of these international markets are used by investors, speculators, and international companies looking to hedge their positions or transfer funds abroad. The foreign exchange market is self-correcting. When conditions change or news is released the market value adjust to include the new risks or forecasts. This is facilitated through international arbitrage which can be defined as the act of capitalizing on a discrepancy in exchange rates. International arbitrage comes in three forms, locational arbitrage, triangular arbitrage, and covered interest arbitrage. Locational arbitrage opportunities exist when foreign exchange rate quotations differ among locations or banks. Triangular arbitrage exists when there are discrepancies among cross exchange rates. Covered interest arbitrage can be attempted when the forward rate premium is not reflected accurately in the interest rates between two countries. Any act of arbitrage is a vote claiming a currency to be over or undervalued. The attempts at taking a profit based on arbitrage opportunities are what correct the market when inconsistencies exist. These market forces assist with maintaining currency forward and option contract rates at their appropriate level. Multinational corporations need exchange rate forecasts for the following reasons: Hedging decisions Financing and investment decisions Capital budgeting decisions Earnings assessments
Many foreign exchange based hedge funds, trading companies, and private investors develop complex models in an attempt to predict future currency trends. The most common forecasting techniques used by multinational corporations include technical, fundamental, marketbased, and mixed. There are many companies that will manage your foreign exchange risks on an outsourced, consulting, or software based
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service model. These same companies might be able to help you with the management of cash and fund transfers around the globe. International Risk Management Multinational corporations face three types of exposure, transaction exposure, economic exposure, and translation exposure. Once a company recognizes which types of exposure it is faces, it should make adjustments to mitigate those risks accordingly. Common ways to hedge these risks include: Futures contract hedging Currency option hedging Currency swapping Parallel loans Forward contract hedging Money market hedging
Doing business with international businesses poses intelligence and credit risks that are more complex than a company will find domestically. Legal system, business norms, and credit processes can greatly differ between two countries. More complications arise through the geographical distances, economic situations, cultural differences, and lack of information. Commercial banks have recognized the opportunity to aide corporations in conducting global business operations and have an array of services available for firms in need. There are dozens of options available provided by banks that will intensely compete for business in this area. International cash management poses two major challenges: optimizing cash flow movements, and optimizing the use of available funds. To optimize cash flow movements firms can use netting schemes, lockboxes and pre-authorized checks. To better use the funds that are
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available many multinational corporations group excess funds from different subsidiaries into a main depositary to realize a greater return. Once a firm is being managed globally, the topic of international capital budgeting will have to be addressed. There are several factors can influence this discussion: It is normally appropriate for a multinational corporations parent to assess the project from its perspective rather than a subsidiarys perspective when determining whether the project should be undertaken. A foreign project is normally more beneficial to the parent when the foreign currency appreciates over the life of the project. The impact of exchange rate movements on cash flows to the parent tends to be greater when the parent provides most or all of the investment, but less when the foreign project is financed with debt from the host country. Blocked funds have a greater adverse impact on a foreign project when the investment opportunities in the foreign country are limited. If foreign projects affect prevailing cash flows, it should be accounted for in deciding whether the project is feasible. The process should account for some uncertainty due to country-specific factors that influence cash flows and return ratios on foreign projects.
There is a four-step process for analyzing country risks abroad. 1. Identify political and financial variables that contribute to the country risk rating. 2. Assign a rating to each of these variables. 3. Assess the importance or influence of each variable and consolidate them to generate an overall rating assign to the country. 4. Decide whether the overall risk rating reflects a tolerable or intolerable level of risk.
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The level of risk should be included in the capital budgeting process for each country where projects are planned. This can help mitigate some risks or simply raise awareness of their existence for the allocation of funds within the corporation. Different tax rates among separate countries of operation can affect financing and investing practices of a multinational corporation. This must be taken into consideration within the capital budgeting and international expansion planning. Central financial and cash management policies should be created to control the corporation on a global and subsidiary levels to address conflicts of interest that might arise between different divisions or hierarchical levels within a global company. (11) International businesses are exposed to different types of risk then domestic firms. One of these risks involves the navigating and securing of foreign financing. In this case export credit insurance can be used to mitigate risk and help a company expand their global presence.
Export credit insurance programs help American exporters expand their global sales by protecting them against foreign buyer defaults, whether it is for commercial or political reasons. The vast number of export credit insurances available paints an intimidating image of using this tool, dozens of solid financial institutions are more than happy to help businesses use export trade financing within their global deals, however according to Gerald Rama, there are four main reasons why exporters use credit insurance: 1. Mitigating foreign risk this is particularly important for emerging markets.
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2. Overcoming competitors selling terms many foreign export credit agencies offer aggressive financing to buyers to stimulate their countrys export sales. 3. Financing in many instances, medium-term financing is not available in local markets. A good trade finance bank will help sellers integrate financing packages with their sales offers. 4. Cash flow export insurance can help enhance cash flow and the balance sheet. (12) There are many types of financial risks that companies become exposed to as they expand internationally. The most prevalent risk discussed while expanding internationally is foreign exchange risk. The first type of foreign exchange risk faced is the warping of global sales due to shifts in foreign exchange prices. The second type is that investments in other countries that will lose real value in home country terms due to currency valuation changes. There are eight strategies for reducing foreign exchange exposure: 1. Maintaining assets in hard currencies, and liabilities in soft currencies. 2. Speeding payments of profits from weak currency subsidiaries to the parent through profit remittance channels. 3. Delaying investments in weak currency subsidiaries. 4. Increasing local liabilities in weak currency subsidiaries. 5. Speeding payments dominated in hard currencies 6. Self-insuring through reserves. Putting earnings into a special account in order to cover exchange losses. 7. Arranging protection in the forward exchange market (obtaining guarantees to sell or buy a currency at a predetermined price and time). 8. Currency swapping (covering a weak currency being obtained by buying a forward contract to sell it later). This list contains some valuable operational strategies for avoiding foreign exchange risk, but it ignores portfolio management techniques that some companies use to hedge their international operational risk.
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Every multinational corporation is in many different markets and must hold both fixed and liquid assets within different countries with different currencies. Some of these may be freely convertible hard currencies or inconvertible soft currencies. Regardless of what type of asset a company holds, each one has its own risk/return details and as such, there should be some theoretical optimal portfolio that multinationals employ. The diversification of a currency portfolio, whether based on a complex model or gut feeling, is always less risky then holding one currency. (13) Unmanaged foreign exchange risk can cause your company millions of dollars within a single quarter. Even if you are only doing business in the U.S. and Europe, the swings in currency valuations can be great. The Euro rose by 8% against the U.S. dollar in December 2000, after falling a full 26% within the first 23 months of its existence. Doug Reed from Siebel Systems has dealt with rapid growth and international expansion for several years and has learned many lessons while doing so. The specifics of their program are constantly evolving but they rest upon the laurels of these four principles: 1. The KISS Principle Forget trying to beat the market with your timing, placing limit orders, over-hedging, underhedging or buying complex derivatives. If you can really do this with any level of skill, your company either has a unique advantage over others in the industry or you should not be in a treasury job. Keep It Simple, Stupid, is the key to forming hedges against foreign exchange risks. Try to secure a current rate as quickly as possible with an offsetting forward contract. Try to keep everything liquid and accounting friendly and you will be better off in the end. 2. The Accounting Principle
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If you keep the way you hedge your risk simple, you can spend most of your time where you should, determining what to hedge. Many large international companies query their accounting databases daily to flag new exposures. Other groups meet to discuss forecasts for sales, expenditures and overarching budgets that could affect their risk exposures. While it is advantageous to be proactive in identifying risks, you have to analyze the past months performance to identify what you missed. Lessons that can be learned from your actions and the resulting affect of your hedges.
3. The Control Principle An incorrect hedge can mean large swings in earnings that could lead to some resume dusting, if controls are not in place. Three individuals should be signing off on every forward trade, including the trader, the traders manager and a third person who can confirm the trade with the banks back office. Many companies, like Siebel Systems for example, reconcile their contracts with counterparties monthly. When a mistake is made on a trade, identify what lessons should be taken away from the situation and insure that everyone along the control line is aware of the situation.
4. The Kaizen Principle Siebel Systems foreign exchange managers always tell themselves, The only perfect hedge is in a Japanese garden. Kaizen means continuous improvement in Japanese. It is important to remember that your system is hedging against a dynamic market and nothing that works well this year will be relevant within the next. Collect best practices, analyze trends, and always know there is room for improvement. (14)
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International Corporate Risk Thousands of managers create international expansion plans every day. How many of those take sales degree and diversification into account while forming them? The consensus is very few. A recent study of 138 firms indicated that differences in corporate risks through international expansion should be considered by firms planning to expand. Portfolio theory suggests that expanding internationally within countries whose market performance is not highly correlated, would reduce overall risk. Naturally, this also exposes the original companies to the additional risks of these foreign countries, which there is often less knowledge of. There are two strategies companies can overtake while expanding internationally; increasing either their sales degree or their sales diversity. Sales degree is increased by further penetration of their current markets being served, and sales diversity is achieved by penetrating new markets in order to achieve more variation between markets of operation. (15) Financial asset diversification was historically impeded by lack of foreign securities information, inadequate and inefficient communications systems, and complicated laws concerning international-capitalflows. These barriers have subsided to a degree causing a substantial increase in foreign financial asset holdings. While the international diversification of real assets has also generally increased over time, it is more difficult to successfully operationalize. Complicating factors, exist that cannot be eliminated by improved information or simplified tax laws. For example, foreign labor laws, foreign government subsidies to domestic firms, and cultural differences may prevent a firm from capitalizing on real asset diversification. Because the barriers to financial asset diversification differ from real asset diversification, effects on the two types of diversification may differ.
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- Jeff Madura Summary Good ideas come from anywhere, and good products can be sold anywhere. While sometimes useful tools, stereotypes can often undermine management decisions. Over 70% of Danish companies surveyed experienced significant barriers to entry while trying to expand internationally. A great deal of international expansion failures can be attributed to a lack of cultural awareness and adjustment of business processes and standards. International businesses are exposed to different types of risk than domestic firms. Unmanaged foreign exchange risk can cost some companies millions of dollars in a single quarter.
References 1. Porter, Michael, The Competitive Advantage of Nations Copyright 1990 New York: Free Press. 2. Rama, Gerald, Leveraging Export Credit Insurance to Mitigate Foreign Risk and Expand International Sales Copyright November/December 2001 . 3. Strategic Issues And Applications. McGraw-Hill Primis. Management Strategy: Achieving Sustained Competitive Advantage by Macus & Crafting and Executing Strategy, by Thompson et all. 4. In search of gobal leaders A changed world Harvard Business Review August 2003 pages 38-44.
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5. In search of gobal leaders A changed world Harvard Business Review August 2003 pages 38-44. 6. Butler, Jack and Dearden, John, Managing a worldwide Business Copyright 2000 Harvard Business Review May-June 1965. 7. The Internationalization of Services: Trends and Barriers Copyright 2003 Economic Bulletin; Oct2003, Vol. 40 Issue 10, p347, 4p. 8. Butler, Jack and Dearden, John, managing a Worldwide Business Copyright 1965 Harvard Business Review May-June 1965. 9. Arnold, David, Seven Rules of International Distribution Copyright 2000 Harvard Business Review NovemberDecember 2000. 10. Pacyniak, Bernard, Global Risk Takers Copyright 2002 Candy Industry; Nov2002, Vol. 167 Issue 11, p16, 4p. 11. Madura, Jeff International Financial Management Copyright 1986 West Publishing Company. 12. Rama, Gerald, Leveraging Export Credit Insurance to Mitigate Foreign Risk and Expand International Sales Copyright 2001 November/December 2001 Business Credit 43-46. 13. Dince, Robert R., Umoh, Peter N. Foreign Exchange Risk and the Portfolio Approach: An Example From West Africa Copyright 1981 Columbia Journal of World Business; Spring 81, Vol. 16 Issue 1, p24, 6p, 5. 14. Reed, Doug, KISS and Control: Lessons for Hedging. Treasury & Risk Management; April 2001, Vol. 11 Issue 4, p6, 1p, 1c. 15. Madura, Jeff and Rose, Lawrence C., Impact of International Sales Degree and Diversity on Corporate Risk Copyright 1989 International Trade Journal; Spring 89, Vol. 3 Issue 3, p261, 16p.
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Chapter 8:
Sales Ethics
Always do right--this will gratify some and astonish the rest. - Mark Twain Nothing is as frustrating as arguing with someone who knows what he is talking about Sam Ewing
When I do good, I feel good; when I do bad, I feel bad. That's my religion. - Abraham Lincoln
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Ethical decision-making trends and standards of operation is an important topic within every business and personal career planning agendas. If for no other reason, the simple ignorance of what is ethical can undermine all of your other efforts. If you truly have a great sales organization, then you should excel based on the execution of your sales strategy, not through the navigation of grey ethical lines and the use of overly controversial tactics. The tricky part is defining what areas are grey or too controversial. There are three different levels of ethical business managers: 1. Moral The moral manager is dedicated to high ethical standards in how they manage and act on their own. They are ethical leaders, and believe it is important to practice business within both the letter and spirit of the law. They often operate well above what the law requires of them. 2. Immoral The immoral manager is against ethical behavior in business and consciously ignores ethical principles when making decisions. Legal standards are barriers to get around, caring only about their own well-being. All that matters to them is the bottom line and they believe nice guys will always finish last. 3. Amoral Amoral managers can be intentionally or unintentionally amoral. If they are intentionally amoral, then they believe that business and normal ethics should not be mixed because different rules apply to business. They believe it is normal not to factor in ethical issues to their decision-making processes. They often try to get by at the minimum legal standards of
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compliance and no more. The unintentionally amoral manager is simply ignorant or careless about what the ethical standards are. They are blind to many of the ethical dimensions of their decisions, even if they seem themselves as well intentioned and even personally ethical. These three types of ethical management behaviors can be seen in all areas of business. There are three main drivers of unethical behaviors: 1. The obsessive pursuit of personal gain. 2. Short term corporate pressures to meet target sales or earnings. 3. Corporate cultures that promote profit over ethical behavior.
Ethical decisions are present internationally and some concepts of what is right and wrong are universal and transcend most all cultures. One example of this is being honest and truthful. Showing integrity of character and treating people with respect are concepts that are held up within most cultures. There are many situations where what is considered right or wrong varies greatly between different cultures. One example of this is bribes. In China, they are largely seen as tips, similar to the tradition of tipping food servers in the United States. As your sales team expands internationally, are you following the ethical universalism school of thought that the same ethical rules should apply everywhere or is each culture and situation treated as unique? There should be a clear picture of how your team is going to navigate the gray zone that arises while operating a global business. The best method that I have come across for managing this grey area is the use of the highest level of ethical standards that exist. This means that whether you are making t-shirts in China or New York, you operate based on the same ethical assumptions and treatment of works. You take the higher level of ethical standards, which in this case would be in New York, and employee them across the organization for those activities. (1)
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While 50% of all business schools require technology-based courses, only 40% require any type of course on ethics or social responsibility. At the same time, less then a third of the programs require soft-skill courses like human resource management, negotiations, leadership, or entrepreneurship. (2) Raymond Baker has seen every aspect of international business through his 35 years of experience spanning across 50 countries in Africa, Latin America, Asia, and Europe. He now works for a think tank in Washington D.C. on global economics and politics. Baker claims that most companies from the United States and the West in general work with their legal advisors to do the bare minimum to comply with laws regarding international fund transfers and competing on foreign sales. Baker contends that a good portion of international money flows consist of transfers specifically intended to escape taxes in their country origin. These tactics undermine fair competition and keep open avenues for criminals and terrorists to launder their money and finance their operations. (3) The clarity of different ethical policies will vary according to the nationality of the organization. Many less regulated areas such as the United States or Britain will have more explicit company policies compared to countries such as France and Germany who are more regulated. The nationality and company size also has some influence on specific corporate ethical policies. The United States and British companies traditionally have clear policies for accepting gifts compared to France and Germany. Another notable difference is that larger companies have clearer ethical policies than medium sized companies do. Most companies within a region have similar ethical policies regardless of industry. Other studies have shown that older managers tend to have fewer ethical lapses, and peers are the largest influence on the ethical decision making of most employees.
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What type of ethical manager does your company tend to develop or attract? What type of behavior should you be screening for during the hiring process, and what are the implications of this? Summary There are three types of managers, the moral, immoral, and amoral. There are three main drivers of unethical behavior 1) the obsessive pursuit of gain 2) short term corporate pressures to meet target sales or earnings 3) corporate cultures that promote profit over ethical behavior The clarity of ethical policies often varies according to the nationality of the organization.
References 1. Strategic Issues And Applications. McGraw-Hill Primis. Management Strategy: Achieving Sustained Competitive Advantage by Macus & Crafting and Executing Strategy, by Thompson et all. 2. Navarro, Peter Why Johnny Cant Lead Harvard Business Review; Dec2004, Vol. 82 Issue 12, p17, 1/2p. 3. Collingwood, Harris Businesss Dirty Little Secret Harvard Business Review October 2002 pages 24-25.
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Chapter 10: Networking 501

Never let anyone tell you no, who doesn't have the power to say yes. - Eleanor Roosevelt, U.S. First Lady
We work to become, not to acquire. - Elbert Hubbard, American businessman
The one unchangeable certainty is that nothing is certain or unchangeable. - John F. Kennedy, 35th U.S. president
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This chapter on networking is based on tactics I have created and used to network during my career. If you are as Malcolm Gladwell would say a connector you will eat this stuff up (See the Tipping Point section within Chapter 6 for more information on connectors). If you are not use it as a guide to at least meeting the people that you need to know to utilize your strengths. The Eight Networking Tricks of Rainmakers 1. Linkedin.com Inroads: Linkedin.com is a great resource for networking with other professionals within your industry. You can make connections with thousands of individuals that you can ask for advice from and network with. Most people who join the website want to move forward with their careers or they would not take the time to try networking online. Use this website to find professionals within a company you want to work at, identify potential new employees, and propose new partnerships. Linkedin.com is free and backed by a leading technology venture capitalist firm, Sequoia Capital. To join my network, send me an email at Richard@RichardCWilson.com. 2. Easy Email Access Many people are hard to reach. This is not an accident. They are often busy or would simply receive too many sales pitches or spam emails if they are contact information was open to the whole world. 95% of all email addresses within established corporations use standard email formatting. For example if you worked at Widgets, Inc., your email address might be Richard.Wilson@Widgets.com and your co-workers
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email addresses might read Mark.Helmick@Widgets.com and Chris.Hege@Widgets.com. Every personal email address within the company is probably formatted so they read FirstName.LastName@Widgets.com. Remember, email addresses are not the same across companies, just usually within a single company. This turns your quest of contacting your targeted professional into a much easier game. Visit their About Us Contact Us or Customer Service web pages online. One of these areas usually includes somebodys personal email address, which will reveal the formatting across the entire company. If you do not have any luck finding an email address try sending a short note to their customer service department and wait for a response that will usually come directly from an individual with a standard email address. Although most people wont mind you doing this, or even ask how you got their email address, you should be cognizant that some people might react negatively to being bothered by someone they do not know. Many people have told me that they admire that kind of intelligence and tenacity in trying to get things done. Keep your message very brief and to the point, and keep it as professional as possible. This tactic will help you gain access to people that others would give up on after checking a website or trying to call a few times. The point of emailing someone that has not provided you with their contact information is not to pester or sell the contact on something they have not shown interest in. This tool should be used to network and suggest a meeting for coffee or discussion of an idea over the phone that might benefit both parties. 3. Informational interviews: Informational interviews are meetings usually initiated by a professional looking to learn more about an industry, company, or potential set of positions. It is a meeting where the goal is to educate someone and establish a relaw w w . R i c h a r d C W i l s o n . c o m R i c h a r d @ R i c h a r d C W i l s o n . c o m
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tionship. Informational interviews can be a great way to get your foot in the door at a new organization or learn about potential positions that are not open to the public. Many informational interviews lead to company tours, resume forwarding, and employment offerings. While being careful not to mistake this informational interview for a formal interview, creating a strong rapport with your contact and really selling yourself can create an inside champion of your skills and abilities. I have conducted over 30 informational interviews and I have only been turned down about 5 times out of about 35 requests that I made over the phone or in person. I was paid more when I graduated from high school then my teachers and the same as my college professors when I graduated from college and both of these jobs came from conducting informational interviews. They work. 4. Resume buffing: Your resume is an extension of yourself. Until a company has gotten to know you well, it is you on paper. While most reports and documents should not be passed on to others without going through five drafts, resumes should be reviewed 20 times before, being forwarded to a potential employer. It should not exceed one page in length, so the time to review it each time should not be too bad. If you have never done this before pass your resume around to a few close professionals that you trust and have them help you. Make sure that your resume is unique, action word packed, and professional, stating real accomplishments and testimonials from past supervisors, peers, or professors. What could you do to improve your real skill sets while improving your resume? Toastmasters? Publications? Networking? Association Memberships? Ask what hiring managers care about and work on acquiring those experiences. 5. Persistence: The importance of persistence in networking cannot be overstated. Start making it your goal to have lunch, coffee, or an informational interview over the phone at least once a week within a professional in your industry. Some peo-
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ple will answer on your first phone call and give you any information you need, while others will take months to track down. Never take any of their responses personally. My father always said no response means nothing. Try to understand their point of view and learn from the situation for your next networking initiative. While networking, you will run into all types of people and learn how to read each unique individual and adjust your approach accordingly. If you leave a voicemail on Monday, follow up with an email, and wait 4-6 business days before leaving a second one. If you network enough, you will gain a very sensitive feel for how much persistence is helpful without being so pushy that others do not want to take the time to help you. 6. Website: Create a website that describes your experience, education, and any relevant professional publications. I have found it very useful to have my resume downloadable directly from the website in Microsoft Word format. This enables you to be Googled and lets you give people your web address over the phone or on a business card. For an example of this type of a website visit www.RichardCWilson.com. 7. Presentations: Your ability to effectively communicate ideas, create PowerPoint presentations, and give speeches will greatly help build your personal image and career. No matter how early or far you are in your career, it can be built stronger by improving your speaking skills. Join a local toastmasters club, or start speaking at local schools and associations. The best part about presenting information is that it turns you into a source of value and brings people to you. 8. Publish: Publishing articles, books, newsletters, columns, and websites are other ways you can become a valuable resource
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to others. If you dont think you can write well enough to publish anything professionally, start writing your first piece today and have a friend or peer at work help you edit the work. 9. ZoomInfo.com: This website is an aggregator of web presences for both corporations and individuals. Go to Zoominfo.com to complete a profile on yourself and your company today and use this website while conducting due diligence on potential new contacts. If you would like to conduct an informational interview with me or see who I could introduce you to please contact me at Richard@RichardCWilson.com.
Chapter 10:
Negotiation Tools
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He who has learned to disagree without being disagreeable has discovered the most valuable secret of a diplomat. - Robert Estabrook
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Dozens of books have been published that focus on negotiation tips, tricks, and best practices. Some celebrate win-win collaborative agreements, while others prescribe ethically gray competitive bargaining tactics. This books aim is to give you a basis of negotiation theory as a science to assist your professional and corporate-wide effectiveness at the bargaining table. Negotiation is the process of reaching agreement between two parties that is mutually acceptable. It is a communication process. In and through communication, negotiated agreements are formed. Everybody negotiates on a daily basis whether it be with friends, vendors, or co-workers. Negotiations can take place over the internet, phone, fax, telephone, or face-to-face meeting. The three possible results to every negotiation include: 1. Win / Win 2. Win / Lose 3. Zero Sum Although negotiations maybe include parties with different information and objectives, most experts agree that the negotiating process consists of five basic steps. 1. Preparation a. This is the stage where you will learn everything about the negotiator you will be working with to understand your position, each partys BATNA (Best Alternative to a Negotiated Agreement), and conduct any competitive intelligence or run through any game theory scenarios that are necessary. 2. Relationship building
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a. The relationship building stage is where both parties begin discussions and get to know each other face-toface. This stage can include days of meals, tours, and introductions or be as brief as a handshake associated with a few lines of small talk. 3. Information exchange a. This stage begins when one side starts to communicate their position in the negotiation. This often includes a formal presentation followed by explanations and questions and answers. 4. Persuasion a. This stage, obvious by its title includes trying to convince the other party to accept their proposal. This could include both parties working toward a win-win situation or involve one party trying to influence the other. 5. Agreement a. This is the point at which both parties agree on an acceptable solution to the issue at hand. Why do we care about segmenting the negotiation process into its separate stages? As with any system, delineating the process into distinct types of intentions and actions can help identify and focus energy on specific potential process improvements. For example, focusing on your relationship building process to build a uniform approach across your company can help build a solid reputation as a company that works towards open collaboration and partnerships across an industry. There are several different situational factors that can change the process and results of a negotiation. These include: o Geographical location
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Is the negotiation location on-site for one company? Expensive to travel to for one firm? The daily costs of negotiation can place unbalanced pressure on one firm to reach a solution. Room arrangements o Is the room set up with a round table, or two tables on opposite sides of the room? Some rooms are built to feel more collaborative than others and should be kept in mind while preparing for a negotiation. Selection of negotiators o Different areas of the world or even within a country select negotiators based on different criteria. In Mexico, managers might be selected for their social influence where in the U.S. it might be based on their competence and position within their firm. Time limits o Are there limits set by one or both firms that will put pressure on the negotiation at some point? This can make a big impact on what concessions are given by each side, and are often overlooked. Verbal tactics o These include promises, threats, warnings, selfdisclosures, questions, or commands. Nonverbal tactics o Silence, tone of voice, facial expressions, body position and gestures. These can be used to send signals to the other team and should be managed among your own team to not send the wrong signals. Facial Glazing o Facial Glazing is looking at a counterparts face, specifically making eye contact and communicating some level of intimacy. Initial Offer o Making your first beginning positioning statement sets the tone and mood for the negotiation. Was it extreme? Explained using third party statistics and facts? o
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Did the party seem hard-nosed about sticking to its guns or willing to work on creative solutions? Touching o While many cultures including the United States and Japan often only touch while shaking hands in a negotiation, touching is often used in countries like Mexico or Brazil to signify confidence or the building of a relationship. This can change the direction of a negotiation and should be paid attention to while doing business abroad. (1)
How you address the other party in a negotiation will be reciprocated in their response and approach to the negotiation as a whole. This reciprocity is referred to as Interpellation and means that if one treats another party with great respect, they are likely to act in the same manner. How you address other interpellates or calls forth details of what the other group will really act like, for better or for worse. From the science of the communication world, there are five disciplines of strategic intelligence and tactical ingenuity that you can use to manage yourself or your team within a negotiation. 1. Self Mastery: This involves the willingness to move beyond self-consciousness and employ the ability to break out of negative spirals and reactive behaviors. You must remain true to your long-term interests at every turn. 2. Mental Models: Analyze your own mental models that limit what you believe is possible or instill assumptions upon areas left un-discussed. 3. Vision: You must know what you want and have a vision of what success will be. Do not confuse your fear-based positions with your courage-based interests. Most people do not
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know what they want and create short-term reactive solutions based on current resources or positioning. 4. Workability: You must be able to call others to your vision and build your solution in a logical fashion that makes sense from their perspective. 5. Integration: You must integrate these four disciplines into one whole system of connected processes to create a superior system of negotiation. (2) 3D Negotiation There are three ways to improve the effectiveness of your personal or corporate wide negotiations. They could employ tactics, deal design, or game setup efforts. Great negotiators practice 3D negotiation. They are experts at not only playing the game well but also creating the right type of game in the first place. Like a commander who positions his troops before battle on high ground before combat, a master negotiator is able to define a problem so that the solution will favor him. The point is that like wars and real estate, the value or profits are created within negotiations largely before the talks have begun. The structuring of the process, the game both will play, will greatly influence in the outcome. One way to change the game is by claiming value. This can be done by adding issues, parties, or information to the discussion. Issues which can be sacrificed later or parties that show the other party that you are not bluffing, but really committed to moving forward one way another, can all aide the progress of your negotiations. Getting third party assessments, opinions or judgments can help you explore the real value of your Best Alternative To an Negotiated Agreement (BATNA), and allow you to present it in a robust way to the opposing party.
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Microsoft used 3-D negotiation tactics while negotiating against Netscape for AOLs browser usage. While the negotiations were over Netscape and Microsofts browser software, Microsoft changed the game by giving AOL real estate space on the Windows Desktop. This closed the deal as it allowed AOL to reach an additional 50 million people per year at effectively no extra cost. Bill Gates sacrificed the short-term success of MSN, but played that card to gain the long-term viability of Internet Explorer and his Windows operating system as a whole. He changed the game; they were technically inferior in terms of browser performance but chose to change the focus to what would really make the business decision makers at AOL sign the agreement. Three specific tools you can use to aide you or your group in 3-D negotiations includes: 1. Scan Widely: To create the right game, you will usually have to scan your environment. What makes your company unique? What resources or relationships do you have that you could employee within this negotiation to change the game? Do not come to the table with an idea, come with a commitment from the other needed parties so all that is needed is their signature. 2. Map backward and sequence: Identify the end best case scenario goal and then work backwards to ensure your firm has an iron grip on achieving it. Think backwards to possible objections and thinking/negotiating processes that will occur along the path to the decision. What extra issues can you add or what can you take away from their BATNA that will make closing the deal more attractive? 3. Manage the information flow: Timing is as important in negotiation as it is in humor. Mismanaged exposure to plans or too much information can spoil a deal or create mistrust or confusion.
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It is important when implementing these negotiating tools and all others to err on the side of ethical negotiation practices. If you are intelligent enough to run a honest profitable business there should be no reason to cut corners. Try employing creativity every time there is an opportunity to use trickery. (3) Six Negotiation Pitfalls Sometimes it is just as important to remember what not to do as it is to remember what to do. Focus on avoiding these six mistakes and you will be better off in your negotiations: 1. Neglecting the other sides problem a. You need to understand the other sides problem at least as well as your own. Repeat back to them in different words what you understand it to be and explain to them your solution in their terms. What is in it for this specific company and specific employee to agree with our proposed solution? 2. Paying attention exclusively to price a. Money is left on the table at negotiations everyday because one or both parties are focusing only on price. This hampers creativity and joint gains based on partnerships, joint-use, or knowledge transfer pay-offs. Thinking outside the box and within the bounds of both parties interests can go a long ways. 3. Letting positions drive out interests a. In every negotiation, there are issues, positions, and interests. Issues are the items being decided on during the negotiation. Positions are each partys stand on the issues. Interests are the concerns each party has that will be affected by the negotiation. Negotiation is half economics and half emotional, and people are often judged or become personally emotionally involved with their specific positions rather then the
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overarching interests that both groups might have in common. 4. Searching too hard for common ground a. Sometimes current negotiating themes emphasize looking for win-win situations to such a high degree that parties forget that differences are sometimes needed to create solutions where there is no common ground. Some situations require compromise and create a solution that is the best possible for two groups without really finding any common ground. 5. Neglecting the BATNA a. Roger Fisher, Bill Ury, and Bruce Patton coined the term BATNA in their book Getting to Yes to represent the action a group would take if the negotiation fell through. Examples of BATNAs include negotiating with another group, simply ending the possible deal, sourcing the deal internally, or forming an alliance. A BATNA can be treated as a sort of hurdle rate for negotiations. Both groups must like the negotiated deal better then their BATNA to be able to accept it, otherwise by definition they would simply go with their BATNA 6. Failing to correct a skewed vision a. Whether the negotiations are being conducted internationally or intra-culturally, a vision as to where they are headed can drift far from reality. Self-serving biases, misinterpretations, and unforeseen consequences of details can all send the negotiation off-track from the path towards success, or far from the route you thought it was following. (4) Aristotle identified three means of influencing others: o Logos (logical appeal)
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o o Pathos (emotional appeal) Ethos (appeal derived from respect for the speaker)
The form of appeal that your negotiating team chooses has a great effect on the strategies you should follow and preparation that will be conducted. One study has shown that the following three verbal tactics can increase the positive outcome of most negotiations for the employing party: 1. Asking more questions. 2. Making fewer commitments before the final agreement. 3. Increasing the amount of the initial request. What is more important than memorizing the list above is taking into consideration how these tactics change the negotiation. What type of relationship are you building with this future partner or client? What types of behavior are best for the long term health of your employees and organization as a whole? In preparation to negotiate, you will need to asses your own needs and those of your counterparty. If your groups needs are not readily apparent, they might be derived from your strategic plan, personal goals, mission statement, or official goals and objectives. While assessing your counterpartys needs you should look at their annual reports, website, and ask others who are familiar with the company. (5) Pre-Negotiation Checklist Ensure that you are about to negotiate with someone of authority who can get things done. Understand the existing or foreseen objections within the upcoming negotiation.
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Review your top 7 positioning levers that you can use that will be seen as valuable negotiating points by the other side. Fully present your value proposition before negotiating begins. Have a strong understanding of your BATNA and try to define theirs to know whether the discussion of either one would add to your leverage. Work in a coopitive fashion, competitively but looking for winwin solutions. Be confident, patient, and listen before stating your view. Negotiating Checklist Take notes to remember key points and if nothing else show continued interest and intent listening Listen as carefully as possible to what is and is not being said. Use silence as a tool. Explain how the other side would benefit from the agreement and confirm that you have understood this correctly. Try to employ open-ended questions to confirm your ability to understand their position. Review small agreements periodically to reinforce them. Post-Negotiation Checklist Agreement Made Review and summarize verbally and/or in writing the agreed upon terms for everyone involved in the negotiation. Reinforce the value you will be delivering and thank the other party for their time. Debrief with your team or self on what worked well and what you learned about this specific customer and type of negotiation.
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No Agreement Made Thank the other side for their time and efforts. Do not burn the bridge; keep the door open for further discussions. Debrief your team on why the deal did not go through noting what did work well, and what was learned about the customer and the type of negotiation used. Sample closing statements The following list of closing statements comes from JustSell.com, an online resource for sales professionals. Would you like to move forward? Are you ready to get started? Can we go ahead? We can start the process today with a credit card if you would like. We can deliver it to you by the close of business tomorrow if you would like. We can have it delivered by the end of the month if we can get a signed contract into the implementation department by Thursday. Should I forward a contract so you can get started? Would you like to try it for a quarter?
(note: any closing statement should be delivered or asked with confidence and an expectant attitude) (6) Keeping Negotiations Out of Court
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Even relatively small court cases can damage relationships, tarnish reputations, absorb talent, and create a financial black hole. Although lawsuits seem to be on the constant rise, so is the amount of available solutions to avoiding having to go into court in the first place. These options are forms of Alternative Dispute Resolution (ADR). They include arbitration, mediation, rent-a-judge, summary jury trial, and mini-trial. Arbitration: This form of ADR is generally adversarial in nature, and the outcome includes a binding decision made by a third party. It is the closest thing to litigation out of all the ADR choices available. Mediation: In mediation, the third party does not impose a solution but simply helps the two parties resolve their differences, and come up with their own solution. Rent-A-Judge: This is a unique variant to arbitration where a retired judge is hired to hear the case of the two parties and make a decision on the issue. All of the procedures during the course remain the same, but it is not a formal court case so it does not have to be open to the public. The decision is often binding, but the process of this and legal standing of the decision can vary based on location. Summary Jury Trial: This tool is used to help two parties who have totally different views as to how a jury would react to a certain case. Both sides get to present their ideas to a jury made up of potential real jury members and then the jurys decision is made, providing input to both sides. This can help bring a settlement out of a stalemate during negotiations. Mini-Trial: This option is a mix of traditional settlement negotiation, mediation, and adjudication. It is a voluntary procedure and requires the acceptance by both sides on the outcome. It is often used to
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calculate the odds of wining a real trial and settling based on that possibility. (7) Summary The negotiating process moves through the following phases: preparation, relationship building, information exchange, persuasion, and agreement. There are three possible outcomes to every negotiation, they include: Win/Win, Win/Lose, and Zero Sum. The five disciplines of strategic intelligence include selfmastery, mental models, vision, workability, and integration. The three ways to improve the effectiveness of your negotiations: 1) tactics 2) deal design 3) game setup Three specific tools to use in 3-D Negotiations 1) scan widely 2) Map backward and sequence 3) manage the information flow Aristotle identified three means of influencing others; logos, pathos, and ethos.
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References 1. Francesco, Anne and Gold, Barry International Organizational Behavior,Pages 121 and 208 Copyright 2005 by Pearson Education, Inc. 2. Leonard C. Hawes, Communications Sylabus 6000-002 fall 2002 Negotiation Theory & Method. 3. Lax, David A. Sebenius, James K. 3-D Negotiation Harvard Business Review; Nov2003, Vol. 81 Issue 11, p64, 9p, 1 chart, 1 diagram, 1c. 4. Sebenius, James K. Harvard Business Review; April2001, Vol. 79 Issue 4, p87, 9p. 5. Fransesco, Anne, and Gold, Barry. International Organizational Behavior Copyright 2005 Pearson Education, Inc.
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6. JustSell.com Sales Reference Materials. (See www.JustSell.com). 7. Allison, John R. Five Ways to Keep Disputes out of Court Harvard Business Review; Jan/Feb90, Vol. 68 Issue 1, p166, 8p.
Chapter 11: International Negotiation
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My father said: You must never try to make all the money thats in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you wont have many deals. - J. Paul Getty
Negotiation, like all other types of business management processes, is affected in international business by the diverse cultures and ways of doing business in different regions of the world. Many of these business norms are rooted deep within the cultural fabrics of society and the reasons why some countries differ in their business norms, such as typically make decisions as a group rather then individually, are not readily apparent. This part of the book tries to give some guidance to negotiating abroad by presenting highly developed stereotypes about different countries and regions of the world. Even more importantly it presents frameworks to analyze cultures and make sense of the different business norms you can encounter globally. These stereotypes are meant to be used as a high level starting point for those societies in general, and additional regional and industry specific research should be conducted before going into any international negotiation.
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Learning more about your counterparty in a negotiation is a great way to increase the effectiveness of your negotiating. Your company should learn and maintain as much knowledge about the region, culture, and specific company as possible to interpret or emulate their communication efforts and business practices. Other cultures negotiating styles will always differ, even within your own team; it is important is to know how they can differ, and what the best approach for each situation might be. Todays business world commonly involves establishing partnerships, supply chains, and operations in several parts of the world. It is important to at least be cognizant of the important differences across cultures so you may deal with real issues, and move past the distractions caused by the different cultural norms in place. These distractions are commonly referred to as noise, and they may greatly increase the cost and even threaten a successful outcome of a negotiation. Some types of companies that often engage in international or cross-cultural negotiations include joint ventures, multinational corporations, venture capital firms, and software companies. According to Professor Perlmutter of the Wharton School of Business, international managers spend more than 50 percent of their time negotiating. Effective negotiators form a strategy based on the characteristics of the situation and people involved. The most common characteristics of successful international negotiators are high self-esteem, breadth of knowledge, flexibility, stable and optimistic personality, high aspirations, a likeable personality, credibility, and great people skills. There are four areas where differences in culture can make a meaningful difference in the process and outcomes of the negotiation. These include language, nonverbal behaviors, values and analysis or decision-making processes. (1)
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It is important to know the common business practices and norms within the country you are hoping to sell your products within. You must pay attention to changes in gatekeeper and key master roles and take the cultural dimensions of different areas into account within your sales process. Culture influences negotiators and every aspect and stage of the negotiation process. Various cultures are used to working towards different goals in the field of negotiation. While some regions value win-win situations, others would rather compromise or try to create a win-lose situation. (2) Sales Negotiation Differences There are three things that can really affect sales negotiations in different cultures 1. Individual Differences (affective disposition and experience in cross-cultural negotiations) 2. Cross-Cultural Differences (internalized cultural values, emotional expression, linguistic style) 3. Context (relationship between negotiating partners, levels of trust, and conditions surrounding a negotiation) During a sales or negotiating process conversations proceed in positive upward spiral or negative spiral downward towards poor results for both parties. There are things you can do to break out of negative spirals and increase the velocity of any positive spiral that you are experiencing. The authors of The Role of Affect in CrossCultural Negotiations suggest that you focus on your personal attitude, focus on the outcome, or use one of their prescribed tools. The tools they suggest include cracking a joke, talking about casual personal matters to build rapport, or taking
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a short break to the let the air clear. The main point of these tools is to ease tension, and show you are motivated to come to an integrated agreement. (3) An effective metaphor for doing business within an entirely new culture is an iceberg. Above the surface, you can witness the visible traits of the people within the culture. You can learn a lot about the culture, but at most you usually come up with a list of dos and donts for business practice there. The next layer of the iceberg that is underwater not readily visible are the shared values. These require inferences from behavior that you might have observed in the new culture. These are more powerful because values partially drive behavior. Shared assumptions make up the most submerged part of the iceberg representing the very abstract core beliefs of a society. These are the hardest to uncover but can help you truly understand a culture. (4) What we teach the next generation of managers and lawyers in our schools strongly influences the negotiating style and practices of tomorrows businesses. Throughout the U.S. educational system, we are brought up to compete, for grades, in sports, and jobs. Adversarial relationships and winning are essential themes of the American males socialization process. Business and law schools give the grades and awards to those with the best arguments, research, and presentations. What they do not teach is how to ask questions, get information, listen, or use questions as a powerful persuasive technique. Few people know that in most places the one who asks the questions controls the process of negotiation and accomplishes more in bargaining situations. It is important to forget your assumptions and face the reality of business in each culture that your business operates or you negotiate in. It can help to break down the process into separate parts to investigate, such as; who are the players? Who decides what? What are the informal influences that can make or break a deal?
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Who are the players? To be an effective negotiator you have to consider what other governmental, regulatory, and corporate players can affect the deal. For example in the United States the SEC, Justice Department, or Federal Trade Commission might all play a role in the negotiation. What similar organizations, if any are you forgetting about? Who decides what? Just as important if not more so then knowing who is playing, knows each groups role in the process. You will not know which issues are the most important or which groups you should really be selling your solution towards if you do not know who has power over what parts of the business. What are the informal influences that can make or break a deal? The hardest question you must ask your own group is what informal influences are at play within this negotiation. What traditions, social networks, or industry ties and expectations exist that could alter the direction or interests of the parties within the negotiation? This could include powerful families, industry groups, the mafia, or other labor groups. Not paying attention to these factors can lead to a negotiation going up in flames for no apparent reason at all. The following box is taken directly from James Sebeniiuss article entitled The Hidden Challenge of Cross-Border Negotiations
Cross-Cultural Etiquette and Behavior: Dos and Donts Greetings How do other people greet and address one another? What role do business cards play?
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Degree of Formality Gift Giving Will my counterparts expect me to dress and interact formally or informally Do businesspeople exchange gifts? What gifts are appropriate? Are there taboos associated with gift giving? What are the attitudes toward body contact? Is direct eye contact polite? Is it expected? How should I carry myself? Formally? Casually? Is it rude, embarrassing, or usual to display emotions? Is silence awkward? Expected? Insulting? Respectful? What are the proper manners for dining? Are certain gestures or forms of body language rude? Should I be punctual and expect my counterparts to be as well? Or are schedules and agendas fluid?
Touching Eye Contact Deportment Emotions Silence Eating Body Language Punctuality
Here are a couple of more regional specific rules Dean Allen Fosters Bargaining Across Borders: o o Never show the sole of your shoe to an Arab, for it is dirty and represents the bottom of the body. Look directly and intently into a French associates eye when making an important point, but avoid direct eye contact in Southeast Asia until the relationship is firmly established. In Italy, do not touch the side of your nose; it is a sign of distrust.
The list goes on and on and can certainly help you avoid mistakes. The rules are so complex and detailed that it is difficult to keep them
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straight, and the likelihood of regional variation further complicates matters. (3) You must analyze many different areas to avoid irritating the other party, and starting or ending a negotiation with a bad note. These areas include: o o o o o o o o o o o o o o o o o o o o Welcoming Transportation Dress codes Gift giving Entertainment Privileges Courtesies Ceremonies Official forms of address Presentation of credentials Business and visiting cards Receptions Language Documentation Departure Precedence Use of interpreters Compositions of the negotiating teams Seating arrangements Timing
The important thing to take away from the lists above is that there are several areas where cultural norms differ. It might be wise to create a similar short analysis of a country you are planning to do business in. International Negotiation Attributes The following are different areas of distinction that are usually found between major countries and regions of the world.
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Role of Individual Trust Risk Attitude Individualist vs. Collectivist Based on a Relationship or Intuition Risk Accepting or Risk Adverse
Basic Concept Selecting Negotiators Issues Stressed
Competitive vs. Cooperative Skill/Experience vs. Status Substance Issue or Relationship
View of Time Form of Agreement
Time is Limited vs. Longer Time Horizon Written vs. Verbal; Legally Binding or Not
Protocol Communications Persuasive Arguments
Degree of formality Verbal, Non-Verbal, Use of Silence Facts & Logic, Intuition & Emotion or Tradition
Geert Hofstede is one of the most well known experts on cultural negotiations. He conducted research by analyzing IBMs international subsidiaries around the globe for cultural trends and distinctions. His study spanned over fifty countries and included professionals of about the same educational level. Hofstedes efforts resulted in his conclusion that cultural differences revolved around four dimensions.
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Power Distance Power Distance is the degree to which the less powerful members of society accept an unequal distribution of power as normal. Individualism and Collectivism looks at the value cultures place on individual accomplishment and actions vs. the value of being a member of a group. Masculinity within a culture represents the amount of value placed on assertiveness, performance, money, and competition. Femininity represents a preference for values around quality of life, service, and caring for a less fortunate people are most valued. This is the level of comfort cultures have in structured vs. unstructured situations. A high uncertainty avoidance norm within a business or culture might lead you to expect a need for a more granular discussion of negotiated details and contract terms.
Individualism vs. Collectivism
Masculinity vs. Femininity
Uncertainty Avoidance
Results of the Study: Hofstede found that when a region showed larger Power Distance acceptance levels it lead to a more centralized control and decisionmaking structure. He also found that collectivism will lead to a more stable relationship over time and that masculinity leads to ego-boosting behaviors and a liking of the strong by opposing teams and those working together.
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Understanding the other partys culture in a negotiation allows you to understand, communicate, and plan more effectively. You should read about the countries traditions, customs, and history while questioning others that have visited or lived in the area. Most of the research efforts should be spent on culture, not language, while still avoiding blind reliance on cultural stereotypes. Avoiding irritants while communicating ideas can help from knocking an otherwise successfully progressing negotiation off-track. International Country Profiles Many countries and regions have unique patterns of personalities and negotiating norms. Some of these norms are taught explicitly while others are subconsciously absorbed. Negotiations often include distinct sets of cultures, religions, morals, style of communication, belief structures and ethics. All of these preferences and styles need to be understood to effectively understand and Although some stereotypes over generalize characteristics of what cultural negotiation approaches, most of them are somewhat true. It can be dangerous to stereotype the groups you are negotiating with based one the culture that they operate within. It can be an advantage to be cognizant of some things generally true in the culture as a whole, but at the same time focus on the individual. Personalities, backgrounds, and interests should play a lead role in assessing the individual or team. American Cross-Cultural Norms Graham and Herberger have identified 10 characteristics as typical American strategies towards negotiation. The following section lists these characteristics and explains how the authors suggest negotiation should be approached differently given their presence.
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1. I can go it alone: Most U.S. executives believe they can handle negotiations themselves. Might as well save those resources for other uses, or so the logic goes. Negotiation is a very complex process and social event where an equal number of smiling faces and brains analyzing possible creative solutions are priceless. Recommended change: Use team assistance intelligently and think about adding technical or technological experts to your team. Involve younger managers who could learn from observing and think of the cost of involvement for anyone as in investment in the outcome. 2. Pardon my French: Most other developed countries are used to speaking in two or three languages when necessary. While English is the most popular business language to date it is important to understand that we are less accommodating than others. Recommended change: Ideally the negotiators should speak the local language, an attempt at learning key words or acknowledging the tradeoffs of using an interpreter can go a long way. 3. Check with the home office: Americans pride themselves on being able to approve the full deal and having a foreign counterparty have to check with the home office can be truly insulting to an American negotiator. What a waste of time the American might think, why arent I dealing with the man who is really in charge? Limited authority is quite common overseas and is a useful bargaining tactic in many situations. Recommended change: While preparing negotiations you should determine the authoritative limits of both parties and gauge the advantages and disadvantages of having different levels of authoritative power for your negotiators.
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4. Get to the point: Americans like to get to the heart of the mater and get down to business. This is starkly different than other customs of focusing on the problem or relationships first which can sometimes be seen as a waste of time by Americans. Recommended change: Many parts of the world rely more on strong relationships then legal systems. This is an important part to remember while trying to make sense of broken commitments or gauging the value of new ones. Spending more time on relationships might be necessary for your executives to operate in a foreign nation. 5. Lay your cards on the table: Americans expect honest and open information flow and commitments. While most cultures value honesty many see conflicts that occur down the road as more important than the agreement which could be easily wiped away. Other cultures see certain tactics at the negotiating table as perfectly acceptable that would be found rude or un-ethical in other parts of the world. A good example of this can be found in Brazil where negotiators often use trickery on a much more common basis then you find here in the United States. Recommended change: Foreign executives seldom-lay all of their cards on the table and you might have to ask the same questions several times to get a straight answer. Some foreign countries are known for producing negotiators who expect to negotiate a lot and make several concessions. You may need to adjust your approach to this type of behavior. 6. Dont just sit there, speak up: Americans are not generally comfortable with silence. This might seem like a small detail
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but those most uncomfortable with it often fill the space with extra information that can get you in trouble during negotiations. Recommended change: Recognize the power of silence and train yourself to doodle or write notes so you are not the first to break silence. Learn to use this tool and more importantly be aware of its use against you. 7. Dont take no for an answer: Persistence is highly valued in the educational and work lives of most Americans. Heros never give up in American folk lore. A negotiating session should be something that you win at, like a sports game. Recommended change: Some negotiations are formal activities where the real action happens within and through relationships. If someone says no in a culture such as Japan, take a break and come back to the issue at a later point from a new angle. 8. One thing at a time: Americans like to tackle things sequentially, while many far eastern negotiators might prefer to wait until the very end of the talks to come up with a solution. Recommended change: Avoid making concessions on any one issue until all of the issues have been discussed. Many other countries gauge the progress of negotiation differently than Americans. 9. A deal is a deal: Americans expect others to honor agreements and fulfill their commitments regardless of circumstances. What some Americans might take as a commitment others might take as simply friendly business talk.
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Recommended change: A deal means something different in every region of the world. Recognize this and learn from past actions of opposing parties and local advisors. 10. I am what I am: Few Americans take pride in changing their strategy for each situation. Most have their preferred or proven way and stick to it through the thick and the thin. Recommended change: You must be flexible to build rapport with international groups and reach solutions that meet both of your needs. International power shifts are happening, we as Americans might have different types of levels of power in the future, and we must adjust our negotiating style to these. (5) Cultural Analysis Four ways to analyze a culture that you will be doing business with include: 1.Relationships: Is the culture deal-focused or relationshipfocused? In deal-focused cultures, relationships grow out of deals; in relationship-focused cultures, deals arise from already developed relationships. 2.Communication: Are communications indirect and high context or direct and low context Do contextual, nonverbal cues play a significant role in negotiations, or is there little reliance on contextual cues? Do communications require detailed or concise information? Many North Americans prize concise, to-the-point communications. Many Chinese, by contrast, seem to have an insatiable appetite for detailed data.
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3.Time: Is the culture generally considered to be monochromic or polychromic? In Anglo-Saxon cultures, punctuality and schedules are often strictly considered. This monochromic orientation contrasts with a polychromic attitude, in which time is more fluid, deadlines are more flexible, interruptions are common, and interpersonal relationships take precedence over schedules. For example, in contrast to the Western preference for efficient deal making, Chinese managers are usually less concerned with time. 4. Space: Do people prefer a lot of personal space or not much? In many formal cultures, moving too close to a person can produce extreme discomfort. By contrast, a Swiss negotiator who instinctively backs away from his up-close Brazilian counterpart may inadvertently convey disdain. (6) Dozens of studies have been conducted and articles published on the stereotypical negotiator from the United States. Through all of these, the common themes often include: Strengths Willingness to make concessions Cooperative and fair Pragmatism Preparedness Win-win orientation Candor, honesty, friendliness Weakness Cultural insensitivity Too quick to concede Dont understand relationship building Poor listening skills Lack of unified constituencies Impatience
Cross Cultural negotiation researcher Stephen Weiss suggests eight strategies for cross-cultural negotiations:
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1. Employ agent or advisor. When neither party is familiar with other, a negotiator can hire an agent to represent him at the negotiation or an advisor to assist. 2. Involve a mediator. This requires the two parties to agree on a third person to facilitate the negotiation and is also useful when neither party is familiar with the others culture. 3. Induce a counterpart to follow ones own script. This is suitable if only the counterpart is familiar with the negotiators culture and manner of negotiating. Then, the negotiator can try to induce the counterpart to follow the negotiators approach. 4. Adapt to the counterparts script. When each negotiator is moderately familiar with the others culture, the negotiator can change some aspects of the usual negotiating approach to be more like the counterparts. 5. Coordinate adjustment of both parties. Another strategy, appropriate when the two parties have moderate familiarity with each others culture, is for the two to mutually coordinate how they will adjust to each other; in other words, they negotiate how they will negotiate. 6. Embrace the counterparts script. One party can offer to completely follow the style of the other when only that party is very familiar with the others culture. 7. Improvise an approach. When both parties are highly familiar with the counter-parts culture, they can improvise an approach, personalizing it and developing the approach as the negotiation unfolds. 8. Effect Symphony. This strategy, suitable when both negotiators have high familiarity with the other partys culture, involves developing a synergistic approach in which the two parties cooperate to draw on the special capabilities of each negotiator.
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Regardless of how much each party knows about each other there is a suggested strategy to help improve the negotiation. (7) The following are characteristics of negotiations often found within the following regions: Western Europe o o o o o o o Typically reserved showing very little emotion. Slow concessions with moderate initial demands and issues being sequentially processes similar to American negotiators. Stronger hierarchy then what is found in the United States. Business people are very fast-paced and punctual . There is an emphasis on initiative & achievement. Individualistic society that is status-conscious. Relationships are slow to develop.
Latin America o o o o o o o o The concept of Face is very important. Very personal and animated, close personal space, and soft handshakes. Must establish relationships through favors and friends are the way to get things done. Big picture spontaneous decision making styles is common. Time is abstract and organized around events, not time frames. Negotiations can move very slow. Individualistic culture based on personal qualities instead of achievement. Strong sense of dignity.
Middle East/North Africa o o Strong eye contact, close personal space, touchy. Group oriented, and very deferential to those of status.
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o o o o o o Relationships are a very important part of the negotiation process. Yes could still mean no in a polite way if it comes off hesitantly. High initial demands, slow concessions, extreme face concern. Group oriented. Bargaining is a way of life. Not punctual or planning-oriented.
Pacific Rim o o o o o Moderate-high initial offers, multiple issues presented and solved at once. Face is important. Relationships and group approvals are important. Reserved body language. Words mean very little, lots of silence.
He who speaks doesnt know, he who knows doesnt speak - Author Unknown Summary Learning more about your counterparty in a negotiation is a great way to increase the effectiveness of your negotiating. Effective negotiators form a strategy based on the characteristics of the situation and people involved. Culture influences negotiators and every aspect of the negotiation process.
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There are three things that really affect sales negotiations in different cultures 1) individual differences 2) cross-cultural differences 3) context To break out of a negative spiral try cracking a joke, talking about casual matters to build rapport, or taking a short break to let the air clear. Understanding the other parties culture in a negotiation allows you to understand, communicate, and plan more effectively. Remember how the iceberg model represents the little parts of a culture that are visible above the surface. Regardless of how much each party knows about each other there is a strategy to help improve the negotiation.
References 1. International Negotiations by David Mitrovica GSEG Recorder March, 2001 p48. 2. Fransesco, Anne, and Gold, Barry. International Organizational Behavior Copyright 2005 Pearson Education, Inc. 3. George, Jenifer, Jones, Gareth, and Gonzalez, Jorge, The Role of Affect in Cross-Cultural Negotiations Journal of Interth national Business Studies, Vol. 29, No. 4 (4 Qtr., 1998) pages 749-772. 4. George, Jenifer, Jones, Gareth, and Gonzalez, Jorge, The Role of Affect in Cross-Cultural Negotiations Journal of Interth national Business Studies, Vol. 29, No. 4 (4 Qtr., 1998) pages 749-772. 5. Graham, John and Herberger, Roy, Negotiators abroad dont shoot from the hip. Copyright 2001 Harvard Business Review; Jul/Aug83, Vol. 61 Issue 4, p160, 9p. 6. Graham, John L, Herberger Jr. Roy A., Negotiators Abroad Dont Shoot From The Hip Harvard Business Review; Jul/Aug83, Vol. 61 Issue 4, p160, 9p 7. Weiss, S.E. (1994a). Negotiating with Romans Part 1, Sloan Management Review, Winter, 51-61
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Chapter 12: Competitive Intelligence
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Competitive Intelligence is the gathering of information about real or potential competitors to assist in strategic planning. It is not espionage, as the process uses the access to public records to conduct research. The knowledge you gain during the intelligence gathering process can change how the company operates, invests, and plans to position itself in the future. Due to the reliance on primary research, you must confirm everything you discover to ensure that it is accurate and reliable. This requires human judgment and often involves throwing away assumptions and political groups that want to see certain outcomes to the process.
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There are many reasons why companies conduct competitive intelligence. As mentioned above it useful for both game theory and strategic planning, but it also adds value in the areas of pricing, distribution adjustments, investments, and the potential creation of a competitive advantage by turning your company into an agile startuplike guerrilla. Conducting competitive intelligence work can include analyzing industries, environmental trends, economic trends, political developments, global trends, technology developments, regulatory and compliance trends, and the evolution of parallel or historic industries or markets. Most Competitive Intelligence initiatives start with an internal knowledge assessment. This CI Audit as it is sometimes called helps provide the company with a starting point, and can lead the team towards the areas with the most promise. Although internal knowledge is useful, it is important to remember that every assumption should be challenged, and confirmed facts of the market takes precedence over any assumption or personal belief. Other sources of competitive intelligence research include: Online databases Investment community sources Government sources Interviews, surveys, drive-bys, or on-site observations Consumer groups, competitors, newspapers, suppliers, distributors, customers, journals, financial reports, wire services, trade associations, academic researchers, sales force employees, customers, industry periodicals, promotional materials, competitor products, tradeshows, annual reports, reverse engineering, service reengineering, and competitive benchmarking
Early Warning Systems

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A recent poll of over 140 corporate strategists showed that most companies have been totally caught off-guard by as many as three high-impact events in the past five years. Moreover, the vast majority (97%) said that there was no "early warning system" in place at their company. At the same time, these strategists admit that foreseeing these events is a crucial part of their job. There are hundreds of informational resources available, such as the ones mentioned above. These sources allow businesses to conduct competitive intelligence projects, and create a warning system of some type. The hard part is not getting information; it's making sense of what's actually valuable or useless. Building an early warning system of your division or company involves three steps. 1. Anticipate Specific Futures: Scenario analysis or game theory tools are useful ways to create long-term investment, development, and strategic plans. In this stage of the process, you identify all of the possible situations, the estimated probability of each happening. Each of these scenarios should list the actions of different competitors or outside groups and what the result would be. This should help you develop a better understanding of what might happen, and where resources should be invested to mitigate the risks, and take advantages of what has been identified as the most probable unfolding of events. 2. Appoint Sentries to Watch the Signals: Once the initial scenarios are mapped, the business must keep an eye out for indications that one of the scenarios is unfolding. Lookouts must be made out of ordinary employees. This is done by assigning responsibilities to individuals who are exposed to certain types of information, and by creating a company-wide knowledge management system. One way companies are now doing this involves the use of swarm intelligence technology. This technology collects information from all employees within a company and allows them to vote on the threat level of potential news. 3. Expedite Decision Making: Information and intelligence are
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only assets when put to use. When agility and the pursuit of new high growth markets are widely seen as "smart" business moves it is surprising to see that only 13% of the companies surveyed had a way of "forcing quick action," and even less react even "fairly soon" after an important event. War games can serve as a good tool to push decisions into actionable items that have been critically evaluated and acknowledged regardless of the current bureaucratic hurdles. Companies will always face new threats, and profit from new opportunities. Executives who are successful in the end will employ intelligent tools and processes so they will not be left without a chair when the music stops. (2) Clone Your Opponent The best way to read a competitor and guess their next moves is getting inside of their shoes. Look at your competitors, and your own company and team from their perspective and emulate their decisionmaking process and priorities. The New England Patriots have used this very tactic while facing the Indianapolis Colts and their star quarterback Peyton Manning. The Patriots did not believe they would be able to stop him with their conventional defensive tactics so they invented a new one. They selected their backup quarterback, Damon Huard, and made him live and breathe the life of Peyton Manning. The backup studied every aspect of Peytons game, from how he walked, called plays, and adjusted to different game situations. The Patriots scrimmaged against this mock Peyton Manning and got used to his style of play and pattern of offensive decisions. Game time came and the Patriots intercepted four of Peytons passes and crushed the Colts. (3)
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This type of cloning tactic should be integrated into your sales teams efforts to guess where the market is going, or what your competitors might do in the near future. Analyzing problems and plans from the perspective of your competitors can help simple ideas evolve into viable solutions. Assign a group or individual team member to become an expert on a competitor that really matters. Tie their ability to emulate this competitors decision-making process and movements to their salary or bonus. Summary Competitive Intelligence is used throughout a business, especially in strategic planning. Although internal knowledge is valuable, it is important to forget assumptions and make decisions based on confirmed facts when possible. A recent poll of over 140 corporate strategists showed that most companies are caught off guard by as many as three high-impact events in the past five years. Building an early warning system involves anticipating specific futures, appointing sentries to watch for signals, and expediting decision-making. The best way to read a competitor and guess their next moves is to get inside of their shoes.
References 1. Malhorta, Yogesh, Competitive Intelligence Programs An Overview. Copyright 1996 BRINT Institute 2. Fuld, Leonard "Be Prepared" Harvard Business Review; Nov2003, Vol. 81 Issue 11, p20, 2p, 1c th 3. June 27 Fortune Magazine page 97-102 Great Escapes Time, Inc. Copyright 2005 Volume 151 No. 13
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Conclusion
Yesterday is gone. Tomorrow has not yet come. We have only today. Let us begin. - Mother Teresa
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The sales and negotiation material in this book can be used as a training manual, educational piece, or an investment in your personal development. Through the past 14 chapters, I have included some best practices, working models, actionable checklists, and wellresearched theories. These can serve as great tools, similar to a painters brush and edger, but without the right approach, they are useless. In the movie, City Slickers Curly tells his crew that the secret to life is one thing. When they ask what that one thing is, he laughs and says, Thats what you have to find out. While it is true that everyone might have a different trigger or goal that internally motivates or inspires them, I was woke up while listening to the story retold below. For me it is that one thing and understanding whatever drives you will enable you to use the tools previously discussed in this book to the best of your abilities. Kaizen means continual improvement. It sounds great. Why not always move forward and improve? If we improved our relationships and ourselves every day, we would be happier then we are now. The secret to actual being successful at this is turning the means into ends in themselves or that the ends are simply a bonus. Dr. Jonathon King was my professor for a couple systems thinking classes at Oregon State University. He started the first class by telling a story about painting a fence around his yard. There was over 50 feet of fenceboard for him to cover and the whole weekend ahead of him to labor in the sun until he returned to his teaching job on Monday morning. He complained about it to anyone who would listen and continued to think negatively about the project all the way through painting about 5 feet worth of the fence. After realizing he had only gotten about 10% of the work done in the first half of the day he put down his brush and took a
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break to grab a drink. Upon returning to the fence he looked at the tiny amount of work done and realized that even an energetic child could have been more productive. Although the drudgery of having to paint in the sun during his valuable free time was what made the painting so egregious, it was obvious that his negative attitude was actually making the project last longer and take up more of his time. He sat and thought about this while drinking his lemonade and decided to create a new plan for tackling this project. He decided that he would get excited about the project, turn it into a game, and challenge himself to paint the fence better and with better quality then he had before. He set a time goal to finish the project in half the time that he had originally planned, tried to do an excellent job instead of just getting it done, and became excited about the means of painting instead of simply completing it so he could spend the rest of his free time as he pleased. It worked. At one point, growing up Dr. King found that this way of approaching any project, whether it be painting a fence to writing a book can be done better if you see it as a game. Doing so creates a fulfilling experience that usually ends in exceptional results. He successfully used this strategy to become elected as head of his 500-person squad on a navy vessel, and later, a well published professor at Oregon State University. The lesson to be learned is that continual improvement, striving for excellence, searching for meaning, and pushing ourselves is only possible with the right mindset and approach. Top Ten Lessons from Rainmaker There are hundreds of tools and lessons you could take out of this book. I find the following ten to be of the most significance. 1. Manage sales form a systems-based perspective.
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2. Use an advanced relationship cultivation model to increase your sales. 3. Change the game you are playing. 4. Manage your battle days and battle hours to maximize the use of them and increase your sales efficiency. 5. Remember the three types of employees you can hire, salesmen, mavens, and connectors. 6. Stick to your core ideology and develop a hedgehog strategy. 7. Get the right people on the bus, then figure out where to drive the bus, and then get everyone in the right seat. 8. Use game theory and competitive intelligence in your strategic planning and sales research initiatives. 9. Train your instincts and tune your listening abilities with golden silence and listening questions. 10. Kaizen continual improvement and focusing on what you are passionate about and making a competitive game out of it.
About the Author

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Richard C. Wilson, MBA (RichardCWilson.com) Richard Wilson is an investment research and marketing professional. He runs five websites including InvestmentRegulation.com and works for the Capital Allocation Partners, an investment marketing and consulting firm which partners with investment managers as their outsourced marketing and PR department. Previous to joining the Capital Allocation Partners Richards experience included running and selling an online textbook retail business and 4 years of investment sales, commodity/currency research and corporate finance consulting. At age 21 Richard became the youngest person ever nominated for the Top Forty Executives Under Forty Award given out by the Portland Business Journal. Richard Wilson has his MBA in Finance from the University of Portland and is close to completing his Masters in the Psychology of Persuasion from Harvard University. You may purchase additional copies of the Rainmaker Handbook online at http://www.Lulu.com/RichardCWilson. Richard maintains or is associated with the following websites: http://www.Linkedin/in/RichardCWilson
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http://www.RaiseAUM.com http://www.HedgeFundMarketing.Org http://www.InvestmentRegulation.com http://www.HedgeFundRegulation.com http://www.3PMRegulation.com http://www.Anti-Bribery.com
Richard C. Wilson Mobile: (503) 789-7901 Richard@RichardCWilson.com
Richard can be found on Linkedin.com at http://www.Linkedin.com/in/RichardCWilson and his bio, resume, publications, and contact details are constantly updated on http://www.RichardCWilson.com.

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I dedicate this book to my parents Tom and Sue Wilson.

I'm a believer in momentum. - Lance Armstrong

Chapter 3: Investment Sales Toolbox Models & Strategies

Initiation: Articulate goals, objectives, and the companys sales mission.

Sales Campaign Preparation:

Chapter 4: Sales Team Development

Taking your Monthly Sales Pulse

Sales Aptitude Tests

- Robert Stevenson (Scottish poet)

Single Sales Objective:__________________

Customer Concept tion

Giving Information Valid Business Reason ment Credibility Getting Commit-

References 1. Guerilla Consulting Newsletter Copyright 2005 http://guerrillaconsulting.com.

Chapter 6: Leading Edge Practices

Chapter 10: Networking 501

We work to become, not to acquire. - Elbert Hubbard, American businessman

Chapter 11: International Negotiation

Basic Concept Selecting Negotiators Issues Stressed

Competitive vs. Cooperative Skill/Experience vs. Status Substance Issue or Relationship

View of Time Form of Agreement

Protocol Communications Persuasive Arguments

Individualism vs. Collectivism

Masculinity vs. Femininity

Chapter 12: Competitive Intelligence

Early Warning Systems

About the Author

Richard C. Wilson Mobile: (503) 789-7901 Richard@RichardCWilson.com

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