Jonathan Farrington’s Blog

A skilled negotiator will create high levels of rapport and be sensitive and empathetic to the people they are negotiating with, yet can still be hard on the issues. The ability to separate the people from the issues, and recognise that negotiations are often fraught with emotional intensity, can help sharpen the focus on the interests of the other party to better balance perceptions. If the negotiation doesn’t appear to be going anywhere and your prospect is behaving like a bully you might feel angry and frustrated. You may already have considered simply agreeing to their demands. In difficult negotiations, there are four vital behaviours that can increase your resourcefulness and consequently your opportunities for getting to “Win-Win”.

1. Manage your emotional state

Build rapport by matching the other person’s style, pace and approach until you have achieved a ‘connection’ Personalise the negotiation by using “I” rather than your organisation’s name. This demonstrates your belief in your proposal and highlights your credibility.

In the face of feelings like anger, disappointment, frustration, confusion, and resentment, we often react without thinking. In such a situation mentally detach yourself and think about it before you respond. It helps to reframe attacks and tactical manoeuvres as feedback that the other person’s interests have not been fully acknowledged. Stay focused on your goal of reaching an agreement.

2. Look for quick mutual wins to build the belief “we can agree”

The more abstract your communication the more likely you are to reach agreement. Therefore, seek to gain agreement at an abstract level first and then get into the detail. For example, if two people wanted what appears to be very different things, such as a) nuclear disarmament and b) more resources spent on defence, if you looked at finding out both sides highest intention, you may discover that ‘peace’ was the desired outcome for both people. Therefore, at this abstract level they have found agreement so the negotiation can continue by gradually getting more detailed. Questions that chunk up your prospect into the bigger picture include:

- For what purpose?
- What’s your intention behind (negotiating point)?

Seek to address the easy/quickest areas of agreement first to reinforce the process of agreement is simple and straightforward. If you discover an area where agreement may not be reached quickly then agree to leave it until later. If some points become contentious it can help discussions if you both move your body, because the mind and body are connected, physical movement helps to create mental movement. That’s why a walk can work wonders during tough negotiations. Provide regular summaries of what you have both accomplished to install the belief that the negotiation is making progress.

Some sales people write out all the points to be negotiated on separate sheets of paper, then ask each point is agreed they move the paper to a different place, so that the buyer can physically see the progress being made which serves to motivate the entire process.

3. Use active listening skills and ask questions to give you a greater understanding of the other person’s viewpoint

Giving good attention to people makes them more intelligent. Poor attention makes them stumble over their words and appear stupid. You are best positioned to change someone’s mind after you have listened to that person. People tend to close down and stick to their position until they feel heard. The goal of active listening is for you to hear and understand other people – their words, thoughts, and feelings, and to let them know you’ve heard and understood them.

Acknowledge their motivations, feelings, and point of view, even when you don’t agree with what they are saying. Your goal is to understand the message, not judge the validity of what they say.

4. Build trust by negotiating fairly

Demonstrations of power erode trust. If you are on the receiving end of this type of behaviour, describe your observations, and the consequences of continuing the current process. For example: “You know you’ve named what seems to me a low price, and so now I’ll name a higher price, and then we’ll each insist on our position until one of us gives in. I don’t find my best negotiations work like this.“

Then propose a different way to proceed, for example: “It would help me to understand the criteria of a fair offer if we could take a look at some of the relevant standards in this industry.” Before beginning the negotiation it can help to agree the ground rules and stick to them. Act with integrity and hold a healthy respect for the intentions of the individual you are negotiating with. There is always a reason why a point of negotiation is important to the buyer and if we can appreciate more about their underlying reasons, this knowledge can be used and acted upon.

Today’s News: OK, it’s yesterday’s news But I was distracted by my daughter’s birthday, so I do have a legitimate excuse: Over on Salesopedia, Clayton Shold is in conversation with Art Sobczak on “Dealing with Objections” and as Clayton observes - “This guy is a real pro!” Check it out here

Tomorrow: I rest? No, not yet - we are burning the midnight oil working on The JF Consultancy site.

Next week, I will be revealing the expanded line-up for the brand new Top Sales Experts site; it really is a “who’s who” of the very best sales gurus in the world - more soon.

So, as ever, have a great w/e and do make it back here on Monday please - JF

The JF Guest Author Spot

“Being On Target – Five Steps To Grow Market Share” by Rick Johnson

Targeting is the process of selecting high potential customer accounts to receive intense sales focus. Goal setting translates that high potential into achievable numeric objectives, i.e. revenue and margin growth. Each Territory Manager should select a predetermined number of Target Growth Accounts (TGAs). Creating focus on this group of selected accounts doesn’t mean a Territory Manager should ignore other accounts; he/she is always expected to service their entire territory. When making decisions regarding his or her time, however, he or she should always consider these selected Target Growth Accounts a priority.

The primary purpose of targeting and goal setting is to keep Territory Managers focused on the strategic objective of becoming the Supplier of Choice. The TGA program can be used as a flexible guide to successful growth through targeting, goal setting and action planning.

The TGA program reflects the evolution of the outside sales force from being primarily transaction driven and self-sufficient to developing customer intimacy and using team-based selling. It’s the evolution from being a Lone Wolf to becoming a Lead Wolf; it supports growth in profitability, revenue and market share!

The selection of Target Growth Accounts requires careful thought and substantial effort. Annual sales, margin and goals are established, and detailed action plans must be created for each of these accounts. For most Territory Managers, TGAs will contribute a substantial portion of total territory sales growth. This “big effort for big reward” means that the number of TGAs must be limited, and that sufficient time is allotted to succeed with each one.

An account action plan ensures that the Territory Manager is proactively pursuing sales growth and that there is a solid basis for expecting account goals to be met. By monitoring these action plans, both the Sales Manager and Territory Manager can manage activities rather than wait for results.

The intention of planning and goal setting is to provide focus on TGAs. These are the accounts with the most potential for growth. This doesn’t mean the Territory Manager now only has a limited number of accounts. He must continue to service his entire account base. These are target accounts that have high growth potential and have been identified to receive a proactive, aggressive focus for growth. Managing the TGA Program

A Sales Manager has many competing priorities. One of the most important is the need to manage the sales functions. The TGA planning and reporting program and the various activities which are a part of it are intended to help the Sales Manager improve their sales management skills and help each individual territory sales person achieve success.

From a management perspective, the goal of a TGA program is to improve the quality of the targeting, goal setting and action planning efforts of your salespeople. Its primary purpose is to provide focus, process and discipline that will enhance territory performance. This enhancement will lead to an increase in the sales, profitability and market share for each individual territory. The process itself becomes an effective sales management tool.

An initial TGA territory meeting between the Sales Manager and the Territory Manager is the most important step in the TGA process because this is where the company’s expectations of sales performance are defined. This meeting creates territory dialog that is essential for effective sales management, support and knowledge transfer. Each Territory Manager should prepare by organizing some key information for each of the TGA accounts selected. The Steps of the TGA Program

Step 1: Account Selection

The TGA program is intended to increase the focus of your sales effort on the kinds of specific activities that will lead to growth in sales, margin and market share. Before these activities are precisely defined for the TGA program, the Territory Manager must select his TGAs and review them with the Sales Manager. TGAs should be selected on the basis of their potential dollar growth.

Careful selection of TGAs is obviously critical for the success of all subsequent efforts. Selection must be based on unfilled “real potential.” Territory Managers should explain their rationale for their selection backed up by data justifying that selection.

Step 2: Customer Profile

When a customer makes his buying decision, he does so based on certain assumptions, perceptions and expectations. When the customer places an order, these assumptions and/or perceptions become reality in the customer’s eyes. Your failure to understand these assumptions and perceptions often leads to costly misunderstandings, resulting in a disappointed customer. The key to avoiding these misunderstandings is to get the “book” on the customer. Only by understanding his needs, perceptions and expectations can you avoid misunderstandings.

Remember:

• The customers’ perceived value of your company drives their expectations.

• Your company’s performance value drives your customers’ satisfaction.

Getting the “book” on the customer means defining the customer profile. It contains information about the internal workings of your customer, including everything from the company’s history and ownership to its day-to-day ordering process. Territory Managers should complete a customer profile for each of the accounts that they have selected. E-mail rjohnson@ircg.com for a sample customer profiling form.

The customer profile is the core of the TGA program. Each profile element becomes a building block in the program’s foundation. Without good dialog with target accounts, securing the information necessary to formulate a meaningful action plan becomes very difficult. To ensure maximum benefit from the information collected, the questions asked and the answers given should be documented. This allows both the Territory Manager and the Sales Manager to improve their knowledge of the account.

Suggestions for getting the information needed include:

• Analyze internal historical data

• Do outside research on the customer’s industry

• Ask the customer directly

• Develop a relationship with the gate keepers

• Use the internet to research the industry and the customer’s customers

Understanding the customer’s market and business is necessary to develop a plan for growth. You need this intelligence to determine and allocate the necessary resources. You need to understand your customer’s business in order to understand how to meet his needs, cure his pain and sell to him. Understanding his business involves knowing his markets, customers and competition. The market profile is used to gain knowledge of your customer’s customer. In which market segments do they participate and what is your customer’s strategy for growing market share? This requires serious discussions with numerous people in your customer’s location. You will define the key players and your contact points on the customer profile tracking form.

Areas to explore include:

• What types of markets are they in?

• Are their markets growing or shrinking?

• What is their market share?

• Are they exploring new markets?

• What types of customers are they after?

• Who are their major customers?

• How do they generate new business?

• What is their large to small customer ratio?

• Who is their competition?

• What price or profit pressures are they experiencing?

This helps you get a better understanding of their business. By understanding their types of customers you will be able to determine the timelines from order to delivery. What is their ordering lead-time? What could be done to shorten the cycle time and perhaps determine what your customer’s pain factors are?

Step 3: Define Goals

After the Territory Manager has selected his targets and collected critical profile information about them, it’s time to quantify goals. For each TGA account, the Territory Manager should now define goals for sales revenue, sales gross margin and potential product objectives. The first item to be considered is exactly where you stand as a supplier or potential supplier right now.

Served Available Market (SAM)

The first step is to quantify the potential for each TGA account. Total available market, less other channel supply that you do not participate in, equals Served Available Market. This is the true potential revenue that you have the opportunity to go after. Just because the customer buys a total of $XX does not mean his total purchase is realistically available to you. We have now entered the age of multi-channel distribution. Your SAM must represent a large potential with a high confidence for success to warrant engaging the resources necessary to capture the account. This candidate should match the abilities of your company to perform. You must understand and be capable of performing under this customer’s requirements, or their “Rules of Engagement.”

Forecast

Territory Managers should forecast sales revenue, sales gross margin and sales, by product line or vendor monthly. This is not “pie in the sky” guessing. They should be able to back up their forecast with solid data and a reasonable thought process. In other words, why and how do they feel they can accomplish this goal? Note that these forecasts should be revised based on the action plans developed in the next step.

Step 4: Action Plans

The action plan is the plan of attack – the steps that will enable the account to reach its goal. It should develop naturally from the knowledge the Territory Manager gained from his research and customer contact. A detailed action plan should be developed for each target account. Of course, the plans for accounts with which you currently do business and have relationship equity may be more extensive than those for newer prospects. This action plan determines how to match your company resources to every opportunity that exists within that account.

• Each task in the plan includes three critical elements: a “deliverable” or result that the task will produce an owner responsible for the task, and a due date. Defining a clear deliverable ensures that you are not confusing motion with progress. You must be clear about what you are trying to accomplish in each step to be sure that the overall plan will produce the desired result. Deliverables are the difference between passive forecasting and active planning.

• The owner of the task is the person responsible for its completion. This is not necessarily the person who will do all the work involved. Each participant in the plan must acknowledge and accept responsibility for his portion of the plan.

Definitive action plans are more than personal account visits once a month. They are more than introductions to upper management and they are more than a commitment to work with management to submit the lowest bid. Action plans must be precise, definitive and measurable. They could include tasks for getting specific customer information, introducing new product lines, entertaining key players, etc.

Do not make the mistake of putting all your energy into your largest accounts. This is especially true when you are getting the majority share of spend from that account. Remember, the TGA process focuses on the greatest potential for growth.

Instead of simply learning to “do what we have always done a little better,” we need to become aware of and practice understanding that involves re-examining everything we do – including how we think about our customers and our role in their future.

This often means letting go of our existing knowledge and competencies, recognizing that they prevent us from learning new things. This is a challenging and sometimes painful, but ultimately rewarding, endeavor.

Step 5: Track Progress

Progress on TGA action plans should be tracked and specific TGA discussions between the Territory Manager and the Sales Manager should occur on a regular basis. The Territory and Sales Managers should also discuss and update the action plans where appropriate. A Territory Opportunity Action-planning Discussion (T.O.A.D.) should occur on a regular basis (monthly is recommended) to monitor results and make the appropriate course corrections. Click on this link to read more about the T.O.A.D. http://www.ceostrategist.com/resources-store/articles.php?id=73

Targeting for growth is not a complex process. It is built on best practice sales principles. However, commitment on the part of the Sales Manager and the Territory Manager is essential to success. The WIIFM (What’s In It For Me) is simple: MORE MONEY.

Effective targeting produces growth in revenue, profits and market share. Such growth increases sales incentive and enhances performance. Improved performance leads to more money for both the Territory Manager and the Sales Manager.

Dr. Rick Johnson (rick@ceostrategist.com) is the founder of CEO Strategist LLC. an experienced based firm specializing in leadership and the creation of competitive advantage. Rick received an MBA from Keller Graduate School in Chicago, Illinois and a Bachelor’s degree in Operations Management from Capital University, Columbus Ohio. Rick completed his dissertation on Strategic Leadership and received his Ph.D. on April 15, 2005. He’s also a published book author with seven titles to his credit: “The Toolkit for Improved Business Performance,” the NWFA & NAFCD “Roadmap”, Lone Wolf-Lead Wolf—The Evolution of Sales”, Leading the Pack – Model driven Leadership for the 21st Century, Turning Lone Wolves into Lead Wolves, The Lead Wolf Leadership Pocket Guide and a fiction novel about teenagers called “Shattered Innocence”. Dr. Eric “Rick” Johnson (rick@ceostrategist.com) is the founder of CEO Strategist LLC. an experienced based firm specializing in Distribution. CEO Strategist LLC. works in an advisory capacity with distributor executives in board representation, executive coaching, team coaching and education and training to make the changes necessary to create or maintain competitive advantage. You can contact them by calling 352-750-0868.

Today’s News: Will you allow me to make a small personal greeting to a very special person? “Of course we will JF” I hear you reply, almost in unison.

So, to my daughter Alice, “Happy 17th birthday, my sweetheart - I love you very much” The bad news? Now you can drive……..oh noooooooo!! Just kidding

Tomorrow: Thoughts about negotiation: “Four Essential Negotiating Behaviours For You To Understand”