Gerry Harvey, (Harvey Norman) was recently bemoaning the culture of discounting in our retail sector. He was saying that retailers had lost the plot and didn’t know how to sell real value anymore.  He said they had fallen foul of a culture of constant discounting as the only way to attract customers, which was tantamount to business disaster and a degradation of the retail sector. I happen to agree with Gerry in this instance.

He went further by saying that retailers were failing to find out what customers really wanted and what they really valued.  He said retailers weren’t offering choice – a range of options of different value and therefore were not selling.  He went on to say that while a ‘sale’ may attract customers to a store, you still needed to put the effort into selling.  Selling doesn’t happen by itself.

I’m not a retail expert, however, discounting, sadly, appears to be main stream in Australian retail businesses.  Rather than a ‘sale’ being a rare event, it now seems, everywhere you turn there is a ‘sale’ or discount war waging.  In short, over the last 10-15 years the consumer has been habituated to look for cheap, cheap, and cheap.  The real value to, we, the consumer, of having a range of products and services to choose from across a wide value scale, seems to be lost in a mentality of it must be ‘cheap’.

It begs the questions “How has this come about?” and “Who started this discounting avalanche?”  It wasn’t always this way.   I recently had the opportunity to visit the exhibition ‘til you drop – shopping, a Melbourne History’ at the Victorian State Library which is about retail shopping in Melbourne across the last 100+ years.  I found it quite an enlightening and educational experience. For instance:

“In the 19th century, ‘retail therapy’ had a different meaning from how we understand it today. Shopping was often promoted as combining commerce with intellectual or aesthetic benefits.  Influenced by British morals and values, the display and purchase of goods were expressions of taste and self-improvement.” This is certainly a far cry from ‘cheap, cheap, cheap’ we now hear.

It seemed that shopping in the 19th century had a higher purpose to it.   Perpetual discounting sadly does not.

Constant ‘discount sales’ erode margins and low or no margins means a business is not profitable and therefore not sustainable.   Gerry and other retail experts will tell you that there is a time and a place for discounting – moving old stock, stock liquidation, seasonal or special events for instance.  Discounting should NOT be seen as a regular occurrence or constant ‘way of life’ as this will affect the buying patterns of consumers i.e. people will wait for the ‘sales’ instead of buying across the year.  They will pick their way through the plethora of ‘sales’ on offer every day, meaning no one has to pay full price for anything across the year which in turn forces retailers to enter a never ending loop of discounting.

Discounting in any business sector, retail or business to business, may increase turnover initially, but as a constant strategy comes at a cost which, in the long term, may create more severe problems than we had intended. This may include poorer sector and business performance, less investment in new ideas and products, loss of jobs, business closure, decreased diversity, poorer quality products sourced in place of better quality offerings, which can lead to increased customer dissatisfaction, and less choice as a result.

Less choice means we end up only getting access to products that are of a lesser quality. This creates poorer product performance, a diminished product life, and increased and unnecessary consumption, resulting in greater costs than if one had invested in a better product or service in the first place.

Who wants to pay for more ‘crap’?   In a world where more and more people are conscious of overconsumption, you can see that this journey down the ‘cheap’ road doesn’t lead to a very good place.

Maybe retail needs to return to its ‘higher purpose’ roots.  Another excerpt from the ‘til you drop’ exhibition bears this out:

“While bargains are always popular, when standardised brands replace some specialty and locally produced items the quality of products can become less reliable.  Today, many shoppers are returning to smaller stores selling organic or locally-grown and made produce.  Supermarkets are, in turn, following this trend and promoting gourmet sections and their own ranges of organic and specialty products.  The fact that consumers are becoming more aware of the impact of goods and shopping trends on the environment can be seen in new approaches to packaging and transportation. People are increasingly recognising that more sustainable shopping practices can reduce their ‘shopping footprint’.”

This is why I propose that a climate of perpetual discounting may potentially lead to the erosion in our quality of life and may limit our ability to make the right and best choices for ourselves, our families, our businesses, our communities and the environment.  Is our culture of ‘discounting’ potentially leading us to a false economy? If so, ultimately, this will ‘cost’ us a whole lot more.

Gerry, I suggest you and your retail mates take a collective look in the mirror and do a bit of reflecting on the potentially larger issues ‘constant discounting’ may be creating for us all.  And while you are at it, why not pay a visit to the ‘til you drop’ exhibition which has some great pearls of wisdom about creating real value in retail.

Special thanks also go to Andy and Errol, my fellow tennis parents who work-shopped this article with me one Sunday morning as our sons played tennis.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au

Understandably everyone wants to save money, especially in these times, however we need to be aware of falling victim to false economy.  False Economy is an expression that refers to an action which saves money at the beginning but which, over a longer period of time, results in more money being wasted than being saved.

For instance, I have never understood why some people will drive half an hour across town to get their petrol two cents a litre cheaper, all the while using up what they may save by driving across town, notwithstanding the time it took to travel there and back in the first place.  In almost all cases this action delivers a net loss.

The following excerpt from Wikipedia on a False Economy provides some good examples:

A notable practitioner of false economy was King Frederick William I of Prussia, who was said by Thomas Macaulay to have saved five or six dollars a year feeding his family unwholesome cabbages even though the poor diet sickened his children and the resulting medical care cost him many times what he saved.[1]

The concept of a false economy is similar to planned obsolescence, whereby the lower initial cost of a false economy attracts buyers mostly on the basis of low cost, who may later be at a disadvantage.

Motivating factors on the part of the party engaging in false economies may be linked to the long term involvement of this party. For example, a real estate developer who builds a condominium may turn the finished structure over to the ensuing condominium corporation which is run by its members once the last unit is sold and the building has passed a final inspection. Longevity of the components of the structure beyond the final turnover of the facility may not be a major motivating factor for the developer, meaning that the result of the application of false economies may be more detrimental to the end user, as opposed to the developer.

A false economy affects businesses and consumers on many levels.  The quality of decision making is the factor here.  The cause and effect of our decisions may be creating a false economy in our businesses or our personal lives.  Anyone in the procurement profession (purchasing) who still holds onto ‘cheapest’ being their only option for purchasing from suppliers may be setting their companies up for failure or disaster.

For instance, many SME businesses may be tempted by the cheap telco service offering or cheaper equipment.  On the surface, these cheaper offerings could appear to be great deals, but before one buys anything they should do some analysis beyond the obvious price on offer.  Just because something is cheap does not mean it is good for you or your business.  A cheap phone or communications system could mean unreliable phone or poor internet connection, poor equipment performance resulting in frustrated or lost customers who cannot communicate with you or your business, a poor reputation, or poor staff retention.  The so called ‘cheaper’ service just cost you a whole lot more than you intended to pay.

The expression ‘buyer beware’ also springs to mind. It is not just the sales person’s job to convince us to buy it. Our job as the buyer is to do the math and to look at the genuine ROI (return on investment) of our purchase.  Any self respecting sales person is well equipped to look at the consequences and ROI of each purchase, and would help you make a sound decision based on facts.  We need to work together to ensure we do not enter into a false economy for all our sakes.

So what are we really purchasing?  Thinking beyond the immediate outlay of money, we can view every purchase in our personal or business life as an investment.  I have just had a salient lesson in false economy courtesy of my eldest son and his friend when they purchased some remote control products online.  They found some great planes on a website whereby they could purchase them at a considerably cheaper price than elsewhere.  Seeing as they were paying for them with their hard earned pocket money, the price looked great to them.

You can see what’s coming can’t you?  8+ hours of my time attempting to communicate with the US online company to get our order processed involving numerous attempts to get what we ordered fully shipped. This was a classic case of false economy.  Even though my son and his friend went through feelings of devastation at the thought of losing their collective $740, feelings of disappointment when their order was not fully filled and the shipping costs were out of proportion, and resignation that not everyone fulfills their promises, the lessons for all of us were invaluable.

They learnt about checking out the reputation and credibility of a company first, the cause and effect of buying and selling ‘cheap’, that trying to fix problems can take a lot of time and cost money, and that plenty of people have lost a lot more than they did. So we were able to put it into perspective, albeit that $740 to an 11 and 13 year old is a lot of money.  They also discovered the value of thinking before you act, the consequences of actions, and how to process a range of emotions that we feel when things go wrong. Perhaps most importantly, they learnt how to respond with patience and reasoned analysis to get what you want rectified, instead of threats.
All in all it was a great lesson, learnt early in life with limited consequences, and hopefully one they will carry with them into the future to help them on their way.

So if using a cheaper alternative costs you even one sale, is it worth it? While in some cases the answer may be yes, in many other cases the more expensive option may be the one that provides the greatest return for you. As you’ve just read, ‘costs’ can involve a lot more than just dollar value.

Special thanks go to my son Josh and his friend Nick for the inspiration for this article.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au

Everything lines up: your solution is a very good match for the client company, you have ticked all the boxes but the deal is rejected.  You are perplexed and confused.  “It’s a great solution!  It’s what they wanted and needed. Why are they saying no?”  Building on from last week’s ‘How do I deal with client objections?’ l thought we should look at when objections become personal.

Over the years I have come to realise that many of us have lost sales not because we didn’t have a good offering or we couldn’t show a real return on investment, rather a key person(s) involved in the sales process or outcome didn’t want the sale to go ahead due to personal reasons or biases.

In the past, I have naively thought that all clients wanted to do the right and best thing for their business, their teams, and their people, however I have been proven wrong on a number of occasions.  Eventually I came to realise that whilst all buying decisions will have a personal aspect to them, some were more self serving than I realised.

What I have learnt over the years is that when people’s status is threatened they can act wildly.  Seeing the world from another’s perspective isn’t always easy, especially if the other person is basing their decision on how it will affect them personally, often at the expense of others and the higher goals of the business or project.

When we are selling, thinking about the impact on the person(s) involved is, therefore, very important.  This is based on the notion that people are unlikely to be as objective in their decision making as we would like and have their own agendas which can be both visible and hidden. The same can be said for sales people too, their personal biases can severely affect the outcome of a sales as well. In fact, rationality often goes out the door.  Not everyone likes to reveal their real reasons behind a decision because they may not be that pleasant.

No one really likes to look stupid or incompetent, especially to their people, managers, clients and markets.  Pointing out the obvious solution which looks great to you may be seen as threatening by some prospects or clients.  For example, they could be thinking “Why didn’t I think of that?”, “This might put me out of a job if we do this”, “My preferred supplier, who is a mate of mine, may lose out here and I’ll lose a friend if that happens”, or “This means I’ll have to change how we do things here and my power/position/status/influence will become redundant”.

There are many examples of where self- interest or even group think can dismiss a great idea or solution from being implemented.   In a sales situation, if you come across indecision, stalling, or rejection of a well matched solution, think about how your solution may be affecting the individuals involved. Is your solution at risk of making the other person(s) feel?

• Less credible or appear stupid to their peers, managers, or staff
• Lose power or control over a situation, team or decision
• Affect their career aspirations
• Not be seen in the best light with their superiors or their team
• Lose status or kudos
• Act differently to how they really want to
• Have their real intentions, actions or agenda exposed to others

We all know not everyone acts in the best interest of the group.  They may be acting to serve their own interests at the expense of others or the greater good.

It is often necessary to try and understand those often ‘unspoken’ needs of customers. While I don’t always get it right, I have worked out that I need to do at least two key things:

1. Find out where I need to be a King Maker
2. Find out where I need to be wary of the Saboteur

Distinguishing between the genuine buyer and the saboteur

As sales people we need to quickly recognise how we and our solution can be a feather in the cap of our buyers.   For instance, if our solution or working with us can help or enhance a person’s career, status or reputation, for the all the right reasons, then this needs to be part of the solution and decision making process.  Who doesn’t want to be associated with a successful partner or project?  If we support the key decision maker, influencer, or end users to feel validated then this can aid the decision making process.

Asking the client how the proposed solution will help them or benefit them personally will give you a valuable insight into their decision making process.  If a person is making a decision based on, amongst other things, how this solution will look on their resume and affect their career status, then we need to realise that our role is also part King Maker.  If this is important to them and does not transgress ethical boundaries then why not?

I try to remember to ask “How will this decision help or impact on you personally?” and then take that into account when preparing my proposal, pitch, follow-up or roll out of the solution.

On the other hand you may come across the Saboteur.  The Saboteur is the person who operates behind the scenes and has a hidden agenda(s) that may involve your proposal not being successful.  If you have a Saboteur as part of your decision making process, it will mean that they are going out of their way to ensure that your proposal does not get put forward. This usually stems from some sort of self-driven, self-serving agenda.

If you suspect you have a Saboteur in your midst, you must try as early on as possible to determine what their motives are. If you are unable to do this, you must pay special attention to their objections and probe where possible. This will help to provide you with more information around their key drivers.

Bear in mind that Saboteurs are often well known amongst the key decision makers and influencers in the decision making process for their underhanded, self-driven ways and often their opinion is given less weight.  However, their bite can certainly strike a blow to your progress if the decision is hanging in the balance.  Be sure, they will find your weakest spot and run with it.

Some key characteristics of the Saboteur

• Have a hidden agenda
• They have a vested interest in you not succeeding
• Can derail entire sales process and influence key stakeholders negatively
• Possibly aligned with competition (sleeping with the enemy)
• May appear genuine on the surface but can be the ’smiling assassin’

The world of selling is a complex one at the best of times and you may be left thinking that you need a Phd in psychology in order to deal with the variations in human emotions, intentions, and behaviours.  While a Phd it is not necessary, be aware, wary, and alert to the subtleties of client engagement and interactions.  Carrying your moral compass along with your very best skills in active listening, questioning, verifying, problem solving, and prevention, and self-reflection along with you for the ride and  applying them on a consistent daily will aid you enormously.  And the good news is they take up very little space, yet give you an expansive view.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au

Many sales people will tell you one of the biggest worries in sales, besides prospecting, is dealing with customer objections.  Its true many people do not like dealing with objections or conflict, however, it is also true that many people unintentionally create objections and conflict by not understanding a customer’s real needs or priorities and failing to find common ground.

In my opinion ‘overcoming objections’ is often blown out of proportion in terms of the issue it claims to be. Too much time and attention is spent on objections in sales meetings and sales training rather than focusing on the skills and resources needed to help sales people eliminate objections from the sales process in the first place.

The two key strategies to eliminating the issue of objections are: Having a sound, logical sales communication process that sets you up to understand where a customer or prospect is coming from, what they value, what their real priorities are, why and when they are ready to make a decision to buy, and how sophisticated they are; and a sound knowledge of your offerings and how it fits or serves your market.

Utilising your very best communication skills such as focused questioning, active listening, verifying and paraphrasing, and creative problem solving are keys to eliminating objections and creating a dynamic, productive sales and buying experience for you and the customer.

Let’s rethink labelling every customer question or concern as an objection.  A customer asking a question about your product or service, seeking further clarification on a matter, or expressing confusion over a new product are not grounds for an objection, they are merely trying to understand what you or the product/service does in more detail.

They are often trying to see if there is match between you and them.  As sales people we should welcome these enquiries as the customer is fully engaged, showing interest, and seeking to find common ground as to whether to work with us or eliminate us from the equation. This should not be grounds for fear and loathing.

So what is an objection? An objection, as defined by www.dictionary.com, is a reason or argument offered in disagreement, opposition, refusal, or disapproval.

Based on this definition, in many cases sales people are not trying to overcome objections, they are working with the customer who is seeking information or clarification for a mutually beneficial outcome, the sale.  Dealing with nonconforming ideas or helping a customer coordinate a viable solution requires understanding, collaboration, and creative problem solving skills on the part of the sales person, not overcoming objection skills.

There are four common areas sales people come across which can, if not properly dealt with, lead to objections (and reactions):

1.    Misunderstanding – correct it
2.    Doubt – resolve it
3.    Limitation – compromise or put it into perspective
4.    Question – answer it

The reality is if you and the customer have not found common ground or agreement on an action to move the sale forward to the next logical stage it does not necessarily mean you have encountered an objection.  It may just mean a viable sales opportunity may not exist.  However, if you have not listened to the customer, tried to force your ideas onto them without their consent, or tried to bully them into a sale then the customer may object, and rightly so.

If during any stage, especially the last stage of the selling process, you encounter strong objections or indecision from your customer, it likely means one or more of these problems may exist:

• You didn’t really understand your customer’s/prospect’s needs or priorities in the first place and tried to put forward solutions they do not want
• Your customer/prospect doesn’t perceive having a need i.e. they maybe an uniformed buyer
• Your customer/prospect is not looking for a solution, i.e. maybe they are just on a fact finding mission
• You have not shown your customer/prospect what they think they need, i.e. there is a clash due to a mismatch between what you perceive as important and what they perceive as important
• Your customer/prospect cannot see any real value in your offering
• Your customer/prospect is not ready to buy yet
• Your customer/prospect does not have confidence in you or your company
• Your customer/prospect has unrealistic expectations you will never meet
• Your customer/prospect has other agendas or loyalties that do not understood, i.e. they have biases and are unlikely to buy from your not matter what

These situations and others like them are the realities of selling.  Our job as sales people it to properly understand our customers, their situation, their preferences, priorities, challenges, goals, and come up with viable solutions that are a win:win for both parties, or determine that a ‘no sale’ exists.  Either way everyone is in the know about what to expect which should reduce the need to object.  However, sometimes there is no simple solution to a customer’s concerns.  A customer will hesitate to move forward and if you can’t find a solution, maybe you can negotiate a resolution.

If you do happen to come across a real objection, below is a seven step process for handling objections:

1. Deal with the objection straight away, don’t ignore it.
2. Be trustworthy and empathise with feelings that are expressed; Use an appropriate manner by remaining calm, showing respect, and using positive language (talk about what can be done rather than what can’t be done).
3. Utilise your most effective communication skills, remembering to:  actively listen, question, solve problems, avoid making personal judgments, be flexible, and work together.
4. Ask questions to determine the real objection.
5. Restate objections to clarify the issue and gain agreement from the customer that this is their real concern.
6. Work towards seeing the situation from the customer’s point of view
7. Select a course of action which may include negotiating a resolution.

In short, the key to handling and eliminating objections effectively can only occur when open communication, cooperation and collaboration exist, however it is important to check and make sure it is a legitimate objection first.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au

I declare right up front that I am not, and never have been a fan of the Hard Sell.  You have probably guessed that from all my previous posts.

And if you ask most people about what they think about the profession of selling they will often describe something akin to the ‘Hard Sell’.   Of late  I have also noticed a rise in ‘hard sell’ stories where people are being unnecessarily pressured to buy or sales people being pressured to sell at almost any cost.

The hard times may be pushing some people to do things they wouldn’t normally do like the “Hard Sell”.

The Hard Sell can also be described as:

• Boiler Room Techniques
• High pressure selling

To put it into perspective, the ‘hard sell’ is not a common sales strategy employed by many businesses today and for most people it is not their preferred way of selling or buying.  Most people revile from being asked to sell in this way.  And I would question whether it is deemed ‘selling’ at all or just a form of bullying or intimidation.

Given the escalation I have seen in ‘Hard Sell’ stories this prompted me to have a further look at what the Hard Sell is and if it has any legitimate place in our world of business and selling today.  Here is some of what I found.

Hard Sell
(definition from www.businessdictionary.com)

Applying psychological pressure (by appealing to someone’s fears, greed, or vanity) to persuade the prospect to make a quick purchase decision. This approach is justified on the ground that most people are lazy and will postpone making a decision—even if it were in their best interest to make the commitment. This practice is, however, reviled when its sole purpose is the salesperson’s gain at the customer’s detriment. Also called high pressure selling.

I think the last sentence in this definition is key here. I highlighted this in Think you can get away with it. Think again.   If a person is willing to be convinced and happy to take part in the process fine.  However, many people who may not know what they are getting themselves into or may feel intimidated and do not know how to say ‘No’ may be caught up in the moment and buy something they do not want or need.  For example if we look at the following technique you can see what I mean.

Boiler Room techniques

Outfit where salespeople use hard-selling (often dishonest) techniques to peddle (often fraudulent) offers to unsuspecting prospects (referred to as suckers) over the phone or face to face.

These techniques have often been attributed to Insurance or Car Sales industries i.e. used car salesman,  e.g.  …extremely aggressive behavior by an Insurance Agent to convince a Prospect to purchase the insurance product without due regard for the prospect’s ability to pay the Premiums and/or needs for the product.

Just think of the Subprime market in the USA and you know what I mean.

Let it be said however that I am not proposing that all sales people in Insurance or Car Sales are selling this way.  In fact more and more businesses in these industries are consciously training their people in more sustainable and honest selling practices.   See A car sales story with a difference

Some industries like Time Share and certain personal development courses still mainly employ Hard Sell tactics bringing people in for 90 minutes pitch fests coupled with a lunch or some small incentive.   Prospects are often pressured to sign up before they leave and can be intimidated to do so as described above.

I have had experience of this myself some years ago and my advice is this: walk away and think about it before you buy unless you are really certain and have done your homework.  If the salesperson says you can’t walk away and think about it outside of the venue or call them the next day then in my opinion it’s likely to be dodgy.   A colleague described one such situation happening to her earlier this year.  The salesperson in question was charming and positive to my colleague up until she said that she needed to think about it and would get back to him.  He tried to convince her to part with $1,000 upfront but she would not do it.  It has to be said that my colleague had nothing against time share she just didn’t want to be pressured to part with her money just yet.  When she did not cave in to his demands and asserted herself, the salesperson’s attitude turned from one of charm and positivity to disdain and frustration in a split second.

By contrast, the term Soft Selling is to describe the opposite of Hard Selling and is often defined as where:

Sales philosophy oriented toward identifying the customer’s expressed and tacit needs and wants, through probing questions and careful listening. It contrasts with hard selling which promotes application of psychological pressure to generate a relatively quick sale

I do not like the term  Soft Selling, what they are really describing is Consultative, Diagnostic or Solution Selling.  Soft implies weak and insipid to me.  Those people how engage in healthy, trust based, transparent  Consultative/ Diagnostic/ Solution Selling are assertive positive and very helpful to customers and understand that not everyone is in a position to buy now.  By treating people with respect and working in partnership with them then you set yourself up for a better future.

One of my clients said just that the other day.  They employ a Consultative sales approach and have found to be far more sustainable and professional.  He said it really cements them as a preferred supplier or partner, especially up against competitors who employ ‘Hard Sell’ or price gouging tactics.  He should know because his business is a much smaller player at present up against much bigger businesses with a much larger sales forces. He said his sales people are well respected, well regarded, and are making good sales despite the competitions’ tactics.   He has held firm and not resorted to the ‘hard sell’ and it is paying off in more ways than one.

I understand it is tough out there for many businesses but desperate times do not call for desperate sales measures. (Desperate times don’t call for desperate measures)

While the ‘Hard Sell’ has always been around and is likely to be around for some time in the future I would encourage you stay true to what you know is right.

Sincerely, your advocate for selling the right way.