The three big mistakes that salespeople make and how to avoid them

hello I'm Neil Rackham and like all of

us I'm suffering from these trying times

it's not easy and particularly if your

job is sales you're hit harder than most

as we begin to get back into some

semblance of a normal life after all

this craziness is there any useful

advice that I can give you to help you

well actually there is a little bit of

experience that might be useful to you

in previous recessions

I've studied salespeople trying to

recover trying to bring back business to

the level which it was and in almost

every case I see salespeople making

three big mistakes and I would talk to

you about these in the hope that it can

help you avoid them as you get back to

something near to normal selling the

first mistake is a fairly simple one and

that is when business is hard when the

economy is bad we tend to chase after

everything that moves we push up the

level of activity we try to go for more

business and that means making more

sales calls opening up more contacts

activity activity and you might say well

what's wrong with that isn't that what

we should be doing but after all it

would seem that if you make more calls

you're gonna make more sales yes not so

it can sometimes work let me give a case

study of when that is the right strategy

I

I studied an office supply products

company in New York City there people

were selling see roughly six customer

contacts a day and out of those they go

to point five sales no they got a new

sales VP in and she said hey just look

out the window here we're in Manhattan

in just that building that you can see

across the street there's four hundred

potential customers so how is it you're

only making less than six calls a day

so I want to see that doubled or I'll

fire you this being New York you know

they're gentle people and true enough

people made a lot more calls about they

pushed up to I I think twelve point

eight calls a day from memory and

they're two-and-a-half sales went up to

four point eight sales a day so it

looked like if you double the number of

course you don't quite double the number

of sales but you get results activity

brings results so why am I saying beware

activity as we recover from the

situation we're in now well put in this

way most of us are in b2b selling we're

not in a simple one called sale like the

janitorial office supplies company we're

more like the big company we studied in

Chicago this was a capital goods company

high tech what we found there was they

had a new vice president in and again

the new vice president said hey in my

previous company which was consumer

goods the more activity the more sales

make more calls you get more sales well

I look at my people they're making less

than two

sales calls a day so I want to see that

change and he brought in an activity

management system and ran in for six

months I I must admit I knew the company

well I advise strongly against doing

this but anyway he brought it in and you

might actually think it was a success I

there was a 36% increase in sales codes

and that led to a 16% increase in sales

good news isn't it not quite the average

value of the sale fell significantly so

overall the new activity management

system reduced sales volume by one and a

half percent and that's a pretty typical

result if you push for more activity it

means you'll often focus on the smaller

easier sale the strategic sales that are

more profitable and more important go by

the wayside we panic a bit we're worried

about short-term business we neglect the

front of the sales cycle we don't open

up the big opportunities we try and

close the small ones that's Jerry a

fairly bad mistake if you look at the

most successful companies handling sales

in very difficult times as an economy

starts to recover from a crash they're

very selective they focus on the best

opportunities and the way they do that

is that they take business that they

can't win and don't even try for it so

I've got a rule that I give people which

is if you wouldn't chase this piece of

business in good times don't chase it in

bad because it means it's probably not

business that fits you that well go and

put more resources into the best pieces

of business now if the first deadly sin

of salespeople is too much sales active

see the second one is an even worse sin

and that is salespeople negotiate when

really they should be selling now you

might want to pause this video for a

little while and think about what's the

difference between selling and

negotiating you had to put it in just

one sentence well pause here's my answer

when you're selling you're trying to

come to an agreement without giving

anything away in negotiation you make

concessions in order to get the

agreement if you make those concessions

too soon in the sales process you're

much more likely to give away too much

because concessions create an appetite

with concessions you're much more likely

to come across as anxious you'll seem

pushy customers won't trust you the rule

here is you negotiate is later in the

sales process as you can you do a really

good job of trying to build needs trying

to get close to the customer taking the

customer through the buying process

because if you do those things yes then

the time will come to negotiate but best

salespeople to go see a little and

negotiate late the third big mistake

that I see people making is that they

sell price they think it's all about

price if I could just keep costs low if

I could undercut a competitor I'll be

more likely to get the business they

believe that decisions being made by

customers based on

price well all the evidence seems to be

if that's not true

it's something else that's much much

more important than price let me let me

tell you a story this happened in the

last big recession I was working with an

insurance company and they were going to

put all their records into an automated

electronic system big decision they had

a lot of manual records and they chose

three potential vendors they shortlisted

for the business one was IBM and the

other two were smaller technology

companies now when the bids came in IBM

understandably was much more expensive

than the other two when they either

buying committee and I was part of that

buying committee looked at the bids we

thought wow iBM is really over the top

but let's look at the other two and one

of those bids was really really much

lower than the other so we looked at the

lowest bid and we call that vendor in

and we said we've been looking a beard

and is is that really your final

position and all three vendors had

resubmitted their stuff and in the

resubmission IBM refused to cut their

prices they just held firm one of the

small companies the lowest bidder cut

their prices another 10% as soon as the

purchasing committee looked at that we

said no way we're going to lock up the

future of our company in this big

electronic box

and these your maple go bust they're

having a hard time

they're already lowest price they've cut

even more there is probably something

wrong with this but the other small

company asked to come and see us and

they made a presentation and the VP of

Sales who is a very smart guy he said

you've asked for resubmission on the

basis of price and yeah I know I know

hardware price has been falling and so

on but he said IBM is a competitor here

and we know we're a lot cheaper than

them so price doesn't really an issue

what's your issue and the head of the

committee said well frankly we want to

know that you're going to be around if

we're going to lock up our future we

don't want you to walk off with the key

or go bust so we don't feel safe going

with you

but as the old saying goes nobody ever

got fired for going with IBM IBM sells

safety so what happened well they were

able to reassure us open their book show

us their forward plans and we felt they

were fairly solid so he went with the

middle company but if he hadn't done

that we would have gone with IBM in fat

IBM had the most brilliant marketing

strategy in history back in the

recession of the 80s that was a time

when technology was very expensive it

was a board level decision and those

people who were responsible for deciding

which computer system had a lot of risk

so IBM at a time when digital equipment

their major competitor cut prices three

times actually increased their prices

because they said what we sell is safety

no price remember that you're in hard

times sell safety don't sell price so

how do you make customers feel safe I

think best answer is you really deeply

understand them and their needs you

create comfort by understanding the

better you understand the customer the

more safety you can create so in summary

I think we can say in recession don't

chase every piece of business put more

effort is the pieces of business that

are best suited to you be very aware

that the customer may be in a different

part of the buying cycle that when

perhaps they're they were before the

shutdowns before the panics but whenever

they are in that cycle the resolution of

concerns the the minimization of risk is

going to be hugely important and when

you get to that point

remember sell before you negotiate I'm

Neil Rackham I hope you found these

ideas helpful

good luck