Neil Rackham 2008 Neil Rackham Visiting Professor Portsmouth

©Neil Rackham 2008 Neil Rackham Visiting Professor: Portsmouth University, Cranfield University Author of lots of stuff SUCCESS IN HARD TIMES

©Neil Rackham 2008 AN INCONVENIENT TRUTH � Only a third of today’s b 2 b salespeople have ever sold in a recession. � Most of them will make the same mistakes that salespeople made last time around – and they won’t even know it. � In this session I want to show you what to do to survive the worst economic mess in 50 years.

©Neil Rackham 2008 STATION BREAK What do you think are three deadliest mistakes that salespeople make when times are hard?

©Neil Rackham 2008 3 DEADLY SINS OF SALESPEOPLE Chasing more opportunities 1 Negotiating rather than selling 2 3 Selling price rather than safety

©Neil Rackham 2008 STATION BREAK The more doors you can open, the better your chances. Right? So how can it be a mistake to chase more opportunities rather than fewer?

MORE CALLS CAN MEAN MORE SALES

CHICAGO MANUFACTURING COMPANY But cases like this are even more common: � 36% increase in calls � 16% increase in orders � 1. 5% sales decrease in

DEADLY SIN #1: THE RULES Increasing call rates [in good times or bad]increases sales revenue in small one-call sales. � Increasing call rates generally reduces sales revenue in large multi-call sales. � The larger the sale, and the fewer accounts per salesperson, the more negative the impact of “selling harder”. � So unless you’re at the low end of the B 2 B market, just making more calls in hard times may hurt your results, not help them. �

©Neil Rackham 2008 STATION BREAK As we speak, some of the smartest companies on the planet are deliberately cutting down on the number of sales opportunities they are chasing. Why? And what will this do to their profits?

©Neil Rackham 2008 WHAT THE SMART PLAYERS ARE DOING In hard times, good companies choose the best opportunities and put more resources into each one to increase their chances of winning. � They can afford to do this by pulling out of opportunities they are unlikely to win. This can increase their profits by as much as 30% � Most companies [and most salespeople] half chase twice as many opportunities in hard times. Many of them will go out of business, as there’s no prize in selling for coming in second. �

©Neil Rackham 2008 STATION BREAK In hard times, salespeople negotiate when they should be selling. What’s the difference between selling and negotiating?

SELLING AND NEGOTIATING: The difference: Negotiation reaches agreement through varying the terms or making concessions – if you haven’t the power to vary the terms you can’t negotiate. Selling you persuade or reach agreement without varying the terms.

MAINTAINING MARGINS Selling Negotiating Sellers who negotiate late in the sale maintain margins better than those who negotiate early Selling Negotiating But in hard times most salespeople start negotiating too soon, eroding their margins and reducing their chances of getting the business

©Neil Rackham 2008 AND TO MAKE IT WORSE. . . Negotiating too early: • Comes across as pushy. • Shows anxiety. • Creates mistrust. • Makes the customer ask for more.

©Neil Rackham 2008 3 DEADLY SINS RECAP Chasing more opportunities 1 Negotiating rather than selling 2 3 Selling price rather than safety

©Neil Rackham 2008 A TRUE STORY � � � In the last recession a company was buying an electronic storage system. There were 3 competitors: IBM and two smaller vendors. The company wrote to all vendors asking for some changes that added about 5% to the system cost. They asked for these changes to be free and they also asked for a price cut. IBM would not agree to either the changes or the price cut. The two small vendors each wanted the business badly, so each offered a different approach. . .

©Neil Rackham 2008 STATION BREAK Who got the business? IBM, who made no changes and gave away nothing. Vendor 1 who agreed to make changes but charged for them, and offered no price cut. Vendor 2, who offered to make the changes free and sweetened the offer by cutting the overall price 10%

©Neil Rackham 2008 THE WINNER � Vendor 2 who did everything the customer requested, was eliminated first. � IBM was eliminated next, for being inflexible. � Vendor 1 won the business, even though they didn’t cut prices and charged for the extras.

©Neil Rackham 2008 THE BIG MISTAKE � It’s easy to believe that in a recession price is the customer’s most important decision factor. � It’s certainly true if you are selling basic commodities: prices fall sharply in recession. � But safety is actually more important than price in most sales where the customer is making a big decision. � Salespeople who make the customer feel that the decision is safe will take more business in hard times.

©Neil Rackham 2008 STATION BREAK Is it true, in your own experience that in hard times most of us, facing a big purchasing decision, will be more likely to buy the safe option than the cheap option?

©Neil Rackham 2008 SO WHAT SHOULD I DO TO SURVIVE? Don’t chase business you can’t win. Focus ruthlessly on your best and biggest opportunities. � Make your potential buyer feel safe about doing business with you. So build relationships, ask buyers about their concerns and really listen to their issues. � Negotiate little and negotiate late. Premature negotiation loses sales. � Don’t defend your existing business. Treat existing customers as new business opportunities and sell assertively; attack is the best defence. �