Did you ever have a conversation with someone you hardly knew, but for some reason it just feels like you've known them for forever? That's what my conversation with Anthony Iannarino was like. Anthony is a speaker, a best-selling author of two books - both are fantastic - and a sales leader. He has worked for and spoken to global giants like Accenture, Abbott Labs, NetJets and Wells Fargo, and is one of the 50 most influential salespeople in the world! We get deep into sales and procurement styles of negotiating and discuss how sales and procurement have interacted with each other in the past. It was a truly fascinating discussion!
Guest: Anthony Iannarino
Mark: Good morning Anthony, how are you?
Anthony: I’m wonderful Mark, how are you?
Mark: I’m very well. Thank you. Thank you so much for joining me today. I really appreciate it.
Anthony: I appreciate you having me on.
Mark: Well, it’s such a privilege and a pleasure to have someone of your caliber on the show. You’ve been named one of the 50 Most Influential People in Sales by Top Sales World and one of the 25 Most Influential People in Sales and Marketing by OpenView Partners. What do you think makes you so influential and why do people listen to you?
Anthony: You don’t ever think of yourself in those terms, do you? You just do the work that you do and it’s interesting because I’ve written a blog post every day now for about eight years, but you don’t know who is reading them and you don’t know what they’re taking from it. What I would tell you is that the audience that does care about what I do is I believe that the reason that they follow my work and adopted it specifically is because I’m a practitioner. So, things that I tend to do and write are very practical and tactical but also being part of a larger strategy that people can really understand and apply.
So, I think the things that I tend to write are things that people want to be better at and know that there are new things that they can do and I try to empower them to do that.
Mark: Very cool. Now, sales wasn’t necessarily the chosen career path for you. It almost sounds like you kind of fell into sales from your background. Maybe you can walk the listeners through how you started off.
Anthony: I still don’t think it’s the right work for me, Mark. I think that I still should be fronting a hair metal band like Whitesnake or something like that but that didn’t happen. Nirvana killed rock and roll and ultimately I played music for about ten years of my life. I went to L.A, played in a band and I found my way into sales when I had a manager who literally threatened to fire me if I didn’t go into outside sales. And what he had recognized is that I was selling more than the three people on the salesforce without actually being a salesperson and so he realized what I did was working and he wanted more of it.
And ultimately under the thread of losing my job, I went to work in sales and succeeded and had a great mentor that helped me do that and I found out that what I liked about selling and the reason that I was doing well even though I wasn’t a salesperson is that it’s really about trying to create value for other people and it’s really about going out and making a difference. That’s really what I was doing and that’s what was working. And once I’d figured out I could do that at a higher level and bring more to it, it became something that made a lot of sense for me.
Mark: Right on. Yeah, I think a lot of people lose touch with the value piece. You talked a lot about it in your book The Only Sales Guide You’ll Ever Need about the fact that you need to focus on the value that you’re providing rather than the product that you’re selling. And maybe you can talk a little bit more about that piece.
Anthony: I think I can sum up the best way Mark by just explaining if you want to be a trusted adviser, and if you want to be consultative, if that’s really what you’re trying to do then you have to embody those things. So, how do you embody those things? And the first thing you have to do is you have to have the advice because if you don’t know anything about what somebody does or what they need to do to produce better results, then you may have the trust so you’d may be known like entrusted but you don’t have the advice part of that equation.
Entrusted adviser is just made out of two pieces, trust and advice. So, you really have to work on knowing how to help people which mean you need what I would call business acumen and situational knowledge which means I know how things work number 1. And number 2, I have the experiences and I have the ability to explain here are some choices that are available. Here are some tradeoffs that you need to make. And I’m sure we’ll talk about this if we talk about negotiation at some point in time.
But here’s how I can create economic value for you as well as what I might call relational value where people are known, liked and trusted. So, I think it’s incumbent upon you if you want to be a valued creator to develop yourself to the point where you can create massive value which means understanding the buyer’s situation, understanding their challenges, understanding the choices, understanding how to help them change.
And the second book The Lost Art of Closing is really about how to help people change. It’s about how to have the conversations that we need to have so that we can see the results.
Mark: Right. Really good points. So, let’s switch gears a little bit. Your experience as an entrepreneur and as sales pro is fairly extensive many, many, many years as an entrepreneur and a sales pro. I mean surely in that time, you’ve dealt with a significant amount of negotiations. Maybe you can walk us through some of the negotiations that you have to deal with on an on-going basis and what makes some of the big ones significant and how do you deal with those types of negotiations?
Anthony: Negotiation is an interesting thing. I think what we’re negotiating about now, I mean if I wanted to point to where most negotiations end up is the difference between price and cost. That’s where we typically end up having to negotiate. And we’ve demonstrated that we have value that we can create and an outcome that we can generate for and with our clients and they really want that, but they know that they’re obligated to say “Anthony, we really like that but we may need you to sharpen your pencil” or something that sounds like that.
And it’s the difference between price and cost and ultimately where I see most negotiations go, my own personally and others’ clients, is we have to have this conversation to say “Let’s make sure we’re making the right investment and that we’re doing the right thing here.” And the price is the price and the value is the value but if I reduce your price and I allow you to under-invest then you’re not going to capture the same level of value because you’re not investing enough to get that value. And this is probably the fundamental disconnect.
I’m just going to give you a little bit of history on this; salespeople behaved very badly for a long time. They leverage very deep relationships to create a preference which we still should do and still need to do and then business has started to get more sophisticated financially. This is over the last let’s call it 3 to 4 decades and they started to say “We have to take the human relationship out of this and we have to negotiate and we have to be very objective about who we’re working with” and they started to try to quantify value. As all this was going on, salespeople started to behave better and then purchasing people were trained to behave as badly as salespeople were and to view everything through the lens of price. And so how they wanted to negotiate is I have to judge my value on whether or not I got you to reduce your price. And that’s not the right thing to evaluate because price is an indication of value at some level and asks people to take money out of the solution they’re actually to build. In which case, we become complicit in allowing our clients to under-invest.
So the negotiations that we’re really having is, in my opinion now, around what is the right investment and what is the right outcome and how do we make that right investment together which means I have to bring something to the table and I have to invest in getting this outcome. So, you have to invest enough in me so that I can help you get this outcome and there tends to still be a disconnect there because salespeople aren’t good enough at talking about cost. And purchasing agents and professional buyers and CFOs don’t understand that by pulling money out of their deal, they’re actually reducing the results that they get which is why they’re unhappy and they keep going through this cycle again, and again, and again.
So, I think that’s the fundamental challenge for most of us in negotiations.
Mark: Listen, I totally agree with you. I think the sweet taste of the price reduction very quickly disappears when the service doesn’t follow through on the backend and I find that there is significant, almost too much, and that’s difficult for me to say as a purchasing person. There’s too much focus on reducing costs and not enough focus on understanding the return on investment. And if you’re going to be purchasing something, you need to understand not only what the thing costs; I mean that’s obviously very important. But you need to understand what the return on the investment is going to be of that purchase.
And if the return on investment is X but you’ve decided to pay something significantly lower than what you had before to get X, you’re obviously not going to get X. So, it’s so, so important to understand return on investment. I know purchasing people talk about total cost of ownership but I really don’t think they’ve done enough significant work to really fully understand what total cost of ownership means because total cost of ownership isn’t just the cost that you’re negotiating and it’s not just the switching cost or the risk or anything like that that you’re going to be negotiating in a deal. It’s also the ROI that the product or the service that someone is selling provides. And if the delta is big enough then at the end of the day, it really doesn’t matter what the cost is because you’re getting a significant ROI and there needs to be a much more strategic focus on that piece I think.
Anthony: I’ll give you an example; negotiation a few years ago with a client, I came in and I gave them my very best advice and my very best advice was they needed to spend a million dollars more than they were spending on the outcome that they wanted. And a million dollars is a lot of money to ask somebody to spend in addition to what they’re already spending which is millions of dollars already. And the CEO of the company and the Head of the Operations sat down with me and they said “All of your peers have said that you’re wrong and that this is not the number. It’s really half of that. It’s $500,000. It’s not a million.” And I said “Listen, I want to explain something to you. I’m telling you it’s a million and I’m showing you the data to back this up and if you don’t spend a million, you will not get the outcome that you want. And I’m not telling you this because I’m tactical and I want you to spend a million dollars more with me. You’re spending the million dollars whether you do with me or someone else so you don’t get this result.”
And then they decided not to take my advice which was fine and I’m fine walking away through the deal because I know I can’t generate the result that they want without the additional $500,000. That’s just a fact. And they went with another provider and then they went with another provider and then they went to two more providers, that’s four providers they went through that couldn’t get them the result and it was specifically because they were under-investing in that. But there are sales organizations and salespeople who will allow the customer to believe that it’s not the investment, it’s the vendor. So, if I switch vendor, somebody else is going to be able to do it at the same amount and there’s a certain amount of reality and you know this could be true, Mark. Reality is persistent. It doesn’t really care what you think about it and it really doesn’t care about your emotions or whether or not you want to spend a money. It is what it is.
At the end of about six weeks, they said “Can you come in and help us?” And I sat down and went through the data with them again and they said “We still can’t do it.” And I walked away from the business because I’m not going to allow them to under-invest in the result and I’ll be liable and accountable for what I promised. I can’t do it that way.
Anthony: They will come back around a year later because they will realize that generating the result is going to cost a million dollars and what will happen is eventually they’ll decide to spend the money and somebody will be able to help them get the result. But first, they have to suffer the negative consequences which they’re missing delivery dates and targets with their clients. That’s the cost. They want to talk about the price but the cost is when they lose their key account or when they have problems and they come under pressure for their key accounts, then they’re going to be wanting to do something different and we have to wait until they get to that point before their motivator will change. But this is the fundamental argument that we’re having. I don’t think there’s a lot.
I mean we negotiate indemnification clauses. We negotiate insurance and line-by-line through contractual agreements and SOWs but the big problem for negotiating is one side of the things is that price is cost and another side if they’re mature understands that price and costs are separate. And when I separate these and we start looking at the costs, it’s easy to spend a million dollars.
Mark: Yes. Yeah, I totally agree with you and I think we got ways to go in terms of bridging that gap. But I think a lot of the work that you’re doing especially in some of the writing that you’ve put out there, helps to illustrate that. And so let’s get into that writing a little bit. In your first book, The Only Sales Guide You’ll Ever Need, you talked a lot about optimism. How do you think optimism and the right mental focus play a role in negotiation?
Anthony: I love this question. I mean I believe that everything is a negotiation to begin with and I believe that there’s always a deal to be found. There’s always a deal and neither one of us may be doing the work that we need to do to get that deal but it is there and I think that’s what optimism does. It empowers you to say there is still a deal here.
Yeah, the other side is being difficult. They won’t give me the price reduction I want or they won’t give me the investment that I want. Okay, sure, these are the normal conflicts that happen in commercial relationships and that’s just the reality which we’ve already decided as fairly persistent. I think that the optimism is what allows you to say I’m going to assume good intentions and know that when Mark says “Anthony, I need you to sharpen your pencil” he’s doing that because he’s trying to do right by his company. He’s not actually trying to hurt me, he’s trying to actually do right and say “Look, I’m trying to do the best thing I can for my company.” And when we push back, we’re trying to do the best that we can for our company and so I assume good intentions and assume that there is going to be a deal. And I think that that’s what allows you to continue to take action and to continue to move forward even when things, and this is your world, even when things get confrontational and even when there’s conflict, it’s the fact that we both believe that there’s something possible here that’s worth going through this and we persist.
Mark: Yeah, I think persistence, if I can touch on persistence for a little bit, is probably one of the most endearing qualities that I see in good salespeople from the procurement side of things. It tells me that they believe, not only in their product that they’re selling or their service that they’re selling but that they actually want the business. And so maybe you can expand on this for me, whenever I get into a conflict or a negotiation, a tough negotiation with a salesperson and they keep coming back and they keep persisting, what is it from the sales side of things that goes through a salesperson’s mind if they’re not getting to the win that they want or the deal that they want? And what advice could you give to salespeople on the topic of persistence when you’re dealing with difficult procurement people?
Anthony: The best thing that I ever heard about persistence, I heard from Harvey Mckay who wrote Swim With The Sharks Without Being Eaten Alive and he’s a great keynote speaker and he told the story about being a young salesperson and getting frustrated by people saying no and what he had at that time would have probably called rejection. And he went to an old grizzled sales vet and said “When do you give up on a prospect?” And the grizzled sales vet said to him “They die or you die.”
It’s just such a good story because if you believe that you’re here to create value for other people, they’re going to be difficult. If you believe though that you’re here to do that, there’s never a reason to give up or go away. I mean if you know that you’re right and that they’re right for you and that you’re going to make a tremendous difference, why would you ever stop? It’s always interesting to hear the way the people think. They say things like I don’t want to interrupt people. If they’re drowning and you can see that they’re drowning, you don’t want to walk by and say “Hey, listen, it looks like you’re drowning. I’d like to help you but I don’t want to interrupt you because I think you’re busy here.”
I mean interrupt them because you’re doing it from a place that I’m trying to help people. You’re not trying to hurt them. They’re struggling with their business and you have an answer for them. Get in front of them and help them and it’s the same thing with this. When you’re dealing in a negotiation, I mean I’ll tell you one of my favorite stories, there are two Buddhist Monks and they’re washing their bowls by a river and there’s a scorpion in one the Monk’s bowls and the Monk picks the scorpion up and it stings him and he immediately drops it and it falls straight back into the bowl. So he reaches in to get the scorpion again and it stings him the second time and the Monk sitting next to him looks at him and says “Why, do you keep doing that?” And the Monk says “Because I’m trying to save the scorpion.” And the first Monk says “But every time you pick him up, he’s going to sting you. It’s in his nature.” And he says “Yeah, but it’s in my nature to save the scorpion.” You’re going to get stung, you’re going to have conflict, you’re going to have disagreement but if you’re trying to work on solving a problem and creating a value for someone, you have to understand that it’s going to take persistence and that it’s not going to be easy.
And if you reflect on the deals that you’ve ever won or the results that you produced in your life, they didn’t come easy. It took effort on your part. It took persistence. It took a willingness to believe that you were doing the right thing and that you are going keep doing it until it worked. And that’s the mindset you need to have when you go into these things.
Mark: Yeah, excellent, excellent, excellent points. I think persistence has a lot of to do with attitude and it has a lot to do whether or not you’re confident enough to persist. And I think confidence comes a lot from how you present yourself and whether or not you believe that you’re doing the right thing, you believe like you said you’re creating value. And a lot of that has to do with body language and how you dress and how you’re presenting yourselves in the negotiation. How do you think body language and how you present yourselves helps in negotiations with procurement people?
Anthony: I think in any negotiation, it helps and I think that you do have to be confident. It’s very interesting to me to participate in negotiations and watch them on both sides. And there are many times and you know this probably better than I do – there’s sort of a battle of wills and you need to be confident but you also need to understand that you’re trying to reduce resistance to what you want and not to increase it although there are tactical reasons to increase a conflict too. And I’m certainly aware that you’re going to be well-versed in those kinds of things, but I do think it matters how you show up. Are you prepared? Do you know what you’re talking about? Do you have the credibility to have this conversation? Have you done your homework to understand how to talk about the delta is between what’s somebody’s investing now and why you’re asking them to invest more?
I do think that it matters that you’re crisp and I do think that you should show up in a physical and a mental state to prepare for this but I think that’s true about every sales interaction we have. And it’s an interesting time because I have more and more people saying “When you come to speak to us, don’t wear a suit.” And I’m doing what I do and to do it, the best thing for me to be wearing is a suit. I mean it is and you’re getting that because you know what I’m talking about. There’s a certain level of authority and a certain level of integrity that comes when you look at somebody and it’s congruent. I need to see the whole thing. There can’t be any incongruities there. But you say that you’re this, but then when I look at you, your shoes aren’t shined, you look like you’re a mess, you’re not prepared, you don’t have your notes.
I went into a conversation with a lawyer once, he was a half hour late for a deposition and he was totally scattered and unprepared and disheveled and it made an enormous difference for him and that he wasn’t able to accomplish what he wanted to specifically because it was incongruent and it ended up costing him a lot.
Mark: Yeah, I totally agree with you. There is a guy named Joe Navarro who is a former FBI, hostage negotiator and he talks in his books about the power of non-verbals and what non-verbals actually say and how much of the conversation is actually had through non-verbals. And he spends a lot of time in his book talking about presentation, how you talk about something not necessarily what you talk about, whether or not you’re standing or you’re sitting, how you relate to people. It’s so, so, so important.
I actually wrote recently about the frustration that I feel whenever someone in sales comes in to meet with me and isn’t prepared or sits down when they do their presentation or doesn’t have their notes ready or doesn’t have answers for the questions that I have. And generally speaking, it happens unfortunately more often than I would like. I mean maybe once a quarter, I’ll get someone who comes in and is on point, he’s practiced or she’s practiced and they have their notes ready and they deliver an amazing presentation and they’ve hit all the key points, but it’s rare. It’s super rare which is super surprising because the information is out there. It’s not like what we’re saying is new. I mean sales and procurement has been around since the beginning of time.
So, I feel like is it that they’re not putting in the effort to learn or is it that they believe the information isn’t out there or are they not committed to sales or procurement as a profession? What do you think? Do they see sales as just a vocational step to the next thing? What are your thoughts on that?
Anthony: In both cases on both sides Mark, it’s poor leadership. I mean the sense of the sales force are really the sense of leadership and not saying “Look, before you go into this difficult negotiation, we’re going to go through this interaction and talk about every step that we believe that we have to go through to be well-prepared to create value and to be able to generate the outcome that we want.” And when people show up and they haven’t done that work, certainly if you’re listening to this and you listen to sales content, you know.
I mean I’ve got HowtoPlanaSalesCall.com where you can go and watch the four video series about how to prepare for a sales call. It’s the same for negotiation for sure. You want to go in and know what you’re talking about and have an end goal and be prepared and have done your homework and it’s not very difficult to do the homework. It’s difficult to be disciplined about the work that we do and to understand that there’s a level of professionalism.
And on the procurement side, so we can say a plague on both your houses, and leadership on that side is we want you to get a price reduction from what the contract says. And I’m now starting to hear, there are salespeople started to behave better a long time ago and procurement hasn’t caught up. But procurement is starting to catch up and I’m starting to hear people say “I need you to show me cost-savings without reducing your price. I need you to show me how you create greater value without you taking money out because I believe we’ve now gone to the point where if you take any more money out, it’s me taking the money out.” And so we’re starting to hear people say “Wait a second, this isn’t about a price reduction. This is about supply chain management. This is about choosing responsible partners who are accountable for helping us run part of our business.”
And so you’re starting, I think we’re at this and you can probably get me more of your insights here. I think we’re at the beginning of this people are looking and saying “Wait, we’re under-investing. We made something that was strategic because we spend a lot of money there transactional to try to save the money, but now we’re not competitive and now we’re not getting the strategic outcomes that we need because neither one of us are putting any more in this. When we took the money out and since we took the money out, we’re no longer the most profitable accounts or the best accounts overall for our clients and they’re putting their effort or our partners rather are putting their efforts somewhere else.” But I think we’re still at the beginning of that but I do see the pendulum starting to swing back the other direction.
Mark: Yeah and I think you’re right. I do think it’s starting to swing the other direction. I think it’s probably a bit slower than I would like to be perfectly honest with you but there seems to be a lot of procurement people, purchasing people now focusing on, like what I said earlier, is ROI, right? And how do we increase that ROI while maintaining the same investment that we had before. So, if we have an investment let’s just say in a service company and they’re coming in to do whatever that fix copiers, how do we make those people who are coming in to fix the copiers more efficient, more effective? What training can the company who is buying those services invest in those people to become more productive, to become more efficient?
Because ultimately at the end of the day, if I just drive down your cost at our next contract renewal, you’re just going to hire less qualified people to come in and fix my copiers and then they’re going to get less efficient and less productive and that’s not going to help me at all because I need my copiers to be running at all times because I run a very busy business.
So, I think there’s definitely a focus on getting that ROI up by focusing on efficiency, effectiveness. We talked a lot about putting in key performance indicators to make sure that the salesperson’s organization is meeting their key performance indicators but what we don’t talk a lot about is how do drive those key performance indicators up instead of just meeting the need. So, what do we do to further invest in that business to get more out and what’s the incremental ROI that we can get out of the deal? It’s a bit slow in my opinion. I think we need to do a lot more focus on helping our suppliers and our service providers help us more by identifying where we can improve instead of just focusing on crunching the numbers and reducing the price. But I think you’re absolutely right.
Anthony: I think it’s incumbent on both sides to say “Look I’m going to bring more to the table. You’re going to invest more and I’m going to match your investment but we’re going to invest more so that we’re going to start an upward spiral instead of just downward spiral we’ve been on.” And listen, some of this Mark, I call post-traumatic recessionary stress disorder. You go through dotcom bubble and then you go through the financial crisis and people start to get really funny and they’re very fearful about money and so doing something cost-savings, cost-savings, cost-savings but when the buying company says that they mean price reduction because if they meant cost-savings, they have the conversation that you just had to say “How do I get a more efficient and a better technician who can do more work?”
Mark: That’s right.
Anthony: I can pay somebody $12 and get a certain level of outcome. I can pay somebody $24 and that’s for somebody not to be able to do twice as much work, they might be efficient enough that they can do three times the work but I have to pay more to get that person and that’s the variable. What are we investing together?
Honestly, the conversations around should really be around what is the right investment. Do you really need the $24 an hour guy or could a $16 an hour guy get us where we need to be and I only need you to give me $4 more to do this. That’s where the real action is and then the negotiation is to start with negotiation around are we looking at price or are we looking at price or cost. Because if we’re looking at price, I can do what I can do; if we’re looking at cost, then we can both be creative and sit down and start looking at the problem together and say instead of negotiating against each other, we can negotiate around let’s talk about what the right decisions to make are and then let’s talk about the right investment for both of us to make. And be grown-ups about this because it’s important that we do this now.
There are companies that are struggling. We live in a world of constant accelerating disrupted change and you have people like Amazon and Jeff Bezos isn't going to negotiate with you. He’s just going to eat up your whole business model altogether. We have to all figure out how we’re going to create greater value together and what’s that’s going to look like.
Mark: Yeah, I 100% agree with you. A few days ago, I had a discussion with a gentleman named Angus McIntosh, who is negotiation coach based out of Hamburg in Germany and he spoke specifically about this issue. Historically, there’s been a focus on win-win versus win-lose negotiations and there hasn’t been enough focus on how do we drive more value and once we’ve decided how much value there is, how do we divide that value? So, it’s no longer a conversation about who wins and who loses; it’s about how much value make sense for each party to get. And it’s shocking to me that we’re so far behind on this discussion because it almost seems like we’re coming back full circle to where salespeople are trying to get to with strategic account selling. And it only makes sense to move in that direction.
So, switching gears a little bit, I’d like to talk a bit about closing and what your thoughts are on closing in relation to negotiations? In your book, you said closing is a last art and you give some steps and some guidelines on how to close better. But what do you mean by closing as a lost art?
Anthony: For a long time, salespeople were taught to always be closing and they were really good at gaining commitments but it was mostly just one commitment. That was the commitment to buy. Neil Rackham been selling in 1988, still the best-selling hardcover book he has ever printed. And the three pages before he gets to the Model of SPIN which is a situation questions, problem questions, implication questions, need-payoff questions. He talks about watching 34,000 sales calls and understanding that the best salespeople did not close for the final ask or the commitment to buy; instead they closed for he called an advance, which is what’s the next step we need to take to move this forward together, at least in complex sales. In little sales, just ask. Ask for the business over and over again. No risk, low dollars, nothing strategic, that’s easy.
Nobody ever really paid much attention to that but when I read it, that was probably to me the most fundamental change that I made in my own selling was okay so I never leave a meeting without getting an advance. And I wrote them down and I thought about them for many, many years and what it turns out is that we went from always be closing to never be closing and salespeople were never taught anything else about selling or closing anyway because closing is a bad behavior and people don’t like to be closed. Well, that’s not exactly true. People do like to make the right commitments to get the change that they need in their business but when you jump way ahead to the final ask which is “Mark, nice to meet you. Your place are mine.” That’s like a little soon for that. Maybe copy first or something else.
We can’t go all the way to the end game because that’s a self-oriented move that we’re making because I want the deal. It ends up that there are a number of commitments that we have to ask people to make to help them make real change. And the first one is time because we have to actually have time to talk about what’s going on and why it matters. And then it’s to explore change and then if it makes sense to change, we have to make the commitment to change. But the commitments that we have to ask for, the commitments to explore what that change looks like, we have to talk about what is the right solution look like and that’s a collaborative conversation that we have to commit to. We have to commit to build consensus in an organization, and I want to touch on this with buying companies and what they do to prevent us from really doing our best work.
And then we have to talk about what investment we’re going to make and we have to review the solutions together and then we have to resolve everyone’s concerns before we get to the part where I ask you for your business. So, all these things need to happen first. So, now we’re back to always be closing but we’re only closing for the next commitment that makes sense in the conversation that we’re having.
So, if we have an initial conversation I’ll say “Great! I’ll send you a contract.” But it’s an $8 million deal. We don’t have consensus from anyone. No one in the organization has ever even seen the solution. No one has taken to account the problems that’s it’s going to cause in the execution. There’s no way you can say yes to that because you have too many things undone. But what we know now is that buyers don’t really have a great process. If they do it, it’s an RFP and that process doesn’t serve salespeople and honestly it doesn’t serve buyers anymore either because what they’re saying if you say yes to all of these things and you give me a low price, then I’m going to say yes to you. You’ve agreed to my contract. But that’s not how business works because business is full of human beings.
So, by making everything arm-length and trying to prevent salespeople from participating in a process where we go through this, we don’t get to pick the right partner and you probably know this as well as I do, you see companies that make decisions after they let an RFP, they bring in three companies to look at. They spend an hour to two hours with each of those companies and then make a decision on as to who their partner is. And in a strategic deal where they’re going to spend millions or tens of millions of dollars, I need you to spend time with me so that I can understand how we would even do anything together. I need to collaborate with you and you need to collaborate with me as a buyer because you have to figure out who is the best group of people for me to do this kind of work with especially if I’m going to have him long-term.
You definitely need consensus and consensus is not built very easily when there are five people on the buying committee and we try to have groups that represent a certain set of stakeholders and they’ve never spent any time with the people that they’re deciding that they want to bring into their company as a partner. And we just can’t underestimate. I would tell you, all things being equal relationships win, and all things being unequal relationship still probably win, which is why we have these arm-length processes in the first place.
With that said, even if you’re going to look at three companies, you need to go through this process again as part of your process to say “I need to know who these people are. I need to have a relationship with them. I’m bringing them in as part of my team in a strategic purchase and I need to know that we’re going to be able to execute together.” And I think that these commitments are what allow us to have the conversation to say “These are the right people to work with” on both sides.
I told you about a negotiation where I walked away from the business. I’m not going to be accountable for a result that I can’t produce and I’m not going to take anyone’s money to do that.” If I can’t produce the result, I’m not taking your money. I’m getting to decide that wait a second; we’re not ready to do this together. And it’s the same thing for the buyer. You might sit down with people and spend an hour with them and they’re delightful. But you might find out four months into the contract that this is the worst decision you made and you’re working with a group of people whose values and whose business operations are so out of synced with yours that now you’re not getting the outcome that you want and your cost are far greater than any money you might have saved in a price negotiation about letting the RFP in the first place.
Mark: Yeah. Listen, I think there is a lot to be said for the gaps that exist in the RFP process. I don’t necessarily have a solution to what is the next thing that we can focus on. I mean some really progressive guys like Greg Tennyson who’s the current CPO of a company called VSP Global. He used to lead up Salesforce and Oracle as well. I mean those are the guys that are thinking about what are the next things. Number1, can we fix the RFP process because it is broken. I think if you had to sit down with a procurement person over a beer, they would admit to that.
But instead of fixing it, how do we create something different. How do we totally dismantle it and make something that makes sense that’s strategic for both parties to invest time? Like you said, invest time with each other and figure out whether or not this actually even makes sense to sit down with each other because the RFP process, I give a hundred questions, you answer them. We check a box, you score well. We go through a round of negotiations, we do a site tour, we select you and then you come in and start doing the work and then we realize “Oh wait, we’re totally not matched for each other. And you’re dropping the ball and everything that we need.” But nowhere in the RFP process had we ever identified any of that stuff and that’s not only comes through consultations with each other. It only comes through spending time with each other and getting to know each other better and finding out whether or not this is actually going to work to begin with.
So, I don’t know how we fix that. I think there is definitely something that needs to change in the industry to make the process between procurement people and salespeople more strategic where they sit down and actually have a conversation versus I find that procurement people are very cold, very data-driven and just very stand offish when it comes to the salesperson. And then I find that a lot of salespeople on the opposite side are they fill their role well and that they’re very outgoing, very gregarious. They make a lot of people laugh but don’t necessarily have the data that the procurement people are looking for to help them make the decision.
Anthony: Both of us still have the wrong people in the room. I mean I have salesperson in the room and you have a procurement person in the room. Okay, this is my gregarious outgoing value creator and this is your number-crunching, what I want to say clinical data-driven objective decision-maker or supposed objective decision-maker. These two people aren’t going to work with each other anymore.
I mean once we start executing, my operations team and your operations team are going to be working together and they don’t spend any time together deciding who they want to work with because we say “Look, you can’t bring them out there. This is an RFP. They’re not going to let you. It’s arms-length. You can’t even have this kind of conversation for one hour.” Then on the purchasing side, they say “Once we let this RFP, do not talk to anybody in this company. You’re going to be disqualified.”
So, it’s like we’re having an arranged marriage, arranged by two people who are going to have nothing to do with the marriage when it’s over, right?
Anthony: How does this make any sense?
Anthony: I have seen, Mark, and you probably have too, some groups that allow their people to spend a lot of time with salespeople to determine who they want to work with in advance of an RFP or even during the RFP instead of being arms-length, they open it up for people to be able to have conversations. And it turns out that when you let this happen, both good and bad for the sales organization and good and bad for the buying organization. You have an operations team that comes and sits down with the client operations team and they know immediately who they believe and who they don’t believe.
And they always ask questions that are what do you do in this scenario and they want to hear exactly. I don’t care what the questions on the RFP said, I want to know when the train comes off the track, how do you handle this because this is what happens in our business?
Mark: That’s right.
Anthony: And they get to decide do I like to answer and does this person have the experience. And invariably when you do this instead, the operations team and the people that are going to be helping to execute after this, they figure out who they like very quickly and it’s the operations team. And I would tell you it’s the salesperson that’s listening to this and you don’t know how powerful it is to bring your ops team and the ops team is the very best salesperson in the organization because just for this reason. If somebody says “What do you do when this happens?” And they say “Okay, so here’s what doesn’t work. Here’s the best thing that we have. It still ends up that you have problems but the problems are easier to fix and they don’t last that long.” And somebody goes “That’s who I want to work with.”
They know once they get it. They know what they’re going to do. They know that we’re not going to have perfect, but this is how they tend to handle it and we like that and that makes them better matches. So, I think that’s what it has to evolve to instead of saying arms-length. We maybe have to get the hug-length relationships out of the gate but we do have to get close enough to say “I feel confident that this is the right decision.” And I’m mostly speaking here about what you work on which is strategic great risk massive necessary outcomes that to have to happen where we really need to do important and good work.
Mark: Yeah, I totally agree with you. And so that maybe actually a good segway to my next question. If you are going to give advice to a procurement person on negotiation, because I love hearing advice from the other side of the table, what advice would you give?
Anthony: I think I gave it. I would tell you to ask the person sitting in front of you to justify the delta between the investment that you’re asking them to make and explain to me how my cost are going to be driven up and what kind of anecdotes and data can you show me. And I think that that’s the salesperson’s responsibility.
Mark, I’m coming to you and I’m going to ask you to spend a million dollars more and that’s a lot of money than you spend more than you’re spending right now. I want to make you sure you understand where that money is going to be invested and how it’s going to reduce your overall cost. If I can’t answer that for you then the salesperson still has work to do.
Mark: Right exactly.
Anthony: And I do think this is incumbent upon the salesperson. I need to justify the delta. You don’t need to justify the delta. You can collaborate with me and we can talk about it because I need to understand how to drive those down but it’s my job to tell you what your cost will be if you don’t do this. And miss deadlines and an under-investment, we’ll go back to your copier example – the person who is being paid too little to be able to do it is highly-inefficient. You end up spending more money than you would be spending if you paid more money. That’s our job. We’re supposed to be doing that.
Mark: Right. Yeah, I think we could do more as, I don’t want to say bodies of work, but I think salespeople and procurement people could do more if we had some sort of way to get together on an on-going basis to discuss these issues because over the course of this conversation, I feel like we make great ground. I mean I think both of us really understand where the other side is coming from and yet for whatever reason, it’s so slow like that pendulum is so slow to come back to a point where it becomes more of a strategic conversation than it does me bashing a salesperson when they come in to the office that their costs are too high.
So, I think we can definitely do more work as a sales organization or procurement organization holistically I mean to come together and talk about these issues to see what make sense for both sides because that’s the only way it’s going to get better faster.
Anthony: I think that there’s a fundamental question, Mark, that you have to ask. And the question is how do I help them? And if I’m the procurement person, I’m like you’re telling me I’m paying a higher price and my cost comes down, how does that work? My job is to know how to help you with that and as a procurement person, your job is to say to the salesperson let me help make your job easy. These are the areas where we need our cost reduced. How do we make an investment to bring these costs down so that the salesperson and his organization understand “Look, longer-term I have to either bring their costs down by generating greater revenue, generating greater profitability, reducing reliance on this asset and moving to a different asset cost.” I have to be creative and come up with that.
But if we both look at through the lens of how do I help to educate that person on what I’m really trying to do. I mean the price coming down pulling a million dollars out of a deal sounds really good but when it costs $2 million to do that, it’s still a bad decision. And we’re both complacent to that, right? We both did that together. I said yes and you said yes and you didn’t get the outcome that you really wanted and I enabled you to do that. That has to change.
Mark: I totally agree with you. Looking back on your career, I mean you’ve got a significant amount of experience and truly you’ve made a few mistakes along the way, what advice would you give to 30-year-old self on negotiation and where were you when you were 30?
Anthony: When I was 30 I was in staffing in Columbus, Ohio and I learned a lot after 30, no doubt about it. I would tell my 30-year-old self, understand that negotiation comes with some conflict but that’s not the most of it. The most of it is determining how we create greater value together and then who gets to capture what part of this value. That’s really how the game is played when you’re playing it with both sides with good intention about really finding the right deal and not just trying to find a deal that one side can be pleased with and the other side struggles with.
I would also say to remember that this conversation about investment needs to happen earlier in the process and that when you start negotiating towards the end of the process, you’re negotiating over the wrong thing. We’re now negotiating over price and cost when we should have been sitting down together and determining what the right investments to make are together from my side and from your side.
And it took me a long time to get to that point to realize we’re both going to put money into something together to get this outcome. How much do you need to put in to get what you want and how much more do I have to add to what I’m doing to be able to serve you this way and then how do we make this investment together? And I think when you view it through that lens; it gets you a lot cleaner. And I think there’s a whole commitment from a buying organization to say “We are going to commit to talking about the investment early to figure out what do we have to spend, where does it makes sense to put that money.” And a good salesperson should help guide that conversation.
The other couple of things I put in the first book, I mean that salespeople used to be so aggressive and so tactical and depend so heavily on the relationships. But now buying organizations are too reliant on tactical things like PCOS and they’re too reliant on okay I’m going to have you negotiate with the stakeholder you’re working with and then I’m going to pass you off to procurement and the CFO is going to step in and you’re going to negotiate three times and everybody gets a bite. And salespeople don’t even know that that’s going and most of the time, they don’t even know what something like PCOS is or that a lot of the stuff is just tactical. And they don’t understand that the tactics are created because for salespeople with strong relationships and leaderships, they were coming in and getting margins that they hadn’t earned and they were keeping the organization from doing the best work that they were capable of by keeping people and products that were legacy and that were going to help them grow and cause people to stagnate.
We just so have to terms with this, you know this is where we are now. We behaved badly. You behaved badly. Okay, then how we both stop behaving badly and just get very real about what do we need to do together. I wished I would have known that at an earlier age. It would have been helpful.
Mark: Totally. Well, listen Anthony, I’ve got to tell you. This is been probably the most refreshing conversation that I've had about negotiations with a salesperson ever. I think both of us have learned a significant amount. Well, I can speak for myself, I’ve learned a significant amount from you today. Your approach to sales is super refreshing. The books that you’ve written are great. I just finished reading “The Only Sales Guide You’ll Ever Need.” Actually, I was listening to it on Audible which was awesome.
So, for those of us out there on the procurement side of things, I think a lot can be done on understanding salespeople better. So for my listeners who are procurement people, purchasing people, supply chain people, do yourself a favor and pick up Anthony’s books. They’re available on Amazon and you can listen to “The Only Sales Guide You’ll Ever Need” on Audible. And get a deeper understanding of how salespeople think because I think that’s what’s going to lead to better collaboration in the future between both sides. I think it’s the only way that we’re going to be able to collaborate with each other if we understand each other better.
And Anthony, I want to thank you so much for sparing up your time with me today. I know you’re a super busy guy. You run a very, very busy business. So, thank you so much for your time today.
Anthony: Thanks for having me on. I appreciate and I was intrigued when you invited me because I think this conversation is good and I’d love to have this again in the future and maybe something that I could use to share with the salespeople.
Mark: Yeah absolutely. I would love to chat again. Further to that, if people want to find out more about you and what you do and get in touch with you, how do they get in touch with you?
Anthony: Best ways to find me is TheSalesBlog.com and I write there daily. I’ve been writing there for about eight years and I’ll also connect with you on LinkedIn. You could just search my last name Iannarino, you’ll find me. Happy to connect there.
Mark: Perfect. All right, well listen again, thank you so much for joining us. For the listeners today, you can check out all the things that we talked about in our transcription and all the resources will be posted with links and you’ll be able to get to Anthony on The Sales Blog. I’ll post a link for that in the show notes.
Again, Anthony, thank you so much. Have a great day. Hope we chat again soon.
Anthony: Thanks Mark.
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