Sales Book Review #2: The Little Red Book of Selling by Jeffrey Gitomer

This review will be divided into two posts. Even though it’s a little book it’s incredibly content dense. This article is going only to focus on the introductory part of the book. The introductory section contains some incredible quotes. Even some quotes that tie together well with the last book reviewed.

The second book in the Sales Book Review Series is Jeffery Gitomer’s Little Red Book of Selling. His book is broken down into a forward, an introduction and 12.5 modules. Each of the 12.5 modules has a clear lesson and will be covered in the following post. Some lessons can be summarized in one sentence while others are very dense. The density of this book makes it the type that will be good to read then re-read months later to find even more lessons for the sales process. The introduction of the book is further broken down into 7 sections. This particular review will focus on parts one and two of the introduction.

Let’s start with the very first sentence on the first page of the book, it comes before anything else. Jeffrey says: “The sale is defined by the customer: people don’t like to be sold but they love to buy. Your job as a master salesman is to create an atmosphere where people want to buy.” So much is contained in his opening line. This line is incredibly important because Gitomer states, what he believes is, the mission statement for great salesmen. To Gitomer the mission of every good salesman is to create an atmosphere where people want to buy. The mission is not to sell people, it is to give them an atmosphere where they want to let go of their hard earned money. The word change is subtle but the consequences of what Gitomer says are huge. Those words have the ability to change the entire selling process into something that could better be described as a facilitating process. Ask yourself are you selling people or facilitating their buying?

In part one of the introduction, Why They Buy – An Answer Every Sales Person Needs, Gitomer says that the most important, yet most overlooked question is: “Why are your customers buying?” In fact, he says this question is so important that it is “one billion times” more important than “How do I sell?” Gitomer makes the case that once you figure out your customer’s “why” selling to them will become a snap. He recommends that you directly ask your customer why they are buying. This advices blends together well with Mr. Pinks advice of “becoming a informational curator and guide.” Once you understand why your customer is buying you will be better able to deliver their ideal product. When you understand why they’re buying you can identify problems the customer may not have identified yet. Those problems could be solved by you thus delivering even more value.

In part two of the introduction, Selling in the Red Zone, Gitomer delivers this gem: “The difference between success and mediocrity is philosophy. Most sales people think end of the month. But you have to begin thinking end of time.” Once again Gitomer delivers a one liner that shows a major mission of sales. He describes this philosophy further saying, “If you begin thinking end of time, each time you are in a selling situation, the sale will always be long term, relationship driven and referral oriented.” This quote supports why Gotimer believes the long term viewpoint is superior to the end of the month viewpoint. It is easy to agree with Gitomer but harder to practice. When you are nearing a big commission number the end of the month is all you can think about. It takes some real discipline to remain long-term oriented. Regardless of how hard it is, Gitomer is right, focusing on the end of time will result in an exponential growth in sales over the long term. A salesman will have to wait longer to achieve the high number of sales, but it will be more stable and predictable than the “end of the month” strategy. So instead of your mission being making money by the end of the month try to make as much money possible by the end of time. In this viewpoint the end of the month doesn’t even matter. All that matters is making sure each customer has an incredible experience purchasing from you.

These couple tidbits are by far the most important in Gitomer’s introduction. I encourage you to purchase the book and read the introduction for yourselves. There is still a lot of value left in the 5 parts of the introduction that I have not touched on yet.

 

Sales Book Review #1: To Sell is Human by Daniel Pink

To Sell is Human by Daniel Pink was the first sales book I decided to read this year. I am very happy I read this one before any other, because it contains one key tenant about sales in the modern age: informational abundance has transformed sales into a profession of informational parity that increases the seller’s risk.

The time of the sleazy, rip-you-off salesman has passed. Mr. Pink says they can no longer exist for two big reasons. One, the informational symmetry of our society, crystallized by the internet, allows buyers to be more educated about the products they’re buying. The information that consumers gather is used to make more informed purchases, and avoid bad deals. The example Mr. Pink gives is used cars. Prior to the internet the car knowledge of the average consumer was very limited. This allowed the people who knew a lot about the product, the sellers, to make one sided deals where they benefited much more than the customer. Now, websites like Kelly Blue Book ensure that the customer has a basic knowledge of the vehicle. This knowledge parity restricts salesmen from making one sided sales.

Secondly, the internet changes the risk complex for sellers. In the past if the sleazy, rip-you-off salesman ripped someone off the buyer will badmouth the seller to their family and neighbors. In this situation the salesmen would only lose access to a couple clientele. The internet changes that. Now if a salesman rips someone off the buyer will go to their entire social network and complain. Thousands of people can see “sleazy, rip-me-off salesman ripped me off!” and know to avoid him. That is thousands of sales gone after one bad one. For sellers the risks has never been greater. This leads to a key phrase of the book: seller beware. In the past the seller had all the power because of the informational asymmetry. Now the seller must be more aware then ever because that asymmetry no longer exists.

In part two Mr. Pink goes on to give a couple behavioral recommendations he calls: “The New ABCs of Sales.” First is “attunement.” Pink defines attunement as: “the ability to bring one’s actions and outlook into harmony with other people and with the context you’re in.” After he defines it he gives some examples of how to bring oneself into closer attunement with another person. The second behavioral recommendation is “buoyancy.” To Pink buoyancy is simply the ability to remain emotionally optimistic despite the constant rain of rejection, rebuffs and refusals. After he defines it he gives some examples of how to remain buoyant before, during and after a tough day of selling. Lastly, C is for clarity. Essentially clarity is broadly defined as clarity of purpose. Pink doesn’t give a specific definition. He only provides a broad sense of what he thinks clarity is. I believe clarity to be a catchall term Pink uses to cram many sales behaviors into the book he did not want to leave out. Ironically, that cramming makes the definition seem somewhat unclear. The exercises are good for gathering a general sense of what Pink means when he says clarity.

The third, and final, part looks at the change of traditional sales processes to accommodate the new informational parity. Pink describes how to make a pitch, improvise on your feet and be a better servant. Each of these processes undergoes minor changes but in essence is the same as they always have been.

The first part of Mr. Pink’s book is incredible. Mr. Pink’s thesis will be of incalculable value as I move forward in the reading of sales books. The idea that informational parity now exists has the potential to clarify thousands upon thousands of people’s flawed sales processes. His thesis will help me sort out the good strategies from the bad strategies. I will not have to waste time practicing outdated selling techniques that will hurt my bottom line in the long run. The rest of the book is essentially the consequences of that change. Parts two and three are how to behave, and the changes of a couple common processes, under the new framework. Most importantly Mr. Pink has given me a template by which I can judge other works. Mr. Pink closes part one saying: “Honesty, directness and transparency have become the better, more pragmatic long-term route.”

A Simple Voting Change Solves Complex Problems

Very few ideas have had as profound an effect on me as that of the Single Transferable Vote, or STV. STV is a voting system that could allow the US to break out of the toxic cycle of two-party government and usher in a new era of accurate representation. Below is a video that explains how STV works.

There are so many benefits from such a simple idea that it continues to astound me. Under STV the voting constituency is more accurately represented. No longer are we subject to Democrats vs. Republicans all across the land. Can a Republican most accurately describe the political beleifs of both West Michiganders and West Texans? No, those two groups don’t have much in common. A West Michigander tends to be a further left leaning conservative than West Texans are. In an STV system representatives with more nuanced views can run without being squashed by powerhouse parties. Now the differences between West Texans and West Michiganders are represented in congress. The representative who is sent under STVis the most accurate portrayal of the real views of each place from Texas to Washington to Maine. Better representation leads to laws that more accurately portray what American’s want.

As I alluded to above, American’s have far more diverse political beliefs than two parties can accurately support. STV frees America from the shackles of a two party system. Do Democrats accurately represent the beliefs of both Angelenos and Massachusites? Again, no, those two groups have very little in common. The two party system that we currently have has many drawbacks: alternative views that make geographical areas different from one another are downplayed and unrepresented, it’s less competitive leading to apathy among the representatives, the only political choice constituents get is the choice given to them from the political parties, it leads to voter un-interest, and, finally, it leads to voting strategy.

In the current political climate people have to think about how others are going to vote then accommodate that into their vote. As a result people do not vote for who they really want. A great example of voting strategy is the Ralph Nader fiasco in 2000. Nader had similar views to Al Gore. As a result, many Nader supporters, believing Nader couldn’t win, voted for Gore. They did so because he was their next best choice and had a chance to win. Strategy should not have a place in voting because people do not vote for who they really desire. Whenever this problem arises it comes with a guaranteed skew in the result of political representation. Had voters used STV and been allowed to list Nader first, then Gore second, Gore would have beat Bush and been a more accurate representation of the constituency from 2000-04.

In an STV system Nader could have run and not garnered the hate of the Democratic Party because his voters second choice would have been Gore. With Gore as Nader supporter’s second choice their votes would have gone to him. Thus, we can see that inter-party political strategy also begins to decrease in importance. Currently the constituency only see candidates that are only ok’d by the two big political parties. In an STV system anybody can run without harming one another strategically. This difference allows for more parties to rise up and be embraced. When more parties rise up, there is a wider range of beliefs to vote for which leads to more accurate representation.

Quite possibly the biggest advantage of STV is that it decreases the strategic value of attacking other candidates. Under STV the 2nd, 3rd, and 4th votes of the constituents have a lot of importance. Therefor, candidates can not risk losing those votes. Because candidates can’t lose those votes they can no longer attack other candidates. If they insult a person’s preferred first candidate they will most likely lose that persons second or third vote. A lack of attacking also works it’s way into debates. Debates now focus on a more constructive and positive dialogue that can better inform voters. Imagine watching a debate when political candidates do not try to break the character of one another. Imagine watching TV and only seeing positive political ads!

STV, while incredible, does have its drawback. In an STV system it takes longer to tally the total vote. With all the moving of votes it will take at least an extra 24 hours. However, isn’t better representation worth the wait?

The United States and Its Debt

Politicians, political pundits and economists all like to say that the United States federal debt could be paid off if taxes were raised slightly and spending was tightened slightly. The people above make it sound as if paying off the debt would be easy. However, this is not the case. A little simple math makes it abundantly clear that the debt will very, very, very costly to repay

Let us assume that The United States government makes debt a priority and runs a 100 billion dollar surplus that will be payed directly to the debt. $100,000,000,000 is not out of the realm of possibility, it has actually been done relatively recently. However, even if the United States re-payed 100 billion per year it would take 181.5 years to pay off the debt. In the last 60 years there has been a budget surplus of 100 billion, or more, 4 times, 1998-2001. To assume that the federal government has the discipline to run 181.5 years of a slight government surplus is ridiculous. Since 1940, 4 years of surplus is the longest yearly streak they have had. The new streak would have to be 45 times longer. It is laughable to expect a government to achieve this streak while there is no historical data that it can do so. The above was simple math. Hold onto your hats because it’s about to get more complicated.

The worst part about debt is the interest. The simple calculations above did not take interest payments into account, so let’s do that now. The US debt of approximately 18 trillion 150 billion, and always rising, dollars turned out to have interest payment of roughly 431 billion dollars in 2014. 431 billion dollars of the federal governments budget last year went to paying down debt interest. The higher this number the more difficult it will be for the government to reach surplus. Also, as you can see from this chart interest rates are sitting at historical lows. When the interest rate begins to rise the government will have to spend more and more on interest payments. With more money being allocated to the interest it will become increasingly difficult to reach a government surplus. The average interest rate on the chart linked above is 5.1%. If interest rates were to rise to 5.1% the interest payments on the current debt would more than double. At a historically average interest rate of 5.1% the government payments, just on interest, would be 909 billion dollars per year. That would make interest payments the second largest item in our budget, a mere 16 billion behind Medicare and Medicaid. The worst part about interest is that it provides no value. Medicare/Medicaid provide healthcare for the elderly and poor. Interest payments provide zero value to the American people, unless of course the interest is being payed to them. In fact, much of the interest payment goes to our competitors abroad.

The relatively simple math above proves the politicians wrong. It would be incredibly difficult to pay the debt down. Not only would it be difficult now, but it will get harder in the future as well. Rising interest rates will make it more difficult to reach a surplus. Without a surplus the debt can not be decreased. When the debt can not be decreased the interest continues to accumulate making it harder and harder to pay down the debt. When all these factors are taken into account it is clear that the federal government would have to run the most fiscally responsible system that it has in decades, while also doing so for years on end, to make progress on re-paying the debt. That is not an easy task.

*All numbers adjusted for inflation.

Sources:

1. http://www.usdebtclock.org

2. http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

3. http://www.davemanuel.com/history-of-deficits-and-surpluses-in-the-united-states.php

4. http://en.wikipedia.org/wiki/National_debt_of_the_United_States#Interest_Paid