Sales Book Review #2.1: The Little Red Book of Selling by Jeffrey Gitomer

Find Part One of The Little Red Book of Selling review here.

Parts two and three of this review will focus on the 12.5 modules that Gitomer uses to make up the majority of his book. Part two will be modules 1-6.

Module one contains what Jeffrey says is an important lesson for success of all forms: light a fire under your ass. Sales he says is no different. Each successful salesman is working their ass of. Besides, as Gitomer makes clear in this module, you have a responsibility to yourself to achieve.

Module two is all about preparation. Gitomer points out the usual culprit: people not wanting to do their homework. Most people know that they should prepare better but often do not. Gitomer merely points out that this is one of the things that separates the greats from the mediocre’s. The most important tidbit of information Gitomer has to offer here is: “The workday starts the night before.” Gitomer describes how a little bit of preparation the night before can go a long way at work the next day.

Module three is about personal branding. Gitomer leads with this quote: “It’s not who you know, it’s who knows you.” This is an important distinction in the networking game. This distiction leads to completely different strategies. Gitomer lists these strategies in bullet point fashion. I’ll list a couple here. Personal branding is… establishing yourself as an expert, being seen and known as a leader, becomeing known as an innovator, and (most importantly) being willing to give of yourself. All these are important. The oddest one really gets to the core of Gitomer “who knows you” strategy is to buy the internet domain that contains your name. He bought gitomer.com and proceed to make it the landing page for his personal brand. To Gitomer personal branding is all about making yourself a business.

Module four gives a primer on how value and relationships are the most important thing people can give one another. The first part of module 4 is the 6.5 principles of giving value and being valuable. One of those 6.5 principles is “Write stuff in journals, newspapers, ezines and newsletters.” Gitomer says that writing creates a perceived leadership position and is a value statement at the same time. It also allows others who agree or like your writing to reach out and contact you.  The biggest tip of this chapter from Gitomer is this gem: “Stop thinking of your product as a commodity. If you tell yourself you’re selling a commodity, you are doomed to the selling price.” By removing the mental restraint of selling a commodity you can sell something other than the price of the product. However, Gitomer acknowledges that 30-40% of people will always buy off price alone. He says it is best to avoid those people because they’re a pain in the ass and they offer decreased profit margins. Search for people who buy value and sell them the value in your product. This is one of the most dense modules of Gitomer’s book. There is still a lot of value I left out.

Module 5 is networking. Mr. Gitomer says one principle is absolutely necessary to maximize networking effectiveness: “You must go where your customers and prospects go, or are likely to be.” Of course this may be simple to a lot of readers but it was new to me. As somebody new in the business world it’s good to have that set in stone now. Gitomer then provides a list of the best places to meet movers and shakers. While attending these events Gitomer says that you should spend 75% of your time with people you don’t know. That way you can make the most networking progress.

Module six deals with one of the most difficult parts of sales, getting in front of the real decision maker. The essence of this chapter is the same essence that Gitomer provided in Module four. You have to give, provide and sell value. A person has to sell the value of an appointment as well. This is the most complicated chapter of Gitomer’s book.  Getting in front of the decision maker is a part of sales that may be more art than a science. Gitomer builds a lot on his concept of creating a personal brand of value. If you can have an incredible reputation it will be much easier to get face to face with the decision maker.

Part 3 of the review of Mr. Gitomer’s book is coming soon.

What is Deflation?

In our current economic environment deflation has been deemed the biggest boogeyman. However, like most boogeymen, deflation is very misunderstood. Many publications misuse the words inflation and deflation. Personally, I believe it is because the dictionary definitions lack the necessary wording and, due to that, are misleading. Deflation and it’s opposite, inflation, will be explained very simply in this post.

Let’s start with inflation because it is the better understood of the two. A Google search for “Inflation Definition” yields this result: Inflation is “a general increase in prices and a fall in the purchasing value of money.” While this definition is technically correct, it is also misleading. A more accurate wording would be “a general increase in prices due to the fall in the purchasing value of money.” Let’s examine this further.

Inflation is not the rising of prices, it is the decrease in purchasing power of a single unit of currency. Rising prices are merely a symptom of this change in the value of single currency units. Let’s say that I create a new currency called the Wok. I distribute the Wok to 10 people giving each person 10 Wok. There are 100 Wok in circulation (10 people x 10 Woks each).  So, right now, each individual Wok is worth 1/100th of the money supply. Goods are priced according to the demand a market has for it. The price is the average proportion of the money supply that consumers are willing to pay for a good. In this example my friend Ron makes chocolate bars to sell for 1 Wok, Gary makes stuffed bears to sell for 5 Wok and Craig makes Cigars to sell for 2 Wok. That means all 10 consumers have valued a chocolate bar at an average of 1/100th of the money supply, bears at 5% of the money supply and cigars at 2% of the money supply.

I, the ruler of this economy, decide a 50% increase in the money supply is necessary and print off 50 more Wok. I distribute it to my people evenly. After distribution each wok is worth less. Individually, they are now worth 1/150th of the money supply. As a result Ron can no longer sell his chocolate bars at 1 Wok because it he will lose money. He will begin to lose money because each unit of currency that a person pays for his chocolate is worth less. 1/150th is less value compared to 1/100th. So he raises his prices 50% to accommodate the rise in the money supply. Now he charges 1.50 Wok. As you can see he has raised the price of his chocolate bar but consumers still get 1/100th value. Gary and Craig have to do the same. Gary raises the price of his bears to 7.50 and Craig raises his Cigars to 3. This is inflation in action.

Deflation is the opposite of inflation. Remember, it is not the lowering of prices. The lowering of prices is a symptom of deflation. Deflation is the increase in value of individual units of currency. Let’s continue with the example above. My 10 friends are currently using 150 Wok. I decide that there is too much currency in our little economy so I decide to retract 33% of the money supply, 50 Wok. As a result each individual wok is now worth 1/100th. Remember Ron is charging 1.50 Wok for a candy bar. After I collect the money nobody is going to buy his chocolate because it is too expensive. It has nothing to do with what Ron did, it’s what I did. A candy bar has always been worth 1% of the money supply but now Ron is charging 1.5%. To get more buyers Ron lowers his price down to 1% of the money supply. Gary and Craig have to restore original value to their product as well so people buy. Gary brings his price down to 5 and Craig brings his price down to 2.

As you can see, my friends changed their prices in a reaction to the inflation/deflation that I performed. Ron, Craig and Gary all had to respond to my policy changes by changing their price to the agreed percentage of the money supply people are willing to pay. Neither inflation or deflation are defined by the price movement. They are instead defined by the increase or decrease in the value of individual pieces of currency. That increase or decrease in the value of individual pieces of currency causes businesses to change their prices. Remember back in 1st grade when the teacher talked about how “all squares are rectangles but not all rectangles are squares?” Inflation/Deflation has the same relationship with price movement. All inflation/deflation has price movement but not all price movement has inflation/deflation.