Category Archives: Customer Psychology

The Ikea Effect – Customer as a Co-Creator of Value

Recently the Swedish Furniture giant IKEA opened its Bangalore store spread over 12 acres at Nagasandra in Bangalore. There was such an overwhelming response that people had to wait for three hours to get an entry. IKEA, a Swedish MNC is a $47Bn company with 458 stores in 50 countries with  225,000 staff. 

The business model of IKEA is  to make affordable and contemporary furniture on a global scale. The pain points in the existing furniture market were:

  1. Traditionally packed furniture was prone to damage during transit.
  2. The cost of transportation was high.

IKEA developed  a flat packaging mechanism. The flat boxes reduced storage space and thus the transport cost. Its target segment were the price sensitive customers.

With DIY ( do-it-yourself)  kits, IKEA helped the customers to assemble their own furniture, eliminated the intermediaries like wholesalers, retailer and thus involved the end customer directly in the value chain. It also decided to manufacture standardized products keeping in the cultural context.

The company takes care in understanding the customer needs.  E.g. ‘Kurs’ was a small bedside table with a drawer. The product did not succeed in the US even though it had a major success in the European market. The market intelligence revealed that shallow drawers with plastic slides was one of the major deterrents. IKEA reworked the design with deep drawers and  non-plastic slides. After 4 years it was a top selling product in the US.

Along with the  furniture kits, the customers are provided with  tape measures, shopping list, pencil and a writing pad. Pick up vans and mini trucks are also arranged for the last mile connectivity. 

What does Ikea do to attract customers?

  1. The company has  built  large stores where you can leave your kids for play activities.
  2. The stores are lit through electricity 24/7 without access to sunlight, a trick borrowed from Casinos; the clocks are either fake or do not tell the right time. – you lose your sense of time  and unknowingly buy more.
  3. The stores are designed in such a way that you only follow one direction you walk from one end to the other.
  4. It puts arrows on the floor to complement the maze layout of the stores. – you need not think where to go next – just follow the arrows.
  5. Impulse Buying: Placing bedsheets next to the beds, pillows next to the sofa persuades the customer in impulse buying. The customer says, “let me buy it now else I have to come once again. “
  6. 30% shoppers go there to eat. In 2017 IKEA made $2.24 Bn on selling food.
  7. Most of the stores are  located outside the city limits. Apart from getting large parcels of land at economical prices for constructing large stores, the customers also tend to think that they need to make their trip worth it. The commitment to buy make them justify the time and petrol spent. This is a cognitive bias called as sunk cost fallacy.
  8. After waiting in a long queue, a customer buys a table, goes home, assembles it;  puts it on facebook showing the efforts he has taken thus giving free publicity to Ikea. Incidentally Michael Norton of Harvard Business School, Daniel Mochon of Yale and Dan Ariely of Duke University have identified a cognitive bias called as Ikea effect where consumers place a disproportionately high value on the product they have partially created. In an experiment conducted in 2011, a group of participants were asked to assemble the Ikea furniture whereas others were shown the pre-built version of the same furniture. The subjects from group 1 ( assembled by self)  rated the price 63% higher than the group2 ( readymade)

Some of the reasons people who do self-assembly are:

  • They feel competent
  • Display the evidence that they are competent.
  • A perception of saving money and thus being a smart shopper.

            As a seller,  you can learn how Ikea has changed the paradigm of customers from recipients of value to co-creators of value. As a buyer, beware of the traps!

Snatching Defeat from the Jaws of Victory

Abraham Lincoln had no choice but to sack one of his army generals for losing a battle during the Civil war for his sheer stupidity when victory seemed almost certain. In his witty style Lincoln said, “He has managed to wring a spectacular defeat from the jaws of victory.”

Congress was the ruling party in Punjab with 77 out of 117 seats under the CM Amarinder Singh. The alliance of BJP and Shiromani Akali Dal (SAD) had 21 seats.

The alliance partner SAD parted ways with the BJP for the latter’s high-handed approach in dealing with its allies. Moreover, discontent was brewing  for long in Punjab due to the farmers’ protests, the bulldozing of the farm-laws in the parliament by the government, the  sudden lockdown during the pandemic which forced untold miseries  on the migrant workers.

Considering the weak opposition, victory was on the platter for the congress. No doubt, Captain Singh had his follies, he was not accessible there was discontent brewing in the party. But it could have been resolved amicably. But Rahul Gandhi thought otherwise. Navjot Singh Sidhu was thrust upon the state leadership. Captain Singh was replaced by a Charan Singh Channi who did not have much following in the state politics. And AAP created history taking its tally from 18 seats to a record of 92 seats. Is this an isolated instance of stupidity on part of Rahul Gandhi? (1)

In 2004, Manmohan Singh took over as the PM leading the UPA-1.Having completed his first term as the PM, the nation was ready for the Lok Sabha elections in 2009. What were his achievements?

From 2004-2009 the economy logged a growth of 9%, the highest rate for any plan period since independence. He stood up to the manipulations of the Left and the opposition in signing the Nuclear Deal between India and the US.

Despite these splendid achievements, the party high command had doubts of winning the election. Manmohan Singh’s photo was printed on the Election manifesto as well as on the election posters. If the party were to lose, it was the PM’s defeat. Incidentally, a Senior political journalist while speaking to Ahmed Patel confided that Rahul Gandhi was ready to be the leader of the opposition and be the agent of Change and differentiate from Dr. Manmohan Singh (2)

Lo Behold! After 1962,  Dr. Manmohan Singh had become the first PM to have been re-elected with an improved margin. Congress improved the tally of LS seats from 145 to 206. ( 9 more than what Rajiv Gandhi had achieved in 1989)

But then how was this Star Performer treated by the ‘family’? Was he given a free hand to choose his team members? For example, for the finance portfolio, Dr. Singh wanted to  induct C. Rangarajan, the former RBI governor with whom he had battled the BoP ( Balance of Payment) Crisis during the Narasimha Rao regime. Sonia Gandhi offered the portfolio to Pranab Mukherjee without consulting him. Incidentally, Pranab Mukherjee was the ‘architect’ of the retrospective tax regime ( the Vodafone case of Rs. 22,100 crores on Capital Gains and Withholding Tax which the GOI lost in the International Court at the Hague)  which was one of the factors of slowing down of India’s economy  growth rate. It also impacted India’s credibility in the international business (3)

By the time the Lok Sabha elections for 1996 were announced, the P.V. Narasimha Rao-led Government  formed by Congress had delivered one of the most  spectacular performances in a 5-year period then. India was able to overcome the BoP ( Balance of Payments)  crises. ( The foreign exchange reserves rose 12 times from 1991 to 1996) License Raj was abolished, the New Industrial Policy was launched, the insurance and the banking sector was opened to the private sector and the new telecom policy was to usher in the mobile revolution. In fact,1991 is termed as a watershed year, also called as India’s 2nd Independence.

But did the Star Performer who was responsible for delivering such an outstanding performance suitably rewarded? Forget being rewarded or being acknowledged, P.V. Narasimha Rao was humiliated not only when he was alive but even after his death. But did the Congress party or Rahul Gandhi win? Congress lost power despite the best performance delivered by the Rao Government. ( A forgotten Hero or a Ungrateful Nation?)

The three incidents discussed above prove the adage that insanity is doing the same thing repeatedly and expecting different results!

There are different approaches in helping the non-performing executives in improve  their deliverables which include coaching, mentoring, reprimanding or if nothing works, the dismissal. But then how do you deal with  star performers who are already doing well and need no interference? The cost involved when such a Star is demotivated increases exponentially when one is heading a department, an organization, or the nation. In the last instance, the damage is humongous. The article is not about Rahul Gandhi and his personality per se. but more about the orientation of a toxic leader. I come across a common refrain in my mentoring sessions that people do not change the organization but their bosses.

Do  toxic leaders like star performers? The question is not about liking and needs reframing. Can toxic leaders manage the star performers? I doubt as they are afraid of being surpassed by their subordinates which might be due to a deep insecurity and a trust deficit which increases in direct proportion to the subordinate’s achievement.

A concept called Wu-Wei can be helpful for effective leaders particularly in managing the star performers. Wu-Wei is loosely translated as ‘letting-go’ as followed in Tao-Te-Ching which denotes :

  1. An attitude of genuine NON-ACTION motivated by a lack of desire to participate in human affairs.
  2. A technique by which the practitioner may get a subtle control in pushing the envelope.

Some of you might have collaborated with good bosses  who practised wu-wei can consider yourself to be lucky. And those, the less fortunate (?)  in getting the toxic bosses- were you able to realize your potential by moving elsewhere or venturing on your own?

References:

  1. The art of snatching defeat from the jaws of victory – Capt. G.R. Gopinath ( Retd.) , Deccan Herald, 16th March 2022
  2. The Accidental Prime Minister- Sanjay Baru
  3. The Lost Decade ( 2008-2018), How India’s Growth Story devolved into Growth without a Story – Pooja Mehra

Should You address your customer as Sir/Madam?

“Sir, do you have any requirement of centrifuges?” Said Biswas during  one of the role-plays in our Value-Selling Programs. My partner, Ramiah Daniels and I have been  questioning this habit of sales and service people addressing customers as Sir/Madam (rather than by the latter’s name) for quite a while. The common justifications provided by the participants are:

  1. Customer feels respected.
  2. Easy to build rapport during client interaction.
  3. Customer has to be treated like God.

Can we question  the veracity of the above statements?

As indicated in the figure, the behaviour displayed that is visible is like the tip of the iceberg. What might be the attitude, belief or paradigm underneath ( and thus invisible) such words?

  1. Legacy of the colonial mindset: On similar lines, It was customary to address the judge as My Lord by the lawyers, the practise which has been slowly dispensed with.
  2. Shift in Power structure: As a salesperson when you address the other person as Sir/Madam, you are handing the control to the other person by putting him/her on a pedestal.
  3. NLP Perspective: The basic premise of Neuro-Linguistic Programming, NLP is your body physiology ( neural system -N  which include your posture, breathing rate and the way – shallow, normal, or deep, eye contact, the skin resistance etc.) is determined by thoughts/belief system and by  the words ( Linguistic – L ) you use. The NEURAL affects the LINGUISTIC and vice versa. Both simultaneously run a specific behaviour pattern which becomes your dominant behaviour which is the programming (P). The eye contact is evasive; the voice tone being less confident, displays the obsequious and the servile approach of the salesperson. Is it fair enough to assume that by  addressing someone as Sir/Madam by default, the salesperson has already lost half the battle?
  4. Less Effort: When you address someone as Sir/madam; the salesperson  does not have to take any effort in asking as well as remembering the full name of the customer.
  5. Low Self Esteem: The salesperson feels he/she is the prime beneficiary in a business  transaction by collecting the order, which in turn helps him in reaching the sales targets leading to a low self-esteem.

If the customer were to be  God, does he behave the same way while negotiating hard on the price and the payment terms?

Is there a better way of addressing the customer  by his name? The conventional norm is either prefix Mister with the Surname, or address by the first name. For example, while meeting a prospect say, Ramiah Daniels, you may say, “would you prefer to be addressed as Mr. Daniels, or Ramiah?” I doubt  the customer says, ”you better address me as Sir.”

There are several advantages when you address the customer by name:

  1. Confident Behaviour: Your body language, eye contact evokes confidence. Your handshake is firm.
  2. Respect from the Customer: The customer reciprocates with  similar respect to the salesperson.
  3. Improved Customer Engagement: You may be able to connect with the customer when you listen to his full name carefully. Almost a decade back, I was having a meeting with one Mr. Reginald Borges who was the GM at APW president then.  When enquired about his relationship with Dr. Ernest Borges he said, “ Happens to  be my distant uncle.” Incidentally Dr. Ernest Borges was a renowned  cancer surgeon at the Tata Memorial Hospital in whose memory a road ( at the beginning of a 2-km stretch in Parel) has been named.
  4. Higher Self-Esteem: Remember, in any business transaction, the customer also enjoys the benefits of the products over a long duration which can help a salesperson raise his  self-esteem.

Is there  anything wrong in addressing someone as Sir? Not at all- if you are meeting someone reverential, exceptionally talented or to whom you have great admiration and respect, please follow your natural instincts.

Barring the above exceptions, is it possible to inculcate  the Ritz Carlton philosophy while interacting with regular customers:  ‘Ladies and Gentlemen serving ladies and gentlemen?’

P.S.To explore more such learning insights visit: Value-Selling for Premium Products and Solutions commencing on 11th January 2022

Have you found your niche?

“Charles, you care for nothing but shooting dogs and rats; you will be a disgrace to not only yourself but to your family too.” This was a father’s prophecy about his son. The father wanted his son to be a doctor like him. Charles entered Edinburgh University for medicine at his father’s behest, found it unattractive, later joined Cambridge, and earned an undistinguished bachelor’s degree in theology. He had no firm idea what to do. Charles was an aimless youth at 22. He wanted to do something different. He loved flora and fauna but did not know whether that love could be transformed into a livelihood.

Captain Fitzroy on his ship HMS Beagle was looking out for a naturalist. Charles asked for his father’s permission. His father refused but with a caveat, “If you can find any man of common sense who advises you to go on the discovery, I shall give my consent.” Neither the father, nor the captain were ready to grant permission to Charles.

There are two approaches of developing one’s career, the conventional approach and the niche-based approach.

  1. The conventional way of selecting a profession for self or for others is primarily decided by the demand for that profession, coupled with tangibles like salary and perks. No wonder Medicine, Engineering and MBAs among others make the cut.
  2. A niche-driven approach on the other hand is decided by differentiating oneself from the crowd by focussing on a niche . It is defined as a comfortable or a suitable position in life or employment. Alternatively, it also means a shallow recess especially in a wall to display something of value – a statue or other ornament. (please refer the image). Let us see what happened to Charles, the aimless youth discussed earlier?

When Charles approached Captain Fitzroy, the physiognomist in Captain Fitzroy said, “I doubt anyone having a nose like yours can possess sufficient energy and determination for the long voyage.”

His uncle drove thirty miles to convince Charles’ father to grant him permission to undertake the assignment on HMS Beagle as a naturalist.

The Beagle Voyage which included the circumnavigation of globe would be the making of the 22 year-old Darwin. Five years of physical hardship of mental rigour imprisoned within the ship’s walls, offset by the wide-open opportunities in the Brazilian jungles and the Andes Mountains, were to Darwin an eye opener in finding his muse. It took him 22 years to publish his theory of Evolution by Natural Selection in The Origin of Species.

Is it necessary to be a school or a college topper or those in the top percentile rankings to find one’s niche? Quite often the converse is true as ‘brilliant’ students have the best choices in selecting the conventional options in career and institution.

What can happen when one selects a career in a conventional way but is at the bottom of a pyramid in a specific career stream? Getting a job may look easy but one may be competing with a very large number of aspirants. For example: Rakesh had scored 100/100 in Sanskrit in SSLC. Having felt he had a flair for Sanskrit he decided to pursue his college education in that direction. He completed his BA in Sanskrit from Ruia College in Mumbai.

At this juncture he had two choices in further studies – to continue his studies in Sanskrit or look out for a qualification which is marketable in the job market. He decided to pursue a MBA in Finance instead. After spending around Rs. 8 lakhs in fees itself what can be the likely scenario when he passes out two years later?

For a person who wishes to do a M. Tech in Structural Engineering, a minimum qualification of B.E Civil is necessary. Likewise for a M.S. in surgery, a basic qualification of MBBS is mandatory. So, when a person pursues a MBA in Finance with Sanskrit as graduation the basic competency level expected of the student is that of Class 12th, as a MBA is agnostic to one’s field of graduation.

Conventional wisdom says that one has a wide range of job opportunities after doing a MBA. The opportunities are large but so is the competition. Annually about 360,000 students graduate from 4000 B-Schools of which 61% are unemployable due to skill gaps and low work experience.

Keeping those depressing numbers aside, can Rakesh compete with students from Premier Institutes or those with Engineering and Commerce backgrounds? It is not impossible, but it is a Herculean task.

What would happen if he were to pursue Sanskrit for his PG? In the absence of clear data let us assume that the number of students opting for Sanskrit may be 1% of MBA students that is around 3600. For Rakesh it would have been much easier to be in the 95th percentile after his MA and in the 99th percentile with a Ph.D. A lot of research happens in Sanskrit in US and German universities. By differentiating himself and finding a niche, Rakesh could have had a sense of purpose too.

From a financial perspective too, the cost of pursuing a MA in Sanskrit would have been at less than 10% the cost of a MBA. In case of a Ph.D. he could have explored UGC fellowships or opportunities in US or German universities where considerable research in Sanskrit is possible.

An example of a niche-based career is of my friend, Christopher Jayakaran who passed PUC, third class in 1962. With hardly any worthwhile career options, his father’s friend suggested him to take up a course in Geology. He completed his M.Sc in Geology at Presidency College in Madras by topping in the University. He worked for an NGO called ‘Action for Food Production’ for 7 years and for more than 25 years in different countries in Africa which include Uganda, Kenya, Tanzania, Sierra Leone etc. He is an eminent Hydrogeologist and a Paleontologist. His Tamil book In Search of Ancestors which is on evolution of man based on fossil evidence has run into six editions.

Why are people in general wary of pursuing niche fields?

  1. Obsession for Security: Education is normally pursued in order to get a job. The market demand is thought of. In the post-covid world there is no security either in a job or in one’s qualifications per se.
  2. Managerial Aspirations: Indians in general prefer to have a managerial title early in their career sacrificing expertise in a specific domain.

How to find your niche?

Around 30 years back, I came across an excellent concept in finding ones niche, based on cybernetic principles which was on identifying one’s core competency and focusing on a specific niche where the strength can be leveraged to maximum extent.

Werner Brandes was a German MBA Graduate who was working in a consulting firm but did not have career growth in spite of working hard in that organization for more than 10 years. He was unable to get good offers elsewhere. He was a mediocre student throughout his academic life and passed out from a tier-3 B-school.

The conventional wisdom of competing with others was not giving any results (like the example of Rakesh discussed above). His work profile was mapped for 15 different competencies. Werner was below average in all save one, which was on Industry Setup in rural areas. When Werner was pointed out that this was his niche. He asked, “How can I get a job with such a small niche?” He was advised to start his own consulting in this field and as he was in the top 5% of this ultra-specialized area of business consulting, slowly he was perceived as an expert in this field. Business started growing. Being a sunrise sector wherever the data was not available, his customers helped him in providing the necessary details.

Fascinated by this counterintuitive concept, I launched a program called Strategy for Quantum Growth. After 4-5 programs I had to withdraw as most of the participants did not want a long-term strategy but a new job which paid them 3-5K more.

One crucial difference between the conventional and the niche-based strategy is the type of growth. In case of the former it is logarithmic growth – where it is easier to get a good well-paying job immediately after graduation but after a few years the growth may taper off. In case of niche areas there is a considerable struggle initially but after a few years when the market perceives you as specialist, the growth becomes truly phenomenal and is termed as exponential growth. ( Please refer the graphs below) You are considered as a pioneer and get a first-mover advantage.

Log_Growthexponential-growth

Conventional Approach                                                         Niche-Based Approach

Whether in business, profession or a job; there are some who go on competing  against  a vast majority in a commoditized market as if running on a treadmill and getting exhausted. On the contrary, the likes of  Christopher, Werner Brandes or Charles Darwin though not brilliant in their school days in the conventional sense were able to find their niche. Have you found yours?

Two roads diverged in a wood and I…and  I took the one less travelled by and that has made all the difference. – Robert Frost.

BATNA – The Tool to Improve Your Negotiating Leverage

“Rajeev, we have been given a mandate by our management. Due to the Covid-19 crisis leading to a steep fall in customer demand, you are expected to reduce the price of your cutting tools by 50%,” said Mr. Padmanabhan, (the purchase manager of Shockproof, a shock absorber manufacturing company from Delhi) adding a veiled threat, “else we have no choice but to switch over to the competition.” Rajeev is a technocrat running ‘Techno Enterprises,’ a MSME manufacturing cutting tools enterprise with a turnover of around Rs. 10 crores. When asked about the customer details, he shared that ‘Shockproof’ is a major supplier of shock absorbers with a turnover of ₹ 1000 crores catering mainly for the two wheeler industry.

One of the questions often asked in our training and consulting assignments is ‘how does one deal with such arm-twisting tactics, especially when the customer is too big compared to the supplier?’

One important concept in Negotiation theory is BATNA, which stands for the Best Alternative To a Negotiated Agreement, a term coined by Roger Fisher and William Ury of the Harvard Program on Negotiation. BATNA is an important tool while preparing for negotiation. Both parties have their BATNA independent of each other. The party having a stronger BATNA has a stronger negotiating leverage. In case the parties are not able to conclude the negotiation, the best option each one has can be called as their BATNA. In the above example, if the negotiations fail, the BATNA for the customer and vendor can be improved as follows:

Customer: Look for other vendors who can give a similar product at the desired price.

Vendor: Develop alternate customers who can provide the requisite amount of volumes at the desired price.

It is not as simple as it looks above. Does the customer have a vendor who can provide deliveries just in time to meet his production targets? Alternatively, does the vendor have alternate customers where his current inventory can be offloaded? Now you will appreciate that BATNA is not only decided by the number of options but also the feasibility and attractiveness of those options.

Whose BATNA is stronger? The conventional answer favours that of the buyer who is much bigger in size. Some points to ponder:

  1. Identify your BATNA: The tool required for cutting/drilling is made with precision which requires tungsten carbide or diamond as the raw material. It also requires a great deal of R&D to develop a tool for a specific application. The vendor has been supplying the tools for the last 15 years. With considerable technical expertise, the production department found the tool useful. The rejection rate was less than 1% and the cost-per-component was low.
  2. Identify the weakness in the other party’s BATNA: The seller knows that the buyer has the option of other vendor but also has the critical information that the rejection rate of the competition’s tool is close to 50%. Also, the shop floor people do not appreciate the tools supplied by the competition.
  3. Spot the customer’s bluff: Even though the Indian two-wheeler volumes fell by 15% in FY 20, the impact on Shockproof was much lesser at around 8.4%. The customer was able to absorb the shock (pun not intended) as it focussed more on improving the content per vehicle. As per a newspaper report, Shockproof had notched up a top-line of ₹ 5000 crores and its EBIDTA rose by 4% to Rs. 800 crores. (Remember the excuse of the Covid -19 crisis the purchase manager articulated earlier?)
  4. Do Proper Homework: Rajeev shared that the customer’s turnover was ₹ 1000 crores, whereas in reality it was 5 times. This can be perceived two ways: conventionally it may produce a feeling of helplessness. Alternatively the helplessness could be transformed into strength as in the end result of a David vs. Goliath fight. The vendor could feel that a supply of ₹ 1 Crore of material is insignificant from the customer’s perspective and there need not be any need for the customer to be so aggressive in reducing the price. Can David stand his ground?
  5. Improve your BATNA: Let us take a different example where both the customer and the vendor are equally strong. For its Power PC, Apple had developed its microprocessor in collaboration with Motorola and IBM. In 2005, Steve Jobs took a call to switch over to Intel, which apart from being a market leader in microprocessors was offering a cutting edge technology in computing. Developing microprocessors needs a huge investment and also technical expertise. Intel had both and was the only vendor for such a high-technology product. With a single vendor, the vulnerability was high for Apple.

Three years later, Apple bought over a 150-employee start-up in chip design called PA semi. Most of the team members had worked earlier at Intel, including Johny Srouji who now reports directly to Apple CEO Tim Cook. In 2020 Apple announced that it will use its in-house microprocessors for the new range of Macs.*

  1. Risk Mitigation: Apple was giving a business worth $3.4 Billion of microprocessors for Macs to Intel every year according to C.J. Muse an Evercore analyst. For Intel it was like losing a major account which was powering around 20 million Macs shipped by Apple annually. The impact of such a Key Account leaving Intel can be minimized when the figure is perceived not in absolute numbers but by the percentile share. Apple was contributing to 5% of Intel’s annual business and the total no of PCs sold annually are 260 million.

While understanding one’s BATNA, apart from the actual value an account produces, the share of the total business also needs to be considered. It is better not to keep too many eggs in too few baskets. An important tool in risk mitigation is the sales funnel which can help in improving your BATNA.

  1. Guard against Pitfalls while analyzing one’s BATNA: There are two mistakes people make while going in for negotiations. Either they are too optimistic or too pessimistic.

Being too Optimistic: There is a tendency to aggregate all the options and assume it to be The BATNA. Consider for example, Rajesh, an unemployed engineer in Bangalore who has applied for a job in IT and feels that he deserves a salary of Rs. 10 lakhs as he has the following options:

  1. Has applied for similar jobs in Mumbai and Delhi.
  2. Has plans of a start-up in 3-D printing.
  3. Is exploring further studies in the US by answering GRE and TOEFL.
  4. Is pursuing MBA by giving CAT.
  5. Joining the family’s 2-decade old fabrication business which is running well.

It is risky to assume the sum total of all these options as the best alternative because at any moment Rajesh can select only the best one. Contrast this with Gautam who already has a job with a ₹8 lakhs CTC. You will appreciate that Gautam has a better BATNA than Rajesh as a bird in hand is worth two in the bush!

Being excessively Pessimistic: The other mistake in negotiation is being too pessimistic when one is too committed to reaching an agreement without any preparation. There is an assumption that agreeing to all of the customers’ demands will make him happy, giving rise to a long-term business and relationship.

In the cutting tool example, the vendor though small in size vis-à-vis the customer, had a better product quality, a low rejection rate, a lower component cost and a shorter delivery period vis-à-vis the competition, which meant him having a better BATNA than the customer. Does it mean that he should rest on his laurels? Competition will be always trying to catch up with him, which necessitates him having to improve his BATNA all the time so as to keep the competition at bay.

Thus, negotiating strength, rather than being decided by the absolute size of a party or the size of the deal (as in Apple vs. Intel) or the number of back-up options, is decided by your BATNA.

Whether you are a buyer or a seller, starting a new venture or looking out for a new job opportunity, please spend time in identifying and developing your BATNA.

Remember, in life, you do not get what you deserve, but what you negotiate and that is decided by your BATNA, the Best Alternative to a Negotiated Agreement!

(* International Herald Tribune, Don Clark and Jack Nicas – After 15 years Apple prepares to break up with Intel DH – June 23, 2020)

Webinar on Skillful Negotiation; Wednesday 11th May 1000 HRS IST

Acquiring New Customers through Contextual Selling

Thursday, 25th June 2020 at 11 AM (IST)

Perspective: The success rate in conventional cold calls is less than 5%. Thanks to internet and with easy availability of information coupled with Covid-19 crisis, your potential customers are wary of meeting unknown salespeople; whether on-line or in person.

When the competition is a mouse click away, retaining old customers becomes a challenge. However it is only through new customers that organizations and salespeople can hope to achieve growth. The practical webinar will show you not only the roadblocks but also powerful techniques to reach out to new customers!!

Major Themes:

  • Shift in  Customer Loyalty due to multiple vendors
  • Imperative for Continuous acquisition of new Customers
  • Business Etiquette while selling ON-LINE and in person
  • Why are new prospects wary of talking to unknown salespeople?
  • Stereotypes associated with Salespeople  
  • Breaking the stereotypes through Trust & Rapport Building
  • Intent, Competence and Commonality: Toolkit to enhance Sales call success
  • Role of reference and recommendations in acquiring new customers

Resource Person: Rajan Parulekar, B.E. (Electrical), MBA

  • Author of Contextual Selling®: A New Sales Paradigm for the 21st century
  • Completed Enhancing Sales Force Performance program at IIM-A in February 2013
  • Trained around 15,000 managers and sales executives from 1000+ companies since 1995.
  • Conducted programs for culturally diverse groups in India, Malaysia, Singapore Sri Lanka, Qatar, Muscat, Bangla Desh etc.
  • Best Sales Performance in Asia award while working for Wiltron USA in 1990
  • Winner of International Taped Speech Contest by Toastmasters Int’l  USA in 1997
  • Worked with Larsen & Toubro, Wiltron and Toshniwal in Sales and Marketing
  • Advanced Toastmaster (ATM) certified by TMI USA.

For Whom: The program is recommended for sales executives selling high-value products, services and solutions from Automobiles, Engineering Products, Chemicals, capital Equipments, Electronics, Telecom, IT ( Software and hardware) sector. The program may not be suitable for OTC/FMCG sales.

Investment: Rs.1950/-, US$ 40 per person.

Payment Mode: NEFT/Credit card/Google Pay: +91 98802 36793/PayTM: +91 98450 14098

For details : contact : rajan@paradigm-info.com, madhura@paradigm-info.com

WhatsApp: +91 98802 36793/98450 14098

Paradigm Trainers Private Limited| https:// http://www.paradigm-info.com

Reason and Excuse: The Crucial Difference

Amit, a participant who had attended my sales training program around four years back called me over phone two days back.

A: Sir, I am working for a small  Indian company selling Test and Measuring Instruments (TMI) What is the secret that our competitors, the giant multinational companies, go on consistently getting orders from customers beating us all the time? I know they have technically superior products. But are their sales engineers likewise?

I: Amit: such companies not only have a good product range but also have a systematic sales and a training process.

A: Now I understand why the salespeople from MNCs are so good.

I: But is that your real question? What is bothering you?

A: My main worry is, how do I improve my order booking performance? I am not sure of my job in these difficult times.

I: what is the reason?

A: I come from small town called Akola, working in a company which does not have a great brand. On top of that, our company does not spend much on training either. I am so passionate about attending training programs and learning new things.

I: You said you have attended my training program four years back. After attending did you ever felt like clarifying your doubts or getting new insights from the trainer?

A: No sir, I was extremely busy with my work.

I: Did you ever get time to refer to the course material?

A: No sir.

I: You said, your company does not believe in training, but you have attended my program.

A: Yes sir, that was an exception.

I: If I am not mistaken, along with the course material, I had presented a copy of my book Contextual Selling?

A: Yes Sir, I have started reading the book now. It is quite interesting.

I: After four years?

A: Now I am having some time. All these days there was absolutely no time.

I: Did you pay for the training program?

A: No sir, the training program was sponsored by the company, and the course material as well as the book was a part of it.

I: So you did not buy the book either!

A: Sir that is OK, being from a small town, I have an inherent disadvantage compared to my counterparts from competition who are from metros. They have all the exposure and opportunities.

I: Out of the three legendary Khans in Bollywood, who have the advantage of lineage and pedigree?

A: Obviously it is Amir and Salman.

I: Anyone who did not have such an advantage while entering the industry?

A: I think it was a Shahrukh.

I: Any other examples you can think of who have made it big and carved out a niche?

A: Irrfan Khan, what a great actor he was!

I: Anybody beyond the Khans?

A: I think of Nawazuddin Siddiqi, Ayushman Khurana etc.

I: You said you belonged to a small town which was your main disadvantage. Can you think a of a cricketer from a small town and still made it big?

A: Is it Dhoni from Ranchi?

I: You are right. Which year did you complete your engineering?

A: In 2008.

I: Did you attend any training programs or self-development activities for the last 10 years?

A: No

I: Did anyone prevent you from attending such programs?

A: No. But I feel training the executives should be the responsibility of the company.

I: Why?

A: Ultimately it helps to reach the company goals.

I: Do you have monthly, quarterly, and annual targets?

A: Yes.

I: Do you deserve to get your commission, incentive or bonus (whatever is applicable) if you were to reach your targets?

A: Certainly

I: Do you feel good quality training can help you improve your sales. Negotiation and communication skills?

A: Yes.

I: Amit, in that case, can you see that you also need to take responsibility for your development.

A: I can see your point.

I: Let us look at a concept of Locus of Control.

Locus of control states that the degree of stress perceived by a person depends on the control (or the lack of it) that he/she has on the situation. The cause of the stressor may be seen as stable or unstable, global or specific, and internal or external.

1.Stable and Unstable causes are enduring and temporary, respectively. My competition is always going to have an upper hand is an example of stable interpretation.

2. Global and Specific causes are relevant to many events or to a single occasion, respectively. E.g. Competition products are technically superior, is an example of global interpretation.

3. Internal or External causes indicate personal characteristics and behaviors or the result of environmental forces, respectively. E.g. I feel inferior because I am from a small town and not trained is an example of internal representation.

The more stable and global the cause of a stressor seems, the more people feel and behave as though they are helpless. Likewise, the more internal the cause of a stressor seems, the worse people feel about themselves. Together, these feelings and behaviors contribute to a depressive reaction to the stressor. Let us look at an example:

It is not advisable to take either of the extreme positions (Global or Specific, Stable or Unstable etc.) but should be treated as a continuum where a combination of both can be thought of.

Test & Measuring Instruments (TMI) range consists of products like Oscilloscopes, Logic Analyzers, Protocol Analyzers, Signal Generators etc. TekEdge was considered as a market leader in TMI in general and Oscilloscopes in particular. There was a small company called Le Croy which had some unique offerings in Protocol Analyzers.  However the company was much smaller to TekEdge. Analogous to David Vs Goliath battle, the Le Croy engineers while making an offer used to intentionally keep their price low vis-à-vis TekEdge offer.

A new manager called Santosh wanted to question the Global paradigm of TekEdge being superior in all respects. To one of his clients, he quoted a price which was $1000 more than the competition. When the customer questioned Santosh’s logic, he said, “even though my competition is big in the overall TMI market, my company has a unique advantage in the niche Protocol Analysers segment which is tailormade to your application.  Santosh changed his paradigm from Global to Specific and was able to close the order with a premium.

Another example: consider a  case where a  guy’s girlfriend breaks up with him and he thinks that his love life is always in the dumps (i.e., a stable interpretation), that nobody really cares about him (i.e., a global interpretation), and that he must not be a dateable guy (i.e., an internal interpretation). Such an interpretation could contribute to a depressive reaction, such as him coming to the conclusion that he might as well not try because there is nothing he can do about it and that he is pretty much a lost cause.

I: I hope you might have understood the concept of Locus of Control and that your interpretation (of your competition, your company, customers and yourself) being stable, global & internal was causing you considerable stress. Would you agree with that?

A: Yes.

I: I shall ask you three simple questions, One, what was your original problem?

A: Sir, my original or the surface problem was: What makes the sales engineers from competition so successful?

I: What was the actual or the fundamental problem beneath the surface problem?

A: How should I improve my performance?

I: What is the root cause?

A: I am lazy. What I felt as genuine reasons were excuses. I need to take responsibility for my development.

As human beings we go on telling a number of lies to others, but rarely do we recognize the lies we tell ourselves!

Rajan Parulekar, rajan@paradigm-info.com,

Behavioral Dynamics of Personal Selling

To understand the salespeople’s attitudes and beliefs towards salesmanship; a questionnaire used to be administered during the Sales Training program commencement. One of the questions said, ‘In a sales call who should talk more? Customer or the Salesperson?’ Majority of them voted for the latter. In a sample size of 285 participants, around 78% participants responded that they feel that they speak for 80% or more during a sales call.

The interesting part was the above statement was perceived by the group as a positive correlation to sales success.  When probed deeper about the reasons for dominating the conversations the answers given by the group were:

  1. To Engage with the customer
  2. To educate the customer.
  3. As I know more about my products, I have to talk more.
  4. To beat the competition.
  5. To close the order fast.
  6. As the time given by customer is very short, I have to speak as much as possible.

After taking the groups through a psychological process called Cognitive Dissonance, which is a gap between the beliefs and the reality,  the participants were shown that the above are apparent reasons and the real reasons why salespeople tend to dominate conversation is out of fear ( of rejection ) and the desperation to sell!

Let us try to understand the above language from a Neuro-Linguistic Programming (NLP) perspective. The language verbalized by the salespeople is not the reality but is the map of an  individual. The map is not the territory. The map is arrived at by three universal modelling processes which are Generalization, Deletion and Distortion. If there is a close approximation between the map and the territory then the salesperson is able to perform successfully in his given role.However with a great divergence, the perceptions will be flawed and he may not be able to achieve his quotas.

The above modelling processes have their validity and relevance in day -today life. However they may also create the problems depending on the context.

  1. Generalization: Generalization is the process by which elements or pieces of person’s model of the world become detached from their original experience and come to represent the entire category of which the experience is an example.* ( Leslie Cameron, Bandler 1985, p224) When a person has learnt a process, say of driving a car, he moves from unconscious incompetence to conscious competence. While coming out of the garage, he knows to put the reverse gear, turn the car, change the gear and put on the accelerator without looking down. In a way he need not have to learn the activities every time he drives the car. In a similar manner from a sales perspective, when an executive goes for a sales call, majority of the activities are common like introduction of the self and the company, ice breaking, understanding the client needs etc.

However the dysfunctional aspects of generalization happen when he goes through some setbacks when the self -talk revolves around the following statements: Today, you can sell only on price. Clients don’t respect my time. They buy only from competition.

  1. Deletion: Deletion is the process by which people selectively pay attention to certain aspects of their experience and exclude others. This allows them to focus the awareness and attend to one portion of their experience over others. This process makes coping possible and protects them from being overwhelmed by external stimuli *( Leslie Cameron – Richard Bandler 1985, p225)

Some of the examples of deletion are the ability to focus on a book in the drawing room when TV is blaring and children playing. Another example is when you are in a party with a group of people and you are talking to an important client over phone. The negative examples of deletion is self-talk by a Salesperson: John does not respect quality products.

  1. Distortion: Distortion is the process which allows people to make shifts in how they experience sensory data. Without this process, they could not plan for the future or dream into reality.

Positive Examples: fantasy allows a salesperson winning the Best Sales Performance Award which motivates him to push harder; abstract and surrealist paintings by Picassos and Dalis are other examples of distortion. The dysfunctional examples of distortion are:  A successful salesman in the past who is reprimanded for his abysmal performance in the last three quarters says, “I am perfect.”When he has lost order due to poor follow-up he says , “ that’s because the design department didn’t give me the specifications in time.”

From the above it can be observed that modelling processes discussed above are not good or bad per se. Generalization helps us from reinventing the wheel on a day-today basis, deletion helps to focus on important issues and distortion helps us to be creative.

Let us look at the number of categories where the salespeople can get into a self-defeating mode and the ways the seniors, mentors can help them come out of it.

Sr. No. Deviation Example (as verbalized by a Salesperson) Challenge (as perceived by the Sales Manager)
1. Simple Deletion I am tense About whom. what?
2. Comparative Deletion Competition offers better product and at a lesser price.  Better in what way? Price how much lesser?
3 Lack of referential index Their salesmen are trained. Who are they?
4 Cause and Effect I have lost orders because Dinesh from Pre-sales did not give the support. Have all the orders been lost because of Dinesh?

What about those orders which you have won?

Any body apart from Dinesh you can contact?

5 Presupposition I talk more because I know my products are better than my competitor. Does the customer buy because of your product or has he a problem to solve?
6 Mind Reading My manager does not like me.

Customer is biased towards competition

How do you know that?
7 Nominalization (Event to be converted into a process for more possibilities) I am a poor negotiator. Is it possible to improve your ability to negotiate?
8 Modal Operator of Necessity I have to achieve my quota this quarter. Can you choose to achieve your quota? (Less anxiety)
9 Modal Operator of Possibility I can’t share the LOST ORDER statement with my manager. What happens if you share? (worst-case scenario)

Instead of can’t what happens if you won’t?

10 Complex Equivalent Customer hates me… he yells at me. Are you sure his yelling means he is hating you?

It may be noted this is an indicative list to identify the mental roadblocks faced by the young salespeople. The sales manager or the HR manager is advised not to use the challenges in an indiscriminate manner; lest the damage may be caused to the young executive. An adequate amount of credibility and trust which needs to be created by the manager which will enable the executive to make the necessary behavioural changes in reaching the designated goals.

For more such experiential insights please attend our On-line Program on: Value Selling for Premium Products and Solutions commencing 5th April: https://paradigm-info.com/training-programs

Rajan Parulekar , Paradigm Trainers Private Limited,  rajan@paradigm-info.com , 98450 14098

Meta Talk: The Art of Reading Between the Lines

A couch potato father while watching TV admonished his son, “Ajay, it is high time you should start with your home-work. Watching TV will do you no good.”

S: Dad, do you mean what you say.?

F: Certainly, I say what I mean.

S: Does it mean that I see  what I eat is the same as I eat what I see?

Meta-Talk ( based on Meta-Talk : Guide to Hidden Meanings in Conversations by Gerard Nierenberg & Henry H Calero) connotes the hidden or the real meaning behind what we communicate; also called as reading between the lines. Cliché are the worn-out words or phrases which are normally used when people are either lazy or not imaginative in conveying the right meaning. Some examples of the divergence between what people say and what they mean are discussed below:

False Modesty: A friend of mine, a HR manager is a regular at the conference, training circuit. He ensures to take his pictures during the events, like being at the lectern, receiving bouquets, or in a panel discussion. The linkedin post invariably starts with the phrase: I have been humbled by receiving the certificate, bouquet, getting the best performance rating etc. The other day I saw a speaker at a raised platform, stretching his arms to the fullest, shouting at the top of his voice and saying, “I am not boasting but, in my humble opinion etc?” Rest assured these phrases indicate that they are simply bragging about themselves. That is false modesty.

Incidentally & BTW: These words are used to introduce a statement. The intent may be to convey just by chance I happen to think. They are generally used by shy people not sure of themselves. However as a cliché, both words may indicate that the speaker wants to say something very important catching the listener off-guard. E.g. Husband says, “Incidentally I have to go to Delhi for an urgent meeting.” Or a lady telling a friend, “ BTW do you know Shruti is opting for a divorce.”

Alternatively  the words can be also used to mislead the listener in believing  the message to be unimportant or of a routine nature.

Sales manager saying to his executive, “BTW Suresh, the credit for this Rs. 50L order shall be going to Ramesh as he has generated the lead.”

I’ll Do my best/I’ll Try: Patient,” Doctor, what are my chances?” Dr “ I’ll do my best.” Meaning there is no hope.

Manager: “You have reached hardly 50% of your target. I want you to meet your targets come what may.”

Executive: “ I’ll do my best.” This may  mean the executive cannot do anything better. When he says I’ll try, it indicates que sera sera. (whatever will be,will be) Both the manager and the subordinate after the meeting feel they have discharged their duties to the best of their abilities.

We and they: Generally these words look quite simple. But sometimes the meta talk may reveal the biases and prejudices we carry about a community. Sudhir Toro, a friend of mine is a liberal thinker. Once while discussing the Bangla Desi migrants issue, he put up whats app post about how Bangla Desh is performing well in terms of economic indicators like unemployment rate, GDP growth etc. Considering the data, the migrant issue might have been blown out of proportion. A group member responded ‘So why don’t you go there?’ Can you see the metatalk in the word there?

‘Why do they oppose CAA and NRC? We are vegetarians but they eat anything. They are not supposed to drink water from our wells.’ Can you see the alienation between we and they?

Using We instead of I: The General Manager tells the assistant manager during the performance appraisal, “We have decided that you do not have the desired skill set for promoting you to the next level.” By using we, the GM has achieved the following purposes.

  1. Apportion the responsibility: The GM would like to soften the blow by saying the decision was taken primarily by the MD but in consultation with the GM
  2. Increasing the distance: The distance between the appraisee and decision maker has increased thus preventing the former in reaching the latter.

Only: According to Sigmund Freud, there are several repressed thoughts and images in the subconscious mind (be it sexual or otherwise) which may try to force their way in the conscious mind. Denial of the entry is achieved by using different processes, one of them being the word only. E.g. if a person were to have a worst nightmare which he may not like to enter his conscious mind, he will say, “It was only a dream.”

A slick salesman selling a beautiful dress may  say, “ Ma’am, it costs only Rs. 2,995,  “conveying a message it is NOT EXPENSIVE.

Adrian and John  were two devout Christians who had missed observing the fast on Good Friday,  the most solemn religious fasting day for the Christians.  When asked for atonement, the pastor asked, “ Adrian, what do you like the most?” “Sharing the marital bed with my wife.” Said Adrian. “In that case, sleep in the other bedroom for the next four weeks” said the pastor. When asked a similar question, John replied, “Pastor, it is smoking my favourite cigar”, Pastor said ,” In that case refrain from  smoking cigars for the next four weeks.”

Some days later, Adrian’s wife enters his bedroom. Startled Adrian says,” Honey, it’s ONLY the third day. We have still a long way to go.” To which the wife replies, “ Adrian, I came here ONLY to tell you that John is smoking a cigar.”  You may notice the degree of denial in the above. What they said and what they meant or the intent  was different.

But: But is a conjunction used to connect two or more clauses.  However it may negate the original meaning. E.g. an executive telling his manager, ”Sorry, I could not reach the office in time, but I was stuck in traffic.” Son telling his father, “I want to go to the gym daily but it is quite far”. Or a waiter telling the customer, “Sorry for the delay in serving you, but there are too may orders.”

By using but, the apology rather than sounding authentic now looks fake and a justification. What is justified as a reason may be perceived as an excuse. One suggestion is to use and instead of but. Better still, say sorry and give no justification.

Dr Sandor Feldman in his work Mannerisms in Speech and Gestures says that people often consciously or unconsciously conceal what they genuinely want to say using Meta-Talk.

So next time whenever you are using words like only, incidentally, BTW, but, or phrases like in my humble opinion, I am not boasting etc. be careful, you are actually conveying  something different than what is being said!

As Eleanor Roosevelt said, ‘ What you are shouts so loudly in my ears, I cannot hear what you say.’

Rajan Parulekar, rajan@paradigm-info.com,

 

Jijibisha:The Will to Live- The Story of Manoranjan Byapari

What  do you expect the future of a boy who had a pathetic childhood, no schooling, a painful adulthood with petty jobs, who  was in and out of prisons for petty crimes? The odds are very high of such a person amounting to anything significant in life.

His parents were migrant labourers from erstwhile East Pakistan who migrated to West Bengal during partition. He was a toddler at a refugee camp in south  24 Parganas then. His sister died of starvation and father was ruined by gastric ulcer.

He worked as a dishwasher in a tea stall, pulling cycle rickshaw, daily wage worker and a caretaker in a Chhatisgarh crematorium. Last 20 years he has worked as a cook in a ramshackle hostel in Kolkata for the hearing impaired.

In the early 70s when the Naxalbari movement was at its peak, he used to take part in protests and quite often he was beaten, tortured and put behind bars. He used to be frequently arrested under the charges of arson, looting, bombing and attempt to murder. He was sent to Alipore and Presidency Jails a number of times.

Manoranjan Byapari is no trader of entertainment but a personification of pain.

All these years, the only thing that was simmering in him was anger against the unjust establishment. One day while in jail one of the inmates said to him,” Getting angry at others may not solve your problem. From this window can you see the sapling on the rooftop of National Library? If it can survive in concrete, you too can find something worth living in this prison. Find a purpose in life.” That day Manoranjan started learning Bangla alphabets on the walls and floor of the prison; first with dust and stones and then with chalk. Two years in prison, he  was able to read and write Bangla fluently. When he came out, he started reading voraciously whatever he laid his hands on.

Throughout the day he used to pull a cycle rickshaw sometimes as long as 16 hours. The spare time while waiting for the passengers was devoted for his new passion of reading. A word called jijibisha from a story caught his attention. He could not decipher the meaning He asked a number of passengers but no one could answer him properly. One day a passenger, an old lady answered his query saying the word jijibisha meant a will to live. Finding something exceptional in the rickshaw puller, the lady  scribbled  her name and her home address on a piece of paper and asked Manoranjan to meet her later.  After the lady alighted, he  took out the novel underneath the seat. It was Agnigarbha by Mahasweta Devi, ( Jnanpith Award winner, Political activist and writer of books – Hazar Chaurashir Maa, Rudali etc.) the same lady who was in the rickshaw a few minutes before.

His first piece of writing, Rickshaw Chalai (I pull a rickshaw ) was published in Mahasweta Devi’s journal Bartika.

His autobiography Ittibrittey Chandal Jibon when translated into English, spread his fame beyond West Bengal and he was invited to Jaipur Lit Festival. He has to his credit 17 books over the last 40 years of his toil and has received number of awards which include West Bengal Sahitya Academy, Ravindra Smriti Puraskar, Gateway Litfest Writer of the year, Hindu Award for Non-Fiction among others. His writing focusses on the marginalized sections of the society  be it the sex workers, daily wage labourers, beggars etc with whom he has one-one interactions. His writing is authentic as he is able to empathise with his protagonists. In one of his interviews he says:

Quote

I too have worked very hard to progress step-by-step. I would labour throughout the day and then sit down with pen and paper at night. My body would droop with fatigue. My guts would twist like burnt cobra in hunger, but I would keep writing page after page ignoring all the pain.

Unquote

Ray Bradbury in his book Zen in the Art of Writing says, If you have to write with passion you need to have something original, something authentic to say. His philosophy is, “Every morning I jump out of bed and hit a landmine, that landmine is me; it explodes. After the explosion,  I spend the rest of the day putting the pieces together.”

Manoranjan Byapari was born a Chandal,  considered as among the lowest in Shudra caste and he says that you just cannot get out of what your birth has assigned you irrespective of your achievements. His autobiography Interrogating a Chandal Life – Autobiography of a Dalit  won him a number of accolades. However the elite Bhadralok literati still shuns him. Even after being a writer for 20 years he was struggling to get a decent job and had to work as a cook in a shanty  hostel.  It speaks volumes about the Hindu caste-based hierarchy.  He says, “I write because I cannot kill.”