ABOUT THIS EPISODE
Sales training has long been viewed as a necessary evil, lacking a major component to success: negotiation training.
We recently interviewed David Bauders, CEO of Strategic Pricing Associates, a company that leverages analytics and training to master profit opportunity.
Here’s what we learned from Bauders.
Episode · 4 years ago
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Episode · 4 years ago
David Bauders on Negotiation Training for Sellers in the Cognitive Era
ABOUT THIS EPISODE
Here’s what we learned from Bauders.
You were listening to the BDB revenue executive experience, a podcast dedicated to helping executives train their sales and marketing teams to optimize growth. Whether you're looking for techniques and strategies were tools and resources, you've come to the right place. Let's accelerate your growth in three, two, one. Welcome everyone to the BB revenue executive experience. I'm your host, Chad Sanderson, and today we have a great show for you. We're speaking with David Bowder's CEO of strategic pricing associates, about negotiation, strategic pricing and sales and ablement. It's a great conversation. Very excited to have David on the show today and just wanted to say welcome. Thank you, Chad. It's great to be here and I'm happy to share what we've learned about strategic pricing, sales enablement and negotiation. And so we always start with the same kind off the wall question defining moment in your career. We were kind of talking about this before I hit record, but would love for the audience to hear about kind of that defining realization in your career and how it kind of change the trajectory of the company. But I think one of the most important things was I started the company in one thousand nine hundred and ninety three and we started by focusing on pricing analytics and in two thousand and fifteen, twenty three, twenty two, twenty three years later, we realized how important it was to not only provide sales people with the analytics to help them to price better, but also to give them the training that they needed to negotiate more effectively with their customers. So for the first twenty two years we thought, well, training is important, but we're focused on analytics and we kind of kept those two apart from each other. And then finally we realize that, hey, training is not just a necessary evil, it's actually the key, one of the major keys to success in any type of pricing or margin improvement initiative. And so you added that, added that to your business and it's been been successful, it sounds like. Yeah, so we in two thousand and fifteen we launched a new business unit, spot sigma, and it's focus completely on sales training, sales enablement, and we provide training with focused on negotiation, relationship building, personality quotient and Financial Acumen for sales reps and it's it's really been very successful and and is filling a really important need in the market place, which is for sales reps to move up the value pyramid and to reskill for an ear in which more and more work is being done by by machines and AI. And so let's let's talk about the strategic pricing side of it. First means, he said, think you said ninety three a minute. What was the attraction to the strategic pricing arena? How? How did we end up there? Well, it all started back at Oberlin College, where I was studying economics. Instead of working in the cafeteria to pay for college, I decided to two our students in microeconomics. It was a better way to make money than than working in the cafeteria. And when I went on to Grad school at the University of Michigan, where I did my Mba, I did that again again, just to help pay my way. And when I graduated from the UFM I didn't have any work experience because I went straight from Undergrad through the school. I had no work experience and I wanted to work for IBM in finance and they said, well, you don't have any work experience in finance, but we know you know something about pricing, so we're going to put you in the pricing department. Sure enough, I ended up over it IB am doing pricing for their large systems business, and then a year and a half later I was picked off by a company called Booze and company, and management consulting firm, and they brought me into do pricing strategy for their clients. And then in one thousand nine hundred and ninety three, at the right bold age of twenty six, I started strategic pricing associates. Twenty five years and a thousand clients later, here we are. A thousand clients while impressive, very impressive as we were to starting issue there too, is well, I'm sure I'm profession I did professional service for last fourteen years off. Well,...
I guess I'm still doing it now, but it was more in the B Tob Large scale services space around digital transformation, and I've got a fair few scars of that. I can't imagine after a thousand clients. I mean, you know, we felt a good team aim to do that, but it's you know, it takes you know, there's a real learning curve and and over twenty five years you learn a lot, you make mistakes, you get better and we always say we're only as good as our best clients. And so fundamentally we've learned from serving very difficult, large clients around the world and it's that experience of growth and learning and challenges and demands of the biggest, most complex companies in the world that really define you. It's almost like being an athlete. You really only is as strong as the the best competition you faced. And and you know, we don't think of our clients as competitors, of course, but it's a very strong analogy that you really grow through the experiences that you have in the real world. Excellent, says. We're prevent for the interview. You mentioned the quote negotiation training for sellers in the cognitive area, and yes, I did actually do the air quotes. That's a pretty loaded phrase, right, and especially as we as ever, we start talking about Ai and and the way buyers by and the way they think. Can we before we want to packet, but I want to start with the negotiation side of that. So why, in your experience, is the thing today sellers struggle the most with when it comes to negotiation well, it's kind of sad because never have we had such incredible product and solution offerings out there in the in the market place, particularly in B tob and companies have invested millions, billions of dollars creating value for their customers. Sales Reps are are flying around the world, they're having long, drawn out sales cycles with customers, they're creating immense value, identifying their needs, bring the right solutions to them, and then they get to the last mile called negotiation, which is, what are the terms of trade, that we're actually going to get paid for this, and they have zero training on this that. We did a survey with selling power and it showed that in the last twelve months, ninety six percent of sales reps have had zero days of professional negotiation training. And if you think about the consequences from a commission perspective, from profitability perspective, from the you know, the future growth prospects of these companies, what happens when they create all this value and they're completely and totally unprepared for out a negotiating a lot of people think it's like riding a bicycle. Right, you just put somebody into a negotiation and they'll be able to wing it, and it's just not true. And so, sadly, getting paid for the value they bring to the customer is the hardest part for sales reps. they're so focused on giving to the customer and meeting the needs of the customer they forget about the needs of their own families and their shareholders. And you know, the other thing I would say, just in very simple terms, that sales reps are so focused on their own pressures to close deals, to hit quota, to pay their bills, that they ignore the pressures on the other party to buy. And that what I mean by that is just as sellers have pressures to sell, buyers have pressureshers to buy, and one is grasped this concept, they can start to train to become skilled negotiators. Without that perspective they're always going to struggle, and for that reason we call this the golden rule. If there are pressures on me to sell, what are the pressures on the other party to buy? And once people get that lens to see their negotiation through, they have a starting point to train to become great negotiators. And so when when you're training negotiators or or we think of like the best negotiators that you've known? What are the top three characteristics that you look for or trained to, you know, in your opinion, to make somebody a great negotiator? Well, first of all, great negotiators are created, not born, and a lot of people think, well, if I find somebody who's tough, who's got the right personality, who's got the right, you know, disposition, then I'm going to have a great negotiator.
And while there are personality dimensions to negotiation, frankly that's one of the biggest misconceptions. Real great negotiators are created, not born, and so the things that really lead to to great negotiated and having a great negotiator are a few things. One is training. Great negotiators have to be created, they have to be trained and just like any other sport, negotiation requires skills, training, practice, a strength and conditioning program and, of course, in game experience. So once people understand the metaphor of it being a sport, then you understand the importance of regular practice and training. The second is preparation. So a lot of people to show up for negotiation they haven't done their background discovery work. They fundamentally are unprepared for what happens. So a great negotiator doesn't just wing it. They spend the time up front to define the negotiation process. They discover critical information about the other party, they develop their value proposition and identify and quantify the issues under negotiation, and they also need to define what a win win result looks like for each party. Without that preparation you don't have a great negotiator. And then the last would be tools. So great negotiators have analytical tools to help guide their decision making. They don't just guess at things, they don't just pull something out of thin air as to what our targets are in this negotiation. They've done the analysis to know what the other appropriate term should be. They know what the pricing should be, they quantify the profitability of the deal and to the other party and they know what to ask for when they give a concession. That's that would be. The other part is really having a concession making strategy. So if I give up price, if I give up terms, what can I ask for back from the other party? And they all all three of these things that together, and a great negotiator is one who's trained, who's prepared and has the tools to succeed, and I think that also probably, I mean extends out to kind of some things we work with, sales rep so on. Right, you need to be you need to be trained. Most of them aren't, but they need to be trained, they need to be prepared, they need to do the practice like the practice one is the one that I see most people struggle with, especially sales reps, because they move so fast with Oh no, I don't need to practice this. Yeah, you do in order to be effective. It's not something. It's not riding a bike, it's not it's not that simple. Sales and negotiation there both disciplines. They take time and focus and just like you know, if you're talking about a great athlete, let's say like a Lebron James, I guarantee you the Lebron James has metrics behind when he when he trains, he knows how many times he was able to do something. What is endurance was he knows when he makes mistakes, and and so metrics are becoming really important even in simulation, a negotiated simulation needs to have a scoring and fundamentally, what's happened for years is even when people did role playing, they still had no metrics about how they were proving whether they were successful, who was doing well at things. So the world, actually the world of sports science, is actually coming more and more to bear on the world of sales training and it does some very interesting parallels. And so is that part of when we talk about the cognitive Evera, how that's pushing us into that are are sort of I mean at what we mean by the cognitive era is this new era where computers and machines are changing the tasks and rolls of sales. So we all know, for instance, that Amazon does over a hundred billion dollars per year and sales without any sales reps, and I mean it's just a staggering figure right. And we also marvel about how this little assistant, Alexa, Amazon's version of CIRI, con seemingly meet every whim that we have without any human involvement. And while we all appreciate that as consumers, you know, in terms of the incredible savings of time and drudgery, what we don't realize is that behind that convenience is a new technology. It's a new technological world where Alexa and she really just symbolizes artificial intelligence is going to radically change the workforce and...
...specifically the sales profession. You know, it's going to change the roles and the skills that are required for success and we've seen studies that show that over the next five years technology, AI artificial intelligence will displace almost forty percent of the activities currently we perform by sales reps. things like basic product information, specifying which product should go into an application, what the value add or the value proposition of the product is. All of these things that people have done historically are going to be resolved very quickly without any human involvement by artificial intelligence. So what that means is a couple things. One is a lot fewer sales reps and for those who remain, there's going to be a real pressing need to upgrade their skills and move up the value pyramid. If the machines are doing all the low value work. You want to still be in sales, you're going to have to move up the value pyramid and you're going to have to train to do that. You're not going to be able to just walk into it and say I'm going to be a value added sales wrap without the training or the skills are tools to do that. I was interviewing Lavan croner from Revenue Storm Cro revenue stormy. He characterize that as the difference between demand capture, which is the lower. I would say I don't. I don't mean it a negative way, but it's one of the transactional side of the sales of versus yet and creation, and that difference between the two. It's a huge it's a huge jump for a lot of people in sales. It's not. It's not going to be as simple and those that I don't, I think, that aren't paying attention to art caught off guard. Yeah, and it's, you know, it's one of those areas where what you get is what you invest and frankly, we in the sales profession for a long time have not thought, you know, rigorously about well, what should we be training people on? The amazing thing we did a again the survey with selling powers. It showed that over ninety percent of the sales training that people are consuming today has no retention program to it. So people get a one and done training program and yet the forgetting curve shows that within thirty days without retention, ninety percent of what people learn will be forgotten. Say, if you just think about cumulatively, let's say there's there's, I think in the selling power five hundred, there's top tit type five hundred sales forces. There's twenty four and a half million people. We invest a thousand dollars each and training per year. There's twenty four and a half billion dollars being invested in training in the US in the top five hundred sales forces. Ninety percent of that is being forgotten within thirty days. I mean it's just staggering when you realize not only are we not training in the right things, but we have no retention program and so, fundamentally we're just wasting people's time and we're squandering vast amounts of resources. And so with with the advent of another topic, right. So millennials and then the way that they're used to interacting with technology. We were talking about how technology is impacting, you know, the sales profession itself. How will it? How will technology or how do you envision technology, or how has it impacted negotiation? Well, it's going to affect in two different ways, specifically on both the quantitative side as well as the behavioral side. We're seeing major advancements. On the technical side, we see new decision making tools that will recommend optimize prices, which products are solutions a particular customers should buy based on their characteristics, based on their purchasing history. Other tools that help really guide sales reps to identify the deal terms to get in their negotiations. What should they be aiming for? How do we set aspirational terms of trade with our customers? On the behavioral side, what's happening is AI and training or giving us new insights into how personality is driving decisionmaking. That is, how people of different personalities gather information, how they process information, how they make decisions, and so this, this whole world of AI, is enabling us to gain new insights into our customers, how they behave, how they make decisions and really help us to negotiate and sell...
...differently. And then the other piece that I would would mention as well is that learning technology has advanced extremely quickly. So now we're seeing a lot more micro learning objects, daily drip learning, we call it that, rather than having, you know, death by power points of these these talking head videos, we're seeing more people want to learn a few minutes each day. They want to be taught some key tip that's actionable each and every day and they want to be accumulative so that it's building up and they're not forgetting things. And so what's happening with with learning now to support better negotiation skills is that we now have platforms will enable you to practice this on a daily basis, again going back to that sports analogy. Without practice, all of the best skills will atrophy. And it's really that that technology is driving both the analytical side as well as the training side. And in the last piece I would mention, which is really cutting edge, is the impact of social on learning. And what we're what we're discovering now, is that when people learn in a social environment where they're interacting with each other digitally as they learn, learn, the learning retention is much greater. When you, your team of sales reps are seeing each other's answers and commenting on them and liking them or otherwise engaging with each other as they learn, that the retention rates go through the roof and the participation rates are really strong as well. And and so social. Everybody Thought Social was a distraction. It turns out that social can be harnessed to be a learning lever if you have the right platform. That's something that you, guys, providers, are platform out of that you've been the most impressed with. Yeah, we have a partner that we work with that's providing a learning management platform that can be either distributed or an lmass learning management system type of platform, and there's different ways of pushing content, but the most important thing is to really leverage to there's two keys to it. One is that you need a platform that supports social interaction, that is, that anticipates and creates the ability for sales reps to learn together, and then the other key to it is that you have to have great content to begin with. So content is king, just like content is king on Netflix or Apple TV. Content is also king. Yeah, content is king way back in the in the training world, and for too long we thought, well, if we just put the sales wrap in front of a screen and, you know, ask him to watch this this talking headlooking at him and he's getting bored to death watching and he's about to pull his hair out, that we were going to train them that way. And what we're learning is no, the same things that get people to watch to Binge Watch on Netflix or Amazon. Those same characteristic better be in our training content. So the question we always ask companies when we go in and talk to him is what percent of your training content is binge worthy? That is, what percent of it will people naturally watch at a rate faster than what you ask of them? And the answer always comes back zero. We keep giving people contents. It's boring, dull, you know, just people want to pull their hair out. We wonder why they're not learning. It's because we were not meeting the standard. And then a social era that we live and we live in a cognitive ear and we live in a social ear and the expectations of our training departments just having kept up with this new ear. And so people are getting distracted away from learning into the average sales rep spends for to eight hours per week surfing on social during work. And you know, it's like, well, why are they doing that's because partly it's because that it's fun, but it's partly because they're not being given the alternatives that would naturally attract them into career building use of that time. Okay. And so when we think about negotiation, as as you know, key component and focus for what we're talking about today. I mean, you've been doing this for a while, right, I estabish expert. I would love to know what is your favorite part of negotiation? Well, a lot of negotiation starts out as kind of you know,...
...particularly for an inexperience negotiator, it starts out as kind of my gain is your loss and vice versa. So it's kind of a zero sum view of negotiation. What I find rewarding as I go through negotiations than we negotiate a lot with clients, is really creating bigger deals that produce greater value than either party expected at the outset. And so there's a very basic principle of negotiation, which is when you find yourself in a win lose zero some type of environment, you need to redefine the negotiation to be bigger, that is, to grow the deal in a way that will make it no longer a win lose, that will make it a win win. But when you see it through that Lens of wind lose, you end up with all this conflict and you end up with all this stress. But when, when you really are clicking and you really understand the art of negotiation, you're constantly growing deals and you're getting bigger deals and longer deals with bigger growth rates. And so the Sales Reps who master these basic principles have better terms of trade, they're more profitable, they retire earlier, they have better neighbors. A whole bunch of things fall from it, follow from it. So for me it's it's the gratification that comes from getting away from the hit head to head conflict, the banging heads with the other party, growing the deal and then, as you master that is the way you do business, it's the the professional success that comes with it. Axxon. So let's give it a little bit and talk about strategic pricing associates. If the customer were to come to you, how do they typically how do they typically come to you? What are they asking for? where? What problems, are challenges are they coming to you to help solve? Well, they start with one or one of two paths. So they their start with the training side, which is they want to understand how do I train my people to get bigger deals, more successful deals, to get better terms of trade, how do I get them to be more professional and to really be more profitable? So they sometimes start on the training side, and they say, Hey, I just want to train people and get them to negotiate better so they stop giving away the value that we create for the customer. Sometimes they start and they on the other hand, they start on the more analytical side. They say, Hey, you know, our business is really complex. We've got thousands of customers, thousands of products or solutions that we sell and frankly, we're just guessing all the time at what the right price is. Can you help us they figure out find the tools to guide our sales people on a daily basis to make better decisions. That's usually one of those two paths. Of course, over time there's a convergence between these two when you really empower your sales reps as when you give them both the tools and the training to drive better, better, more profitable deals. And can you give us an example of client success that you can publicly talk about that you're the most proud of? Yeah, well, we don't disclose for for confidentiality reasons and particularly in the pricing space, we can't dis close the identities of our clients, but we have a large multinational client with over one million products that they sell, over a hundred fiftyzero customers operating thirty five countries around the world, with thousands of sales reps, in addition to thousands of channel partners, and what we've done is, over the last fifteen years, we've provided them with both the analytics and the training to enable their sales people to be more effective and working all around the world. Over that entire period we've added over four hundred million dollars per year of operating profit. And I think equally gratifying for for folks who, like myself, have dealt with thousands of clients, it's really about how have you helped the people along the way, and in this case they're literally been thousands of sales people who's whose professionalism has been elevated, who's earnings have been elevated and who've had a more successful career. And for me that's you know that the money is there when you work on these things, when you work on negotiation training, you work on skills training for reps and they give them the right tools. But what's equally gratifying is how it affects people. The People Element is...
...is for me and for some of those I think that I know that are the best at what they do that people element is what keeps US coming back. It's what makes the scars that we have worth it. Exactly. Yeah, you can't. I mean you can't really separate people from profit. I mean it's as you as you work on the projects, you have to work on them to make sense financially. But at the end of the day, nothing works financially if it doesn't work for people. And so you know it's something to put them in two different silos, but you really have to find approaches to solving problems that in a great the two and and it turns out that performance, and human performance is the biggest differentiated it's not. It is a Cliche, but it's also true. The people are a company's greatest asset and when you empower those people by giving them tools and training, you transform the value of the corporation as you transform the value of the individuals, and both are winning in that scenario. When you when you're losing that whole thing, as when you viewed your profits can only go up if you take training away. And when you start seeing the world that way, then then you're in a world where neither party is winning, without a doubt, without a doubt. So what's the end of? Towards the end of each interview we ask, guess, two standard questions and, as the CEO Strategic Pricing Associates, that makes you a the politically correct term is prospect for sales professional. I have a tendency to use other words, but in that role and you and you know live and breathe stuff on a daily basis, if somebody you know was trying to get your attention establish credibility with you, what would be the best way for them to do that? Yeah, I mean I think it comes down to a few things. One is, how are you going to help me to improve the profitability of my company? How are you going to help me to improve the capabilities of my company in ways that will serve customers and then lead to profitability? How are you save me time? Time is the most precious resource and frankly, time is is what we all run out of eventually and fundamentally, time is valuable. So if you've got something that can help me save time or drudgery or help me or my people to move up the value chain, then that that grabs my attention. Of course. That's that's the starting point. Beyond that we look for differentiation. How are you solving the problem differently from other people, because differentiation usually leads to a better answer. And then the last piece that I look for, because I've been around the block a lot of times, it's really you know, do you have a forward looking perspective? Right? It's not enough to solve the problem now. You need to be able to help solve the problems that I don't know about yet. Identify those problems and show how how you're going to help in the future. And then the last thing is, of course, simplicity. People who overcomplicate things usually don't succeed. That's going to be the quote. That's going to be the quote for the PODCAST is soon. Don't overcomplicated. Yeah, the last question. We call it our acceleration inside. If there's one thing you could tell sales professionals, marketing professionals, one piece of advice that you believe would help them be better tomorrow after hearing it, what would it be and why? I think that, you know, it's a great question, first of all. First of all, it's determine what tools you need to do your job more profitably on a daily basis, either to do it more successfully to add more value to do it more efficiently. Figure out what those tools are that are going to drive you two more profitable book of business or more profitable daily decision making. Find those tools and use them. And then the second is, and this is the harder one, frankly, is determine what skills you need to do your job more profitably. And here's the hard part. Once you've identified what skills you need to do your job more profitably, practice them daily and and so that brings up the question what are you prepared to do differently each day? How much time...
...are you prepared to allocate to get better at things? And for most people, the answer, unfortunately, it turns out to be not a lot. But I think if people invest a small amount of time each day and building their skills figure out what tools they need to be more effective, that's what's going to drive success. So that's how it responded. That one excellent, David. If a listener's interested in getting more information about what you guys are doing or wanted to touch base, what's the best way to connect with you? Sure, and we're always happy to learn from other people and to talk to more people. It's it's a pleasure or to do that, and we consider it a critical part of development. First of all, you can visit our website, strategic pricingcom, no spaces, or our training business by Sigmacom, SPA Sigmacom. Those two are good places to learn more about what we do. And then, if you want to contact me personally, you can reach me at two one hundred and six, five, three, six hundred and twenty eight hundred and the US or my email address, David Dot bowder's beauders at strategic pricing. One wordcom and always interest in talking to other folks about these challenges and opportunities. Thank you, David. I can't thank you enough for being on the show. It's been an absolute pleasure to speak to you today. Great well, thank you for having me, Chad, and all my best wishes to you and your listeners. All right, everyone that does it for this episode. Please check us out at be to be REV exaccom, share the episode out to your friends, families, coworkers and if you like what you're hereing, please write US review on itunes and helps us determine the guests to bring on to continually provide you value until next time. We value prime solutions with you all nothing but the greatest success. You've been listening to the BB revenue executive experience. To ensure that you never miss an episode, subscribe to the show and Itunes for your favorite podcast player. Thank you so much for listening. Until next time,.
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