Tuesday, December 14, 2010

Game Theory and Business Strategy - A Wonderful Association

To solve many practical problems that are encountered in economic, military or other disciplines, one has to deal with situations in which there are two or more conflicting parties striving for the same objective and the outcome of each action of one party depends solely on the opposite parties choice of a course of action.

As we all know only one horse can win the race ultimately and the other parties only can prolong the race or see to that they make every possible move to delay the opponent's success.

So, what's this game theory all about?

This is a special mathematical method that was evolved mainly to analyze conflict situations where the number of competitors are finite, each participant has a definite set of actions to choose and there is a conflict of interest between the competitors. So it helped the participants to reach a decision that would put them in the winning post.

This theory has spilled its implications on business situations where success is the motto and conflict and competition the order of the day. Only the best among the best survive. Darwin's theory, "Survival of the fittest" applies not only to biological organisms but also to business organizations which are also abuzz with activity.

Games like chess, checkers are played according to the definite set of rules laid down and these game patterns has inspired the business world to pick up its cue for playing strategic business games, where the concentration is mainly focused on the chance moves that defeats the opponent.

Big business corporates mainly concentrate on the strengths and weaknesses of their competitors to have an edge over them. A real game is controlled and regulated by the statutory rules to be followed but a business game involves lot of killer instincts and intuitions combined with rational thinking and logic.

The first party always puts himself in the shoes of the other party and tries to perceive how the other party would react in a particular situation. Although the aim is to win, choosing the optimal strategy is what matters.

It will atleast keep you in bay. Precise solutions can be arrived at if you plan your game accordingly. The anticipation and thrill that is involved in a strategic game cannot be matched.

We witness a lot of firms imitating what the leader of the market does. The risk is borne solely by the firm introducing the change and if he wins he takes the major share of profit as he is the pioneer and if he loses he goes for the next strategy.

For a company with sound financial position, the chance move is worth giving a try, head or tail doesn't matter. The firms that follow this leader as a shadow are benefited by the waiting period during which they come to know of the pros and cons of the strategy employed by the leader and if it is a winning strategy, they follow suit.

Games are played in the true spirit of sportsmanship, but a business faces cut throat competition. There is no space for any courtesy or liberal approach. If you are quick enough to pick the pulse of the people by gauging their preferences, analyzing the market conditions and employing timely strategies you will atleast survive in the market lest becoming a leader. The presence of mind with which the entrepreneur or the corporate team brings strategic revolutions

* to bring their products quickly into the market
* to identify one's own competitive advantages
* to arrive at optimal decisions for problems in a complex business environment

makes them understand that the business environment is interactive and a single firm cannot survive on its own. We only talk about competition between firms which act as rivals in pricing, promotions, production and employing human resource. But there is another aspect to be considered by the firms. Yes, consideration about co-ordination.

In oligopolistic markets where few large suppliers dominate the scene, all the players can coordinate to fix the price of the same product to their advantage and to enjoy a possible outcome. The pay -off matrix doesn't always favor one particular firm, it favors that firm which employs this applied (game theory) science in a proactive manner.

Recruiting the right person to the right job, fixing the pay scale, advertising, legal arbitrations, auctions, investment decisions, bidding, calling for tenders and much more fields employ game theory to arrive at possible outcomes that prove to be successful. Employ game theory in your business to outsmart your competitors and capture the saddle point which is unique to your product or service.

By : Shyamala_Sankaranrayanan

Saturday, December 4, 2010

Get More Sales Today!

Many otherwise good salespeople set themselves up for failure by expecting it before even picking up the phone. A winning attitude is essential to turn a telephone call into an in-person appointment. Failure is when excuses stall making prospect calls.

Remember that no call is bad and all results work to groom the salesperson. Attitude can override inexperience.

* Set aside a chunk of time for calls.
* Plan and prioritize a call list.
* Outline specific goals to meet.
* Know who you're talking to and why.

Apprehension is a salesperson's worst enemy, as most salespeople don't want to pick up the phone in order to do their job. To overcome nervousness, you must first admit the problem. Then analyze why you really don't want to make the calls. Fearing rejection is solved by gaining more experience.

It is not intrusive to call businesspeople, who expect interruptions during their day, so don't ever apologize for calling. Remember to simply sell the idea of making an appointment. To get an in-person appointment, be prepared and establish a relationship from "Hello."

* Be armed with background on your prospect and your goal.
* Clearly introduce yourself and your business.
* Know their needs and explain briefly how you can help them.
* Keep conversation geared toward simply making the appointment and directly ask for a
* meeting.
* Once set, thank them and reiterate details like your name and the time and date of the appointment.

It is important to distinguish between useful and time-wasting prospects. It is easy for a prospect to simply hang up on you. You must be quick but not act like a smooth telemarketer.

* Consider not setting an appointment if it's very far away or there's really not the money or need.
* Increase your chances of getting an appointment by setting and adhering to a 20 to 30 minute time limit.
* Use words like "understand."
* Accept a real "No" but consider trying later.

It is also essential to avoid critical mistakes when a prospect attempts to reject making an appointment. A salesperson should not simply accept a quick "No," but must be careful not to ignore or manipulate the client in the process.

Always figure out what they really need, but don't ever be self-serving when faced with an objection. Remember, don't give up on the first "No." For example, don't use words like "but" or "better." Finally, don't ignore the prospect and try to push other services or merchandise.

By : Stephanie_B_Mojica

Perfect Words Blended Together Perfectly Yield Best Results

I hear a lot of salespeople criticize the use of so-called "sales techniques." I most often hear salespeople say two things when they refer to sales techniques: First, they say that decision makers can see them coming a mile away. Secondly, they say that they sound phony.

I disagree. When I have heard a dozen or more times the same reason for not doing business with me or my company, I figure it's time for me to come up with just the right words to overcome the objection, memorize those words and repeat them in such a way that I convince the prospect to give me his business.

Yes, this may include the use of a technique, but my definition of a sales technique is to string together a series of words that help salespeople accomplish their objective. As salespeople we must be persuasive. Product knowledge is essential, but product knowledge alone is no better than sending a dictionary on a sales call.

Recently, a lumber company I know experienced some severe cash flow problems, so severe in fact, that several of the company's vendors held up shipments thereby forcing the lumberyard to be out of stock on several key commodities.

The competition jumped on this situation with both feet and spread the word in the community that their competitor had been "cut off" by several vendors and couldn't meet their delivery commitments.

Even though the dealer was able to get his bank to extend his line of credit, pay his past due invoices and get caught up with his vendors, his salespeople were bombarded with questions from customers about what had happened and what assurances could they be given that the barrage of backorders wouldn't be repeated.

The owner called me for some ideas. I recommended a technique that I thought would be perfect for the salespeople to use to deal with this customer concern.

It is called the Feel, Felt, Found technique.
To use this technique, the salesperson had to first of all identify a well-respected contractor who had experienced the inconvenience of backorders, but who had given the salesperson (and the lumberyard) a second chance and was well pleased with the results.

Let's say that the contractor's name was Lou Goodfellow, owner of New Home Construction.

Salesperson making a sales call: "Okay, Joe, it sounds as if you and I pretty much agree on the pricing and the quantities for the framing package on the Cotner Job, may I go ahead and schedule the initial shipment for next Monday morning?"

Contractor: "I don't know, Eddie. You guys put me in a really bad position on the last job I bought from you. If you remember, my framing sub walked off the job when you guys backordered all of those 2 x 6s. I can't afford to let something like that happen again. I thought I'd never get that [framing] crew back on the job. That snafu ended up stretching that job out an extra five days."

Salesperson: "Joe, I totally understand how you feel. If that had happened to me, I would have felt the same way. We went through a bad time of it there for a few weeks, but now we have our act together and we have plenty of stock on hand to take care of your needs."

Contractor: "I'm just not sure, Eddie."

Salesperson: "Joe, do you know Lou Goodfellow over at New Home Construction?"

Contractor: "Yeah, I know Lou."

Salesperson: "Do you respect him?"

Contractor: "Of course, I respect Lou. He is one of the most successful builders in this community."

Salesperson: "Well, Lou had the same experience that you did. And he felt the same way you feel right now, but I convinced Lou that all of the problems we where having with backorders had been fixed and that we had our act back together. So Lou gave us a second chance and he found that our service was better than ever. So what do you say? I sure would like to have a chance to get back in your good graces."

Contractor: "Okay, Eddie. I see your point. Go ahead and ship it. I need it on the job by no later than 7 AM, okay?

Salesperson: "You got it, Joe. Thanks for your confidence.

I understand how you feel, Lou felt the same way, but he found...

Call it a technique if you will, but in this case it did the job for the salesperson. Using these words helped Eddie convince Joe that he should give him a second chance.

Eddie practiced the technique until the words rolled off his tongue. He didn't sound like he was trying to trick Joe into anything, he just sounded sincere. He simply made a good case for being given a second chance.

My advice to all salespeople is to have effective words and phrases memorized to deal with recurring customer objections. The time to learn how to deal with an obstacle is well in advance of encountering it. The worst time to start thinking about what you're going to say is immediately after you encounter the obstacle.

When a golfer hits a shot into a bunker, he must know the correct technique to get out of the trouble he finds himself in. He must know the right way to open the blade of the club, hit an inch or two behind the ball and follow through, letting the sand become a friend instead of an enemy.

Think of the use of sales techniques in the same way as you might think of a technique in golf.

By : Bill_Lee

The Customer's Process Rules: A Sales Rep Pop Quiz

Whatever you're doing right now, stop.

Put down the phone, quit fiddling with your iPad, and shut down your Tweetdeck while you're at it.

It's time for a Sales Pop Quiz, hotshot.

Here's the rules: Without looking at your CRM system, think of your highest-probability deal in the pipeline right now, and answer these questions.

1. Name the specific title of the last person at the account you spoke with on the phone, and the department they work for.

2. Give the name and title of the person that the Person in Question #1 directly reports to.

3. Give the name and title of one of the people that reports to Person #1.

4. Give the name and title of the person that's going to write the check/drop the corporate credit card/put the final signature on the PO when your prospective sale closes (if you're lucky, the answer will be the same as Question #1).

5. When was the last time the Persons in Questions #1, 2, and 4 met together to discuss the problem your product/service is going to solve?

6. What paperwork/research/data did they have in front of them when they did?

7. Who else was in the room?

8. How long is it going to be before they meet again?

9. How many other vendors are they considering?

10. Who are they?

11. What features/benefits/advantages of competing vendors are most appealing to them?

12. What's their "drop dead," point-of-no-return deadline for implementing any purchased products or services?

13. Which of the Persons in Questions #1, 2, or 4 is setting the budget? Or is it someone else entirely?

14. If it's someone else entirely, do they even know your company is in the running for a major purchase?

15. What is the budget they've set?

16. How is your product service emotionally making life better for the Persons in Questions #1-4? This isn't about features and benefits, it's about the direct connection to how you're going to emotionally change their lives, their jobs, their daily tasks. From Day 1, how is what you're about to sell to them going to make them enjoy their job more/hate their job less?

17. How is your sales data, case studies, testimonials, research, and best practices justifying the emotional reactions of the Persons in Questions #1-4?

18. Based on Questions 9-17, are you even in the running for this sale, or are you clinging to false hope?

19. Are you tracking the progress of the deal based on your internal sales process,, or on how the prospect is actually approaching the purchase?

20. Based on Questions #5-19, how accurate is your current closing forecast?

21. If your sales manager knew the true answer to Question #20, how would that change what you do for the next 14, 30, 90 days?

It may seem a bit didactic, but the point is if you didn't have answers to more than four or five of these questions, it's indicative of a mindset.

Are you really focusing on the prospect's needs? Are you approaching the process of the sale from their viewpoint, their decisions, their company hierarchy and culture? Based on your action items, are you making the decision to purchase your solution harder, or easier?

It's these every day questions that ultimately lead to a customer-centered, rather than a seller-centered buying cycle, that will lead to more success.

By : Steven_Watts

Give Pain to Get Pain When Making Cold Calls

Regardless of where you are in a sales cycle, it is critical that there must be identified pain in order for the opportunity to be qualified. This is because regardless of the relationships that you have established and the cool things that your product can do, if there is no pain there is no reason to change. Thus, you will want to find pain and find it as early as possible and one way accomplish this is to give pain while making cold calls.

Giving pain to get pain refers to sharing a story of how someone else has experienced a challenge to a prospect and exploring if they can relate and have seen anything similar. This is a probing technique and can help the prospect to become more self-aware and share information that they might not if you ask them directly without the story of the other company.

A Brief Demonstration
An example of this would be to tell a prospect that a lot of your clients have complained about not being able to produce financial reports that have data from all their international operations. You can go on to share the impact of this challenge and how it prohibited the companies from having visibility across the entire organization and that impacted the quality and timeliness of decision making, which impacted the ability to manage labor costs resulting in decreased profitability.

From there, you can ask the prospect if that is something that they have had any similar challenges with. The prospect will then either share similar pain, will share pain in a different area, or will not admit to any pain. When you reach this point while making cold calls, you can either drill down into pain that is shared or if there is no pain uncovered, you can continue on to give pain from another example in another area.

Latent Pain
One of the reasons that giving pain can help to get pain is that many prospects are not fully aware of their pain. And when making cold calls, since you are calling them, any pain they may have, whether they are aware of it or not, it is not the top of their mind. When this is the case and the prospect is not actively thinking about pain in an area and trying to fix it, we call this "latent pain".

In order to improve sales effectiveness, we need to uncover this latent pain and bring more attention on it. One of the ways to accomplish this is to ask very direct questions about it. The downside to doing this is that either the prospect can fall into denial and avoid acknowledging it or the prospect could feel attacked by the questioning and get defensive.

This is an example why giving pain to get pain can be powerful when making cold calls as you give the prospect an example that helps them to become more aware. You also bring it up in the context of another company so not only do they not get defensive by feeling attacked, they also can feel comforted by knowing that they are not the only company out there in that scenario.

By : Michael_Halper