Persuading Consumers to Sign Long-Term Contracts

Companies that focus on driving customer usage and spending see their conversion rates increase.

strategy+business magazine:

by Matt Palmquist

Title: Strengthening Customer Relationships: What Factors Influence Customers to Migrate to Contracts? (fee or subscription required)

Authors: Yolanda Polo and F. Javier Sese (both University of Zaragoza)

Publisher: Journal of Service Research, vol. 16, no. 2

Date Published: May 2013

Although contracts have become widely used in recent years, pay-as-you-go consumers still account for a large portion of the customer base in many industries and businesses, including legal services, media, telecommunications, repair and maintenance, and entertainment or professional sports. A 2011 study of U.K. and German mobile phone firms, for example, found that more than half of their customers had a prepaid plan and were not tied to a contract.

English: A business ideally is continually seeking feedback from customers: are the products helpful? are their needs being met? Constructive criticism helps marketers make adjustments to their products and services to adapt to the changing needs of their customers. Source of diagram: here (see public domain declaration at top). Questions: write me at my Wikipedia talk page or email me at thomaswrightsulcer@yahoo.com (Photo credit: Wikipedia)

That’s a problem for companies, because there’s no question that subscribers are more profitable. On average, they generate 4.5 times more revenue than noncontract customers, according to the study. It stands to reason, then, that a small uptick in the number of customers who sign on the dotted line would lead to a significant increase in revenue for companies—including those in business-to-business contexts such as tech support or consulting. However, despite contracts’ clear value to firms, surprisingly little research has been done on how managers can strengthen their companies’ ties with customers to encourage them to sign long-term deals.

This paper aims to fill the gap by identifying the key factors that lie behind customers’ decisions to transition from pay-as-you-go to contract status. Noting that their findings are applicable to several industries, the authors based their study on cell phone users, in part because of the massive size of the mobile market. ... The authors were also drawn to this sector because the contract problem is particularly vexing for telecom operators, who shoulder huge operational costs and face stiff competition for customers, which makes the negative impact of weak and short-term client relationships all the more damaging to their bottom line.

The authors tracked nearly 300 customers, all of whom began as pay-as-you-go clients, of a major mobile communications supplier for four years, gathering user and account data on a monthly basis. About 22 percent of the customers moved to a contract and 78 percent stuck with their pay-as-you-go phone cards, which shows how difficult it can be for firms to secure long-term commitments.

In a series of analyses, the authors found that the first key factor in the decision by customers to make the switch

English: A schematic illustrating the evolving relationship between the firm and its customers via the marketing orientation, which includes the introduction of a new marketing concept, customer enrichment marketing. (Photo credit: Wikipedia)

was whether they exceeded their expected usage: Did their usage regularly exceed the amount of credit they loaded on their cards, and, if so, how big was the gap?

The clear implication for telecom companies, and other types of service providers, is that they can increase the likelihood that customers will sign contracts by getting them to use their service more during the pay-as-you-go period.

In the mobile phone market, for example, companies should encourage their pay-as-you-go customers to install social media applications, online games, or other time-consuming programs that would increase their mobile service use. In other industries, offering discounts, promoting free trials, and bundling services with partner firms are all viable strategies. In addition, employed, female, and younger customers all had usage rates that exceeded their own expectations, so these groups should be among the first targeted by marketers, the authors write.

The second factor influencing the decision by customers to switch to a contract was a variation of the first: The more customers paid when not on a contract, the more likely they were to see the benefits of a long-term deal and make the switch. This doesn’t mean, however, that companies should simply raise rates for noncontract clients, the authors write; over the long term, the higher prices would likely drive away potential customers or cause existing ones to leave. Rather, managers hunting for contract contenders should begin by focusing on customers with a history of higher spending. Once they are identified, these customers should be plied with inducements to exercise their bigger spending habits during the noncontract phase. Companies should offer points for frequent usage in a loyalty program, among other incentives.

Last, customers who had had a longer noncontract relationship with the firm showed a higher probability of joining the contract program, the authors found. Thus, retention strategies and effective customer service are crucial. Although keeping long-standing low-end customers happy with good service is important, companies should keep their eye on the real goal: Strengthening these ties to convert them into more profitable contract-based relationships.

The authors stress that these managerial and marketing insights can be applied more generally to other industries. Internet-based phone companies, music streaming websites, file hosting services, and new-media businesses such as online newspapers and magazines are all facing the same challenge. These findings highlight the need for companies to encourage higher usage and spending during the pay-as-you-go phase.

The recommendations also extend to B2B firms, the authors write. For example, companies specializing in consulting, computer-related support, or legal services can team up with complementary firms to give customers easier access and more opportunities to use services.

“Marketing managers should move from the prevailing backward-looking focus toward a forward-looking focus,” the authors write, “in which each customer’s future considerations are monitored and managed proactively.”

Bottom Line:
Companies can lay the groundwork for customers to sign a contract by tracking and influencing their use of the company’s services in the pay-as-you-go phase. Although getting customers to make the switch is tough, it’s worth the effort because it is so profitable. Companies should target customers who have longer relationships with the firm, spend more during the noncontract phase, and have reason to think they will use the service frequently enough to offset the higher costs of a contract.

AUTHOR PROFILE:

1. Matt Palmquist is a freelance journalist based in Oakland, Calif.

'via Blog this'

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The Weakness of Positive Thinking



When an upbeat management style becomes excessive, it wards off reality and asks for trouble

strategy+business magazine
Published: July 27, 2012

Title: Prozac Leadership and the Limits of Positive Thinking (Fee or subscription required)

Author: David Collinson (Lancaster University Management School)

Publisher: Leadership, vol. 8, no. 2
Date Published: May 2012


Fluoxetine HCl 20mg Capsules (Prozac) (Photo credit: Wikipedia)



There is such a thing as too much positive leadership, according to this paper, which finds that a blind allegiance to organizational optimism lies at the heart of many of the financial miscalculations that drove the Great Recession. Countering the widely held view that positive thinking by leaders invariably challenges and inspires subordinates, the author coins the term “Prozac leadership” to describe how optimism tends to resemble a well-intended but addictive drug: It promotes artificial happiness and discourages critical reflection, leaving companies ill equipped to deal with setbacks.

Drawing on an analysis of nearly 200 studies of leadership, positive thinking, and organizational dynamics, the author acknowledges that the ability of supervisors to be persuasive is a key skill, and that optimism is one of the most effective communication methods. …



Optimism (Photo credit: hynkle)



But several recent studies have critiqued the positive thinking movement, highlighting the negative personal and organizational effects that can result from “excessive optimism,” “irrational exuberance,” “gambling against the odds,” and the “tyranny of positive thinking.” In short, Prozac leaders can wind up believing their own narrative that everything is going well. As a consequence, they ask fewer and fewer questions and become deaf to feedback that is “off message,” leaving them, and their companies, dangerously insulated from economic and social realities.




Royal Bank of Scotland (Photo credit: Wikipedia)

A 2003 study coined the term delusional optimism, which the author uses to describe the circumstances surrounding the acquisition by the Royal Bank of Scotland (RBS) of the Dutch bank ABN Amro in 2007. … It was completed with insufficient risk analysis, little due diligence, and a disregard of red flags.

Because ABN was significantly exposed to the U.S. subprime mortgage crisis, the sheer size of the deal fundamentally weakened the balance sheet of RBS, which was bailed out by the U.K. government. Companies that “reward optimism and discourage pessimism are likely to undermine the capacity to think critically,” the author writes, ...




Diagram of the Subprime Mortgage Crisis (Photo credit: Wikipedia)

“By insisting that subordinates’ upward communication [be] exclusively positive, Prozac leaders and the uncritical cultures they encourage can silence committed and concerned followers,” the author writes. In this context, employees may hold back on their views as a way of protecting their career, reputation, salary, and job security.

Indeed, leaders’ upbeat perspectives are not always accepted or internalized by their followers, the author says, and Prozac leadership can generate a wide range of responses and types of dissent. In addition to outright whistle-blowing or quitting in protest, disenchanted employees can engage in less overt subversions such as absenteeism and foot-dragging, studies have shown, or simply be at odds with the dominant workplace culture, creating tension.

For example, despite an oil company’s descriptions of its safety commitments as “unremitting,” “all-embracing,” and “our number one concern,” many workers on two of its North Sea oil rigs did not disclose accidents or near misses because of a “blame culture,” one study found. The workers complained that those who reported safety-related concerns were given poor assessments, affecting pay and employment security. “Assuming that concealment could not occur since this contradicted the learning culture,” the author writes, senior managers remained in the dark about safety problems on the rigs, a reflection of “their excessive optimism and distance from offshore practices.”…




Image via CrunchBase

Of course, customers can also react negatively to hollow corporate promises, the author says, citing the case of a musician whose guitar was severely damaged in transit by a major airline that touted its customer service. After failing for nine months to convince the airline of its responsibility, the musician recorded a song about the incident that went viral on YouTube and became a public relations nightmare for the carrier.

Shareholders, too, can express resistance to Prozac leadership. A 2011 study found that executives’ use of overly optimistic statements (especially in relation to corporate earnings) increased the firm’s risk of being sued by shareholders. In analyzing 165 lawsuits from 2003 to 2008, the study found that the statements of sued companies were markedly more optimistic than those of similar firms that weren’t sued. …

“Regardless of whether Prozac leadership is fuelled by wishful thinking, naivety, hubris or more deliberately manipulative motives (or a combination of these),” the author writes, “subordinates can perceive Prozac leaders to be contradictory, remote and unwilling to consult, and may dismiss their excessive optimism as insincere and manipulative.”

Bottom Line:
Leaders can become excessively positive, making them reluctant to listen to alternative viewpoints and leaving their firms unprepared to deal with unexpected problems. This so-called Prozac leadership ultimately results in resistance from employees, customers, and shareholders.

Related articles

• Mayo Clinic: Reduce stress by eliminating negative self-talk
• Should Leaders Accentuate The Negative?
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• Positivity

Expertise in aviation components applied to distribution to expand opportunities

Memphis Business Journal
Date: Friday, April 13, 2012, 5:00am CDT

Andy Ashby

Staff writer- Memphis Business Journal

Alan Howell | MBJ Marcellus Montalvo and Mario Ordonez of InterSky Precision Instruments perform tests on electronic components used in the aviation industry.

InterSky Precision Instruments Inc. is expanding its horizon to expand its business.

Memphis Skyline HDR [Reinhard] (Photo credit: Exothermic)

The 32-year-old company, which has made its name in aviation component maintenance, sees growth possibilities using the same skills but in different industries.

It’s part of the company’s versatility.

InterSky mainly repairs cockpit instrumentation for commercial, corporate and government aircraft, but also fixes aircraft lighting, probes and accessories such as fans or motors. It also calibrates equipment.

Originally launched in North Hollywood, Calif., the business migrated to Memphis to be a supplier to FedEx Corp. 13 years ago.




FedEx A310 and A300 cargo aircraft fly daily from Memphis and Indianapolis to GSO. (Photo credit: Wikipedia)

FedEx was developing its supplier diversity program and since InterSky is a 100 percent Hispanic-owned business, the company thought it would give Memphis a shot.

“There was no promise of business, there was just a handshake and (founder) Hernan (Montalvo) took a shot on his own dime,” Marcellus Montalvo, president, says.

When the company moved to Memphis, the Tunica casino building boom was happening and it was hard to find contractors to build out InterSky’s office space.

Montalvo’s uncle and a friend flew to Memphis to teach the 12 families who moved here for the company how to do the construction work on the FAA-approved facility.

“Everyone literally learned on the fly,” Montalvo says. “That’s the roots of the company.”

While InterSky handles repairs for companies such as Boeing, FedEx, and the U.S. Air Force, it has been looking to expand its business model.

“The aviation business is very capital intensive, especially for a small business,” David Hughes, vice president of government services, says.

For example, the company’s inventory has a commercial value of more than $30 million.

They took their problem-solving prowess and decided to go beyond aviation.

Its core competency is fixing electronic equipment such as microcircuitry boards, which run everything from slot machines to public utilities. So InterSky applied that expertise to help Fred’s Inc.




PCB with testpads (Photo credit: Wikipedia)

The Memphis-based discount retailer has a major distribution center in Memphis with an automated system that has more than 4,000 small, printed circuit boards. The system was giving Fred’s problems, but the company didn’t have schematics to guide repairs.

“We basically reverse-engineered our repair capabilities just from the broken boards we were looking at,” Montalvo says.

InterSky’s employees learned how the system worked, then figured out the problems.

InterSky has also expanded existing relationships for growth opportunities. The Great Recession impacted many of InterSky’s partners.

InterSky responded by partnering with companies with complementary parts and services. When talking with a manufacturer, for instance, they asked to add maintenance components.

“We’re looking for companies where we can say ‘We can add to what you’re already doing,’” Montalvo says. “That’s so we can service a broader customer base through partnerships.”

Southern California Aviation LLC has been working with InterSky for just over a year.
The company, which stores and maintains mainly commercial aircraft, sends equipment to InterSky for repair and recertification.

“Compared to other vendors I’ve dealt with, their open line of communication is 100 percent,” Lisa Mullaney, purchasing manager, says. “I’ll send something and as soon as it gets there, they let me know. As soon as he knows what’s wrong with it, he’s sending a formal estimate.”

InterSky is apparently following the old business maxim of “under promise and over deliver,” as Mullaney often gets equipment back faster than InterSky’s employees say they would.

“I’ve found I haven’t had to follow up with them, as they’re very proactive,” she says. “Some vendors it’ll go a week or two and I’ll have to call them.”

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To Increase Revenue Stop Selling

Forbes

Leadership | 5/01/2012 @ 11:47AM

Mike Myatt, Contributor, I write about leadership myths, and bust them one-by–one.

Creating or expanding business relationships is not about selling – it’s about establishing trust, rapport, and value creation without selling. Call me crazy, but I don’t want to talk to someone who wants to manage my account, develop my business, or engineer my sale. I want to communicate with someone who desires to fulfill my needs or solve my problems. Any organization that still has “sales” titles on their org charts and business cards is living in another time and place, while attempting to do business in a world that’s already passed them by.

Engage me, communicate with me, add value to my business, solve my problems, create opportunity for me, educate me, inform me, but don’t try and sell me – it won’t work. An attempt to sell me insults my intelligence and wastes my time. …The difference between the two positions while subtle, are very meaningful and powerful.

The traditional practice of sales as a business discipline has become at best ineffective, and in many cases flat out obsolete. …

The problem with many sales organizations is they still operate with the same principles and techniques they were using in the 60′s, 70’s and 80’s. While the technology supporting sales process have clearly evolved, the traditional sales strategies proffered by sales gurus 20 or 30 years ago have not kept pace with market needs. They are not nearly as effective as they once were, and as I’ve alluded to, in most cases they are obsolete.

Trust me when I tell you that your existing and potential clients have heard it all before. … If you want to create revenue, increase customer satisfaction, and drive brand equity, stop selling and start adding value.
Lest you think I’ve lost my mind, I want to be clear that I’m not advocating taking your eye off the revenue creation ball. Rather what I’m recommending will help you generate more revenue, with greater velocity by simply doing the right thing in putting your customer’s needs first.

I hear a lot of noise about the tough economy, and revenue being down for many companies…. If you’re experiencing this type of reaction from your customer, it’s not because they don’t have money to spend, it’s because you’re selling and not adding value. It’s because you’re talking and not listening. …

It’s not about you, your company, your products or your services. It’s about meeting customer needs and adding value. …

So, my first suggestion is you change nomenclature. Clients are people not fish. Don’t “lure” or “hook” them – engage them, listen to them and serve them. Eliminate the words “suspects” and “prospects” from your vocabulary and replace them with potential clients. Think about it – do you establish trust by profiling and targeting prospects, or by attempting to understand the needs of a potential client? This is much more than a semantical argument – it’s a philosophical shift in thinking, and a practical shift in acting. Stop selling and start serving.

TICSS Customer Service Measurement Model (Photo credit: Wikipedia)

… Frankly, most people I know would rather talk to a knowledgeable customer service person over a sales rep any day of the week. The reason for this should be obvious – the perception is a customer service professional is providing information and helping them meet their needs. A sales person is trying to sell them something.

It’s time for companies to realize that consumers have become very savvy and very demanding. Today’s consumer (B2B or B2C) does their homework, is well informed, and buys…they are not sold. …

Since the large majority of all buying decisions either begin or conclude on the Internet, you better be visible online. In addition to the basics of search engine optimization and traditional search engine marketing, I would strongly suggest getting involved in social networking. Just by having a presence on Twitter, Facebook, Google+, LinkedIn, YouTube and other social networking platforms, you not only open-up a new communications channel to your existing clients, but you also make yourself readily available to those looking to find what you have to offer.

Teach your sales force to become true professionals focused on helping their customers for all the right reasons vs. closing the big deal for personal benefit. …

The most important factor in creating revenue and building brand equity is the client/customer/end-user. If you don’t engineer everything around the client, your client relationships will vanish before your very eyes. Don’t be just another vendor, become a trusted advisor and advocate.

Related articles

• 80%+ of the Respondents to a Future of Business Survey Want Customer Service Improvement Strategies to Increase Revenue and Competiveness (prweb.com)
• When It Comes to Customer Service, Do You Really Know What Customers Want? (smallbizdaily.com)
• Stop Selling or Pitching - Start Serving (leadsexplorer.com)

A Big Payoff from Online Company Communities

strategy + business magazine:

Membership engages customers, who spend more across the board.

Title: Social Dollars: The Economic Impact of Customer Participation in a Firm-Sponsored Online Community

Authors: Puneet Manchanda, Grant Packard, and Adithya Pattabhiramaiah (all University of Michigan)

Publisher: Ross School of Business Working Paper

Date Published: January 2012

Image via CrunchBase

Studies show that consumers are spending more of their leisure time online, and U.S. marketers are flocking to third-party social networks such as Facebook and Twitter to reach them. But companies as diverse as Amazon, Buy.com, Disney, IKEA, Kraft Foods, Lego, and Procter & Gamble are also making major investments to build their own consumer-centered online communities. According to a 2011 survey, nearly half of the top 100 global brands host some kind of network.

... This paper, among the first to tackle the question empirically, tracked the effect of consumer membership in one company-sponsored online network on the amount of money members spent on the firm’s products. Although based only on a single case study, the results appear to be a significant affirmation of the economic value of these networks: The authors found that revenue from members increased by an average of 19 percent after they joined, a result of closer ties with other customers and more engagement with the company.

The revenue increase, called “social dollars” in the paper, represents spending that is over and above the members’ purchase history with the firm — and it similarly exceeds the spending of a control group of comparable consumers who did not join the network.

This increase in income is “economically significant for the firm as it more than covers the fixed cost of setting up the community as well as the variable cost of operating it,” the authors write. The increase is neither a novelty nor a cannibalizing threat to a company’s retail stores, they add. Rather, they say, the jump in social dollars “persist[s] over time, arise[s] in both online and offline channels, and affect[s] all product categories sold by the firm.”

The authors based their analysis on data obtained from a large North American retailer of entertainment and information-related media, such as books, movies, and music. The firm is the largest retailer in its market in terms of sales and operates in both retail store and online environments; about 10 percent of its total revenues came from Internet purchases in 2009.

The company’s online community is similar to Facebook’s — members can manage a profile page that allows them to post personal and product-related messages, convey a sense of their personality and interests, and display their status in the community. There are private and public discussion boards so users can establish friendly ties, start up special interest groups (for example, the “Vampire Movie Lovers Club”), and publish Top 10 lists or product reviews. ...

After controlling for several factors, the authors found that the quantity and quality of friendly relationships with other customers was key. Customers who had many friendly relationships, or who befriended more important or prominent customers, were likely to spend more on the firm’s products. Those who displayed more products on their profile page also tended to rack up purchases.

It doesn’t require many participants to earn a return on the investment of establishing an online community, the authors found. Based on the projected volume of social dollars taken in, and the costs and firm-level margins available in public financial statements, the authors’ conservative estimate is that the firm broke even on its investment when 33,000 of its existing customers signed up.

“Given that the firm acquired 260,000 members within the first fifteen months after community launch, this was clearly a very profitable investment for the firm,” the authors write, “especially as this number is comprised of a mix of both current and newly-acquired customers.”

Aside from the direct economic benefits of setting up the community, the firm has much to gain in other ways. For example, the data paints a clear picture of each customer’s preferences and behavior, the authors write, which is “an informational boon for customer relationship management and other life-cycle based marketing strategies.”

By monitoring which products are becoming more popular and identifying who is discussing them, marketers can optimize their promotional strategies. And the firm also disclosed to the authors that the massive amount of user-generated content produced via the community strongly improves the company’s position in major online search engines.

A segment of a social network (Photo credit: Wikipedia)

“While it is likely that hosting customer communities on third-party websites such as Facebook provides reach to a broader audience,” the authors conclude, “this strategy does not offer the same level of access and control over customer interaction management and data offered by a firm-sponsored social network, nor is the third-party community interaction data commonly available to the firm in a manner that can be easily linked to customer-level purchase behavior.”

Bottom Line:
Consumers who join a company’s online community spend significantly more on the firm’s products than they did prior to signing up or in comparison with similar customers who are not part of the network. The findings indicate that online communities more than justify the investment to create and maintain them, and provide a unique way for companies to connect with customers and monitor their purchases and behavior.

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10 weird but wonderful frequent flyer rewards

CBS News:

By

Kathy Kristof

 (AP Photo/Tony Avelar)

(MoneyWatch) ...As an increasing number of credit card companies offer points that can be used on any airline, single-airline frequent flyer programs have had to step up with better alternatives, says Jay Sorensen, president of IdeaWorks, a company that does research and brand development for the airline industry.

"Reward-oriented credit cards that are not affiliated with a particular airline have forced airlines to make their offers richer, release more seats for frequent flyer programs, and offer more extravagant sign-up bonuses," says Sorensen. They've also spurred an escalation in weird and wonderful reward options, like having the opportunity to pet Artic wolves in Sweden or sup on an in-flight "happy marriage cake." 

Lufthansa aircraft and one Air Canada aircraft at Munich Airport. (Photo credit: Wikipedia)

One caution: the point-based prices for these oddball rewards aren't always a bargain. In a world where reward points are usually worth 1 to 3 cents each, the number of points you'd have to use to buy some of these off-kilter purchases might indicate that your reward points are worth a fraction of that value. For instance, Lufthansa will let you buy onboard wireless service for $15 in cash, but would deduct 3,500 miles from your account if you paid with points. At a penny per mile, that costs you the equivalent of $35. Not such a great deal.

And yet, some premium-price purchases may still be worth your while, says Sorensen, particularly for those spending "orphaned" miles on an airline they're no longer flying. If you've switched favorite airlines, why not buy something with the rejected airlines miles, which are never going to amount to a free ticket?

Air Canada Centre, Air Canada headquarters, and Air Canada Boeing 777-333ER - Montreal, Quebec. It is nicknamed "La Rondelle" ("The Puck"). Français : Centre Air Canada, le siège social d'Air Canada, et un Boeing 777-333ER d'Air Canada à Montréal. Centre Air Canada a le surnom "La Rondelle." (Photo credit: Wikipedia)

Moreover, some of these offbeat rewards just can't be replicated. For instance, Air Canada sold a leather vest autographed by George Clooney for 177,000 Aeroplan miles. That's hard to value and, as an added bonus, Air Canada pledged to give the value of the rewards to charity. 

... Here's a sampling of 10 other offbeat frequent flyer rewards that Sorensen uncovered. If you want to find similar options offered by your favorite frequent flyer program, you've got to dig deep into the program's web site. ...

Charter a private jet. For 2,345,000 miles (about $235,000) you can charter a private jet through Lufthansa that will take you and six of your closest friends from Rimini, Italy to Nice, France. Admittedly, you're not getting a very long flight for your that whopping number of miles. But, hey, it's a private plane. ...

Sub-orbital space flight. Virgin Australia's Velocity program offers a sub-orbital spaceflight at 50,000 feet through Virgin Galactic. Cost: 25,000,000 points or a minimum of $200,000 in cash. ...

Wine membership. Qantas has a wine club that lets you go to invitation-only events and get a free bottle of Shiraz valued at $130. The price when paid in cash is $103, but you can buy it with 1,300 frequent flyer points instead. ...

Weekend on Ice. The Ice Hotel in Sweden is truly one of a kind. Located 100 miles north of the Artic Circle, the hotel is built every winter out of real ice and it melts into oblivion every spring. For 395,441 SAS Scandinavian Euro Bonus points, two people can spend the weekend curled up in thermal sleeping bags when they're not enjoying the ice bar or a dog-sled ride across the tundra.

Raffles and auctions. It's not a specific product, but another very popular program is to offer raffles and auctions where your ticket (or bid) is paid in points. Emirates Skywards program, for instance, has a monthly raffle for business-class tickets anywhere. Cost of the raffle ticket: 2,500 miles. Other airlines hold auctions, where the prize goes to the highest bidder. Cathay Pacific, for instance, auctioned off an NBA jersey autographed by Kobe Bryant for 90,000 miles. Delta auctioned off a Habitat for Humanity Homebuilding trip to Thailand for 401,001 SkyMiles.

© 2012 CBS Interactive Inc.. All Rights Reserved.

• Kathy Kristof
  >> View all articles
  Kathy Kristof is an award-winning financial journalist and the author of Investing 101.

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5 Traits of Highly Successful Salesmen

Are you cut out to make the sale? Make sure you've got these characteristics--or else learn to develop them.

Inc.com
By Geoffrey James |  @Sales_Source   |  Jan 27, 2012


… Buyers and sellers are emotional human beings, which is why great salespeople are always masters at managing their own emotions. Based upon my observation (and some pretty hefty research in emotional intelligence), highly successful salespeople cultivate the following five emotional traits:


1. Assertiveness
This allows you to move a sales situation forward without offending or frustrating the customer. … For example, suppose a customer is delaying a decision. There are at least three basic responses:


Passive: "Could you give me a call when you've made a decision?"
Aggressive: "If you don't buy right now, the offer is off the table."
Assertive: "Can you give me a specific time and date when you'll make your final decision?"

The passive response puts the sale on hold indefinitely (or give your competitor the opening to outsell you). The aggressive response creates pressure and resentment: … The assertive approach sets up the specific conditions for the close, without forcing the customer's pace.

Image via Wikipedia

2. Self-Awareness
You need to be able to identify your own emotions, understand how they work, and then use them to help you build stronger customer relationships. This is a four-step process:

• Identify the emotions that you're feeling,
• Based on experience, predict how those emotions will affect your sales effort.
• Compensate for negative emotions that might hinder the sale.
• Expand your positive emotions that might help you make the sale.

For example, suppose you feel furious that an important customer stood you up. You might take a break before your next meeting in order to remind yourself of all the times you've succeeded in the face of challenges. Or you might, as an ice-breaker, tell your second customer that you're having a tough day and why.


3. Empathy
This entails adapting your behavior to the customer's moods and emotions. … You must be able to feel what the customer is likely to be feeling.

Suppose, during a sales call, you discover that the customer's firm just announced major layoffs. …

… [If] you want to build a better relationship, you'll be empathetic and imagine your contact's sense of fear and confusion. Then, depending on your emotional reading of the customer, decide whether the customer would prefer to commiserate, complain or (alternatively) be distracted from the situation.

Image via Wikipedia

4. Problem Solving
The desire to solve a problem helps you create new ways to satisfy the customer's needs, both financial (the ROI of your offering) and emotional–such as the customer's need to be convinced that your and your firm are reputable and reliable. Problem solving is a four step process:

• See the customer situation as it really is. (Never try to solve a problem before you fully understand it.)
• Help the customer visualize a more desirable situation.
• Devise a way to move the customer from the ways things are today to the way the customer would like them to be.
• Communicate that solution in a way that makes it easy for the customer to make a decision.

While those steps might seem obvious, they're the exact opposite of old-school salesmanship, where selling entails "giving a great sales pitch."


5. Optimism
Optimism helps you maintain a sense of balance when things go awry. … For example, if the first sales call of the day goes poorly, your performance for the rest of the day will be different if you have this rule...


A bad first call means that I'm off my game this will be a bad day.
... rather than this rule:
Every sales call is different, so the next will probably be better.

… [If] you automatically jump to the first rule, rather than the second, it will be difficult for you to remain happy.

This principle works on bigger events, too. I've run into about a dozen top salespeople who saw the weak economy as an opportunity to sell even more,and did so, while their colleagues were busy hand-wringing. …


This column is based on an interview with Robert Scher, president of the Scher Group, a sales performance improvement firm. (He used the term "happiness" for what I call "optimism," but it comes out to the same thing in the end.)

Geoffrey James

Geoffrey James is an award-winning journalist and author of Inc.com's Sales Source column. Previously, he wrote Sales Machine, the world's most-visited sales-oriented blog. James has written hundreds of articles on sales and marketing for publications like Technology Marketing and SellingPower, and has helped thousands of sales professionals communicate more effectively with customers. To get column updates, sign up for his weekly "insider" newsletter or his @Sales_Source Twitter feed. James' newly published book is How to Say It: Business to Business Selling.

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