Chicago Booth Review Podcast Why Sales Skills Are Life Skills

Episode transcript

Hal Weitzman: How good are you at selling, or do you think you don't need to be? Our guest today would like you to think again. Welcome to the Chicago Booth Review Podcast, where we bring you groundbreaking insights in a clear and straightforward way. I'm Hal Weitzman. And today, I'm talking with Chicago Booth's Michael Alter, who wants us to think about sales as less about convincing people and more about listening to them. Michael Alter, welcome to the Chicago Booth Review Podcast.

Michael Alter: Hal, thanks for having me.

Hal Weitzman: We are delighted to have you. You've been teaching sales at Booth for a long time, and we haven't had a chance to talk to you yet. So this is important. First of all, sales. People have a lot of negative prejudices, including me. "You're being too salesy. Don't say it like that." Why do we have those, and what are we getting wrong?

Michael Alter: Well, I think the connotation when we think about sales is someone's going to force me to do something that I don't want to do. Right? We think about the typical used car salesperson on TV or when you walk into a showroom like that. And it's certainly a form of sales, but it's not really the sales that we think about and I think is so critical for anybody.

Sales to me is all about communication. And when you think about sales, sales is just another word for persuasion and, "How can I persuade somebody to do something else?" And a lot of times, when you're persuading someone, it's not about pushy, pushy car salesman. It's about really understanding what their need is and then helping to communicate how you can help solve that need or that problem. Right? There's an old adage which is nobody likes to be sold, but everybody loves to buy. And if you think about your role in sales then, it's much more about being a guide to help someone to buy than it is to push them in that sort of salesy format we see on TV.

Hal Weitzman: Fascinating. Okay. So you teach sales skills to people who are not necessarily going to be selling even. So why is it important for people who don't have a formal sales role to learn how to sell?

Michael Alter: Well, I think, again, if you think about sales as a communication tool and a persuasion set of skills, it really matters, because in anything we do, whether we're in business or not even in business, we're selling in 360 degrees. Right? I teach the entrepreneurial sales class. And so, when we think about the 360 degrees that you have to sell, I have to sell someone to give me money, if I'm going to raise outside money.

I might have to sell a supplier to allocate some of their business that's already... They're already selling out somewhere else. I need some of their capacity. So I got to get them, "Hey, give me some of that raw materials." I have to convince the outside world, the media, the analysts out there that what we're doing is good and the industry we're going into is good. So I got to sell them.

Obviously, I got to sell a customer to make any revenue, and then I think probably the hardest sale in the world, at least in the entrepreneurial world, is I got to convince some employee to leave their good job where they have a strong reputation, reasonable hours, low risk, good money, and say, "Hey, why don't you come work for me for a lot more risk, a lot less money, and a lot more hours? It's a great opportunity, right?" And that's a sales opportunity. And so, when you think about it in just about anything we're doing in life, we are trying to communicate and get someone to do what we want in sales.

Hal Weitzman: But you're particularly talking there about an entrepreneurial context where someone's got a new startup, and I can see they're in that environment. First of all, there aren't the staff. They've got to do everything themselves. And second, there's a lot of evidence, isn't there, that people tend to back the kind of founders who are charismatic, who can express themselves, as well as people who have good business ideas, of course. What about in a more established... Most of us work in more established organizations. What are the typical contexts where the kind of skills that you train people to look to to develop are useful?

Michael Alter: Well, I think they're 100% applicable. I just picked an entrepreneurial example, because that's what I do day in and day out. But if you think about being in a large organization, you're sitting in a meeting, and you've got a point of view in terms of what you think the organization should do. How do you voice it in a way that you marshal the others in the room to go in the direction that you think is the right direction for the business?

And if you just sort of tell them we're going this way, maybe if you're senior enough in the organization, you can do that, but most folks in the organization don't have that sort of authority, and most organizations don't really run that way anymore. And so, you have to be able to communicate and persuade. And really, what you're doing is you're selling your teammates on why your direction is right. We do that all the time. If I want my kids to take out the garbage, I kind of have to sell them to do it. Right?

Hal Weitzman: Oof. That's a very hard sell. So I know that you feel like curiosity is very important. That's sort of the basis of good selling. Tell us about curiosity in practice, and what have you seen? What are good curiosity techniques?

Michael Alter: Well, curiosity to me is really just you're interested in other people. Right? I had a great aunt that used to say that interesting people are interested, and those are the people that you wanted to engage with most. And so, I think if you're going to have a conversation with someone, try to help solve their problem, you really have to be curious about what their problem is and what are the implications of that.

And then once you really understand what it is they're trying to solve, it's a lot easier to solve it. And so, what curiosity to me in practice is, is someone who is both a great questioner and a great listener, and the difference is you're not questioning like in a court of law where it's an interrogation and it's a lot of yes or no questions, and you always know the answer to the question you're going to ask.

It's almost 180 degrees different. It's questioning because I want to learn about you, and I'm genuinely curious about what challenges you face or a particular problem that we're going to talk about. And so, I'm going to ask a lot more open-ended questions. I'm going to ask a lot more follow-up questions, and I'm going to flow with a conversation instead of I got to start out and do discovery, then I got to figure out what their needs are, and then I got to push my solution and get them to buy. Right? I don't think that really works.

Hal Weitzman: So just dig into that difference a little bit more. So you're talking about a traditional sales route, the second one, or what we think of as a traditional sales route, which is discovery, meaning I just find out what's going on, what the problems I can solve, and then I can shove products your way that will solve those problems, and you're saying that's not right.

Michael Alter: Well, I'm saying the steps and the process step is probably the same. Right? There's a discovery process, and then there's a solution process. But the difference is, when you go into it with, "I'm really looking to discover they have these three pain points, because my product solves these three pain points," versus "I'm going into it to understand what are their pain points." I don't really know what is-

Hal Weitzman: Does that mean, if you're trying to sell a service or product, that you might come out thinking, "Actually, I'm not going to be able to help"?

Michael Alter: Absolutely. Absolutely. And what builds more credibility in a sales situation than when you listen to someone's problem and you say, "You know what? I don't actually think we're the right answer. You ought to go over here." You'd earn so much credibility-

Hal Weitzman: Does that make them want you even more?

Michael Alter: Sometimes, but it certainly gives you a lot of credibility when you do come back to have a conversation with them as their business evolves or as your products evolve.

Hal Weitzman: Okay. So at the beginning, you talked about all the negative stereotypes we have, and you said that they're legitimate, because they relate to some kinds of sales. Is that what distinguishes bad sales or negative sales from positive sales, the curiosity? Is that the technique that you find in good salespeople versus bad salespeople?

Michael Alter: I think it's one of the important skill sets that you have to come with or characteristics. Right? To be genuinely curious about somebody else, I think, is really critical, and I think it's critical in any kind of communication. Therefore, I think it matters in sales. There are some other things that really matter, and the other side of the coin about being curious is you have to be a great listener. Right?

And sales to me is much more about asking, not telling, and that's sort of completely contradictory to a lot of, again, at least what's portrayed on TV and how we think of selling. Now, sometimes you're just hawking a particular product. You got this product. Maybe it's water, and you're right outside of the Wrigley Field, and there's going to be a Cubs game, and it's 90 degrees. You don't really need to do a lot of selling there. Right? You're just, "This is what I got. This is the price. You want it or not?"

But in today's world, a lot of the selling that people are really doing and the communications that they're having, whether they're actually selling or whether they're just operating in their business, trying to get the warehouse to move a little faster to get the product out to a customer faster or some other situation, a lot of that is all driven by the need to really understand and the need to be a really good listener to understand what those problems are.

Hal Weitzman: Mm-hmm. Okay. What else separates good sales and bad sales?

Michael Alter: You certainly got curiosity.

Hal Weitzman: Listening skills.

Michael Alter: You've got listening skills. You have what I would call some domain expertise. And so, you understand a bit more about what the problem is that you're solving. It usually gives you a little more credibility in doing that, and then some of it is also a willingness to do the activity and to work hard. Sales is not often just sort of a one-and-done sale, and it takes some perseverance.

You will almost inevitably get an objection in any kind of real sales process. And so, you ought to look on that as, "Well, if I got an objection, I either didn't communicate something right or I didn't understand something right." And those are good things, because we want to end up in the right place in the end. So those are the things, I think, really make for a great salesperson.

Hal Weitzman: Okay. Well, I want to think about objections in a minute, but first of all, it makes me wonder. I think I've heard the adage, if they're talking, then that's the way to be selling or something like that. I mean, I didn't express it very well, but the more that your customer is talking, the better things are. Is that right?

Michael Alter: Yeah. Well, because, I mean, part of it, if you believe that most of what you really need to do is to understand what the problem is you're solving, then when you're talking, you're not learning anything new. When they're talking is when you're learning stuff.

Hal Weitzman: Right.

Michael Alter: And the way you differentiate yourself from one salesperson from the next, because they've all been to sales training, is you ask better questions and you listen more, and that only happens when the other side's talking more.

Hal Weitzman: Just so I understand, so the kind of sales you're talking about, which is really good conversation skills, good problem construction skills, is that different? If I were a secondhand car salesman and I come to say, "Michael, I need some training," would you give me the same advice? Because there's a lot of videos on the internet. There's a lot of training that is the old school, very aggressive, "Yeah. You're going to walk out today with this F-150 truck, and we're going to give you this deal, and this is going to be the best thing you've ever done, and you don't need to make any calls. You don't need to think about it. Decide right now." Is that not the way you would sell that, or is there any role for that kind of sales at all?

Michael Alter: Well, I would say that I think sales is situational, and there are different types of sales for different types of roles. I don't necessarily think about it in terms of the high-pressure sale, sort of the boiler room, as we know it, that you're talking about, but we do see that just there's a big difference between entrepreneurial selling and established selling and growth-stage selling in a company.

And there's also differences in when, if you got a transaction and you want to do a high-pressure sale and you're okay with that, I could see somebody wanting to do it. I tend to think that's not how I want to make a living, and that's not how I would want to do it. And I think if two people are selling a car that you can get there without being always the pressure, always the tactic, then you might be hearing in the example that you just did.

Hal Weitzman: Okay. But you wouldn't personally want to do high-pressure sales because you don't enjoy that environment or because there's something negative about it? Is it because you're kind of hoodwinking the clients a little bit?

Michael Alter: I think you are at times. You can be putting somebody into something, a product that they don't need. And I think long term, that's a challenge, because if I ever want to sell something twice, if I didn't do a good job or I let you down or I sold you something you didn't need, I'm done, and I think that the world is small and that what goes around comes around a lot.

And so, just pushing a sale on someone as a transaction if they don't need it, I think, can cause you a lot of problems as you're trying to build and scale a business, and even if it's a used car dealership, right? If I get a reputation as the guy that puts you into the crappy car, how likely are you to go there? How likely are you to tell your friends to go there?

And now, maybe 20 years ago when information wasn't quite as available and I couldn't look online and see all the cars in the neighborhood and what all the prices are and compare them and know what the right price was, they had some information asymmetry, if you will. And therefore, they could be in a much higher-pressure situation. But today, if I walk into a car dealership, the buyer usually has more information than the seller. And so, therefore, giving me a shot clock and some of those other high-pressure tactics, I think, are less likely to be effective.

Hal Weitzman: Michael Alter, in the first half, we talked about selling and how you teach selling and how the type of selling that you teach is different perhaps to our stereotype, the negative stereotype about what sales is. Different contexts require different kinds of sales techniques. Right? You talked earlier about when you're an entrepreneur, that's different to if you're running a multimillion-dollar corporation. Tell us about some of those differences and the situations. The sectors are different. So just tell us about some of those differences and how you would think about addressing those.

Michael Alter: Yeah. And maybe if I could even back up for a second, when you think about sales to me, there's really two dimensions to it. Right? There's the sort of behavioral skills that you have that are deployed in a nonlinear way, and then there's what I'll call the process and the math, and I think the process and the math is relatively consistent, and it starts out relatively simple, and you can make it more and more sophisticated. You just think about a simple funnel.

We start with leads in the top. We qualify out some of those leads maybe to a proposal, and then we win some of those proposals. We get them as customers, and then we sell them ongoing services. And you can put all sorts of math and metrics against that. You can put all sorts of AI tools against how do we manage it, what's working, what's not working, really important part of selling.

But in terms of what I teach here at Booth, it's much more on the dynamic, nonlinear skills that you're deploying, these sort of behaviors that you learn to deploy nonlinearly. And so, when you think about that and then you start to put into different sales environments, sales is not ubiquitous. It's not one salesperson can be good in any role.

And at the same time, when you think about that one salesperson being not good in any particular role, the answer and how they get there can also be different. Right? I say to my students all the time, one of the things you may hate about my class is, it's not like a finance class where if you didn't get the NPV as 14.28%, you failed. Right? Lots of people, reasonable people can get to the same answer in a different way. And so, what that means is you really need to teach a set of skills and teach people how to use them.

And so, if you then step back and you say... If you think about the world, we've got startups. We've got growth-stage businesses, and then we've got established companies. Right? And I'm certainly oversimplifying, because you have aspects of those in a large company as well. But then when you think about that, the skills that you need in an early-stage business, what we call the entrepreneurial sales side of the house, are very, very different than you need in that established business once it's running.

And so, some of that has to do with certainly on the math side. We don't have a lot of math to know how do we sell this product, and we haven't had a lot of at bats to know what our close rates is and all those maths. So the funnel process is important to track, but we're still learning, and we're sort of comparing to the trend.

Did we get better in absolute terms or not? Because we're trying to understand those parts of the funnel, whereas in the established organization, we got 50 years of data. We know that if you don't knock this many doors or you don't make this many emails, what's going to happen? Right? And if you don't have this many proposals or this much coverage in your pipeline, it's not going to work. And so, we can manage it a lot tighter.

What also happens is, in an existing business, say IBM, I spent a few years of my career at IBM, they have a pretty good idea of what they need to do to be successful, because they've been doing it for so many years. And so, they understand the skill sets they need to hire, the activities you need to take, and, in a sense, the tools that you need and all of the infrastructure. So you sort of sit at the top of a pyramid as a salesperson at IBM running a process, which is not an easy process.

You've got to build trust. You're working with millions of dollars trying to convince somebody to buy your product, but you also don't have a lot of ambiguity. Right? You don't have a tremendous amount of pricing authority. You don't have enough product strategy authority. I don't get to pick what colors the computers come in, and I don't even get to define what the contracts are.

And so, I am running a play in a defined set of customers. Right? They told me what my territory is. They tell me what my comp plan is. So what makes somebody good in one of those environments is they're really good at running a play that looks like the last play. Right? And so, once I sell one customer in my industry, in my target, the next customer kind of looks like the last customer and so on and so on.

And so, I get really good at running a playbook without a lot of ambiguity. Right? I'm building trust. I'm solving problems, and it's rinse and repeat. And it's a really important set of skills, and it's a really important process, and I have a lot of metrics that I can use to go against it. And there are people that sort of excel in that world and love that world and love that sort of, "You hired me. I can make a lot of money if I'm willing to do the effort, and you told me what I need to do to be successful, and we just need to do it." Right?

You sort of go to the other extreme, "I'm going to start a business. We got some AI software product that we're going to try to sell a big company. We want them to bet, I don't know, $2 million in their career on our product works." The kind of salesperson there is almost the exact opposite of IBM, because we don't actually know what we're selling. We've never sold it. We're not quite sure what the pain points are. We're not even quite sure how the prospect is going to think about the problem.

And there's a tremendous amount of ambiguity. I'm not sure how to price it, what my absolute price is, and should I price it by user, by consumption, by month, by company? How do I actually get a meeting, and what's the sales process like? At IBM, in a particular case, you might have to do a discovery document, then you might do a demo, and then an ROI analysis, and we're good to go. Right? Do we need that? I don't know. Right? And to what degree do we need it? And if we need it, what does it look like?

So what it means is, your entrepreneurial sales rep is someone who sort of loves the problem-solving and the ambiguity of not knowing what the answer is when they start, but they're all about really learning and understanding what that customer needs, and they're great at helping you get those first couple of sales, and the entrepreneur has to be actively involved in that process.

The challenge comes when you go to get your second sale. They pull out a brand-new white piece of paper, and they say, "Okay. Let's start all over with everything, because you're a completely different customer than my last customer." And that works for the first couple of times, so you can figure out how to get some sales. But now, when you try to scale that, you tend to have a conflict, because that salesperson wants to look at everything as brand new and the ambiguity of starting from scratch, and your economics don't work unless you can start to rinse and repeat and scale that.

And so, you need to make that transition in your organization from these entrepreneurial folks who love the ambiguity, love the problem-solving, also building great trust into someone who's now saying, "Okay. Here's the activity. Here's the rinse and repeat. Here's the structure, and here are those metrics and process funnels that we have."

Hal Weitzman: Is that the point at which entrepreneurs should hire outsiders to do their sales then?

Michael Alter: Well, I think, again, being situational, it's going to depend on the kind of business that you're building and when you're building it. If I'm an entrepreneur and I've been in an industry for 20 years selling cameras, and now I'm just starting out on my own and I'm opening a camera store, I probably know what the process is. I might not have the brand. I might not have the pricing, whereas a lot of entrepreneurs today are building something that nobody has ever seen or heard of. That's when you really need that skill more.

Hal Weitzman: Okay. So I want to turn to the how. What are some of the basic techniques that we should understand that are going to be useful for us regardless really of where we work? Because you said this is useful in every context. I understand that the context is important, but what are some... You talked about the skill of asking open-ended questions, the skill of listening. Talk to us more about some of those basic skills.

Michael Alter: Yeah. Yeah. I mean, and I think I would say there's probably three basic skills, and there's a lot of them, and any sales training program will teach you some of these things in some way, and they're pretty straightforward. It's just, in a quiet room, they seem pretty obvious, but in the real world, when you're interacting with somebody else, it's a lot harder. Right? I joke I'm a golf pro. Right? It's easy to teach golf on the range. It's hard to do in practice.

And so, some of those would be qualifying, discovery and questioning, and then the third one would be closing. And so, qualifying is just a simple technique, which when we don't do it, we get in a lot of trouble, and it's this idea of understanding not is somebody going to buy from you, are you going to win, but are they qualified to buy from you? Right?

And there's lots of different ways of thinking about it. Do they have time? Are they going to make a decision in a near-term time frame? Right? Do they have budget to buy what I'm selling? Right? Do I understand what the decision process is? These types of questions that are really important to understand. And so, we see it all the time in sales, but we see it in other places.

I'm involved in an organization where we're recruiting a new CEO. Well, we worked with a recruiter to find the CEO. We get all the way to the end, and we can't even get close on comp. Shame on us. We should have qualified early on as to what that potential CEO's comp expectations are so that when we get to the end, we're not trying to bridge, "Well, you know what? We've got a great story here. We've got great equity upside. If there really are CEO, we'll be able to get them excited." And the CEO on the other side is saying, "Hey, listen, if they really want me, I'm going to be worth a lot. So I'm not going to talk about it now." And so, in the end, both sides wasted a lot of time to end up in a position where we shouldn't have been.

Hal Weitzman: So it's obvious in that case that you would say to someone, "This is the salary range we're looking at. Does that sound like the kind of thing that would be acceptable for you?" How would you do it if you're selling a product or service though? You say, "Right. I understand what you need. You're looking for us to come and, whatever, supply lunches for the next two years." What are you saying? What is your budget? Because that question, people are always asking you what your budget is.

Michael Alter: Well, that's the reason they're asking you what your budget is. Right? And so, you certainly should be asking some question around that, but it's a question of how do you ask that? Right? And there's other ways of asking it.

Hal Weitzman: What's a better way of asking them, "What's your budget?"

Michael Alter: Well, I think you could... And again, it's going to be situational in terms of what we're selling and what we're not selling, but I think there are different ways to directly ask that same question, and sometimes you can ask that question, which is, "Hey, I don't want to waste your time, and I don't want to waste, quite frankly, my time. So what is the budget range that you're thinking about? Because if we spend six months thinking through whether this is the right product for you, and in the end we have a big mismatch on budget, it's not good for you and it's not good for me. So I'm not trying to negotiate here and get, 'This is the final answer,' but I am trying to understand from you, are we in the range that makes sense? Because I don't want to waste your time." Right? It's one way you could think about doing that.

Hal Weitzman: Right.

Michael Alter: Right?

Hal Weitzman: Okay. So qualifying?

Michael Alter: Qualifying. Really important, really critical, lots of ways. And quite frankly, it happens in just about everything we're doing in life. We just need to do more of it. Second one, I think, is the power of questions, and we undervalue questions in conversations, and especially in selling, because we think we need to sell, which is to tell as opposed to question.

And we talked earlier, then there's open-ended questions where you're learning something, and there's closed-ended questions where you're sort of getting a yes or no answer, and I sort of think about that like fishing. Right? I'll throw out a line. It's an open-ended question, where I'm looking around for the fish. Once I get a bite, I want to hook that fish. So I'm going to ask a couple of rapid, closed-end yes or no questions to sort of bring them back in.

And so, the techniques of using these different questions are really important. But what questions do is they really drive three things, and the three things that you need in sales. If I want someone to buy something from me or do something, if I'm not selling, but I'm in a work situation where I got to convince or persuade, I need to understand the problem and the situation. I need them to like me, because people tend to buy from people they like, and I need to have some influence over them.

And so, we always think that I have to talk and prove that to you. But the reality is, and there's a lot of research done by this professor, Alison Wood Brooks. I think she was at HBS. There's a number of other folks that have done research in this area. But what they find is, when you ask questions of somebody, you drive those three things. You drive learning. I mean, it's obvious. Right? If I ask you a question and I learn your answer, I learned something. Right?

You drive likability. And one of the ways that they've proved this over time is they did a study on speed dating, and what they found is, who got asked to go on a second date? The person that asked the most questions. And again, it makes sense, because if I'm on a date, the more I get to talk about me, the better the date. Right?

And so, when we talk about ourselves more, we like the other person, because we like the conversation better. So they drive likability, and then they drive influence. And they did an analysis looking at Gong.io data on sales calls, and it's a sales enablement tool, and they looked at over 50,000 calls to understand how likely were you to get the objective, and how many questions did you ask?

And what they found was, for the most part, the more questions you asked, the more likely the salesperson was to get their objective. A little counterintuitive. Right? Now, I'm sure there's a diminishing point where you're asking too many questions, but most of us are probably not asking enough. And so, if you think about it, I'm trying to drive learning, what's the problem, trying to drive likability, and I'm trying to influence. The single best way to do that is not to tell them how great you are, but to ask great questions. Right?

Hal Weitzman: Excellent. Okay. So now, I want to push you to closing, because this is the hard part, and we have to close in a minute. So tell us about closing. How do you close? Because that's the thing, I think, a lot of people find very hard.

Michael Alter: So, I mean, to me, closing is not rocket science. Right? There are all sorts of different techniques people will teach you how to do, how to close, and you can decide to use them or not decide to use them. But in the end, you just have to ask for the order. Right? And as I say to my students, I don't know anyone who's married today where there wasn't a proposal. Somebody asked the other one to get married. That's what you have to do when you're selling.

And so, you just can't be afraid to ask, and you have to ask in a confident way. You can't be wishy-washy. And what happens is, you know what? If you get a no, you're now into objection handling mode, and that's a good thing. And so, sometimes even if I ask too early, I close too early, they'll object. And if I question on that objections, I might learn the only two hurdles I need to get over as opposed to the six I thought I had to solve for. But there are very few times in life where somebody just says, "Yeah. I'm ready to buy. Let's go." Right? You got to ask for the order. And when you don't, that's when you get into trouble.

Hal Weitzman: Okay. All right. Well, Michael, we could talk about this all day, but unfortunately, I have to close now.

Michael Alter: Right.

Hal Weitzman: So thank you very much for coming on the Chicago Booth Review Podcast.

Michael Alter: Thanks for having me.