The Art of the Sale – Book Review and Notes

Author Philip Delves Broughton followed up his entertaining book about his time at Harvard Business School with his book “The Art of the Sale.”  As Broughton notes, sales are key and core to every business, but little attention is every paid to the act of making a sale.  MBA students study marketing, which is an input to sales, but nothing discusses how you convince someone to buy your product.

Broughton’s book attempts to look at the deeper reasons that go into a great salesperson, and why people buy.

In all, it’s an entertaining read.  In my view, it could have used a tighter structure and editing, as it rambled a bit and often times made it difficult for the reader to see how the pieces fit together.  Below are a few key highlights and thoughts from my read.

  • The Master Salesman

    • Best example he saw was Majid – Salesperson in Morocco
    • Through presentation and storytelling and understanding the desires of his customers, he could create value and set prices beyond the dreams of neighboring stores
    • “You have to have loose robes” – never get upset
    • Do not avoid rejection, but see it as a vaccine that strengthens the ability to resist the personal battering inevitable in a life in sales
    • Avoid questions that can elicit the answer no
    • Accurately perceiving the motivations of a customer is just as important as understanding what product they want
  • The Pitch

    • 3 main steps in sales process
    • First – get your audience’s attention with an event or challenge that throws them off balance
      • This upends the everyday routine and a problem stands in the way
    • Second – struggle to solve the problem
    • Last – resolution – call to action
  • Soul of a salesman

    • Most significant predictor of performance in sales is role perception – how did a salesperson feel about what they did
    • The most complex sale and salesperson is someone who sells intangibles – advertising or education services, for example, where the product is not easily demonstrated and must be conjured up in the prospect’s imagination
    • Good salesperson does 3 things
      • Seduce prospect
      • Provide logical justifications for buying
      • Pressure to close
    • It is a wooing process
    • “Failure must act as a trigger – as a motivation toward greater effort – which with success will bring the ego enhancement they seek.  A subtle balance must be found between (a) an ego partially weakened in precisely the right way to need a great deal of enhancement (the sale) and (b) an ego sufficiently strong to be motivated by failure but not to be shattered by it
    • Profile of Mrs. Shibata of Dai-chi Life Insurance
      • Top life insurance salesperson in all of Japan
      • People buy life insurance out of love for their family
      • ‘this is how I contribute to society. If its just about the money – I have more than I can ever spend.  But families need the backup provided by insurance.  This is about me and how I can help people.’
      • ‘Selling is very hard to teach, because it’s about what exists in your head and what goes on in your whole life.  If you keep your friends and respect your parents, the benefits of that come back to you in this life.  It comes back as income you can see.  The objective in sales becomes the same as that in the rest of your life, to respect others and do the best for them.  Then you don’t have to be a salesperson about what you do.  Selling becomes an activity consistent with who you are.”
    • Norman Levine – another top sales person
      • The key to a sale is an interview, and the key to an interview is a disturbing question
      • A favorite line – “you’ll have the same problems when I walk out as you had when I walk in …unless you let me take your problems with me
      • Vary pitch based on what customer wants solved
      • You must know what they want – find via empathy
  • Other Misc Thoughts

    • Any industry where persistence is required to overcome adversity – a sense of optimism is vital
    • 4 steps –
      • Identify self-defeating thinking and the events that prompt it
      • Gather evidence to support or undermine the fear inhibiting us – decatastrophize the event
      • Distract ourselves from nose-dive of negativity
      • Treat internal criticism as if they have been uttered by an external rival whose mission in life is to make you miserable and to dispute that rival


Emulate, Don’t Fear the 3G Way – Notes from Dream Big by Cristiane Correa

We recently finished reading, Dream Big – Cristiane Correa.  Originally published only in Brazil, Dream Big is the story of 3G Capital, the now owners of Budweiser, Burger King, Heinz, etc.

3G’s operating model of extreme cost discipline to drive free cash flow, driving further investment in brands and growth is garnering, rightfully so, a lot of attention in the private equity world. Our view is all managers should look at their lessons and see how they can apply them best to their operating businesses.

A common misconception is that 3G is only about cost control – but as Dream Big shows, that really isn’t true.  The cost controls are about freeing ‘stored capital’ that is sitting in an unproductive format and using it to drive results where it really matters.  This approach is reminiscent of Sam Walton’s cost discipline which he used to drive the Wal-Mart economic model.

A few salient notes / thoughts from the book are below:

  • 3G’s start – Jorge Paulo Lemann, his partners were Marcel Herrmann Telles and Carlos Alberto Sicupira, and their company was the investment bank Garantia.
  • From the very beginning, their primary investments have been in people, especially young and talented leaders
  • An obsession with getting the right people, investing in those people, challenging those people, building around those people and watching those people experience the sheer joy and exhilaration of achieving a big dream together
  • First, get great people; second, give them big things to do
    • Dream + People + Culture – into a powerful concoction, they created a recipe for sustained success. The culture rewarded performance; if you could make a significant contribution, and deliver results, within the boundaries of the culture, you would do well
  • We built our company, then that would be the very best way in the long run to generate wealth.
  • I learned that the best sign of true wealth is an uncluttered calendar, with time available to focus on the most important priorities.
  • Get great people, give them big things to do and sustain a meritocratic ownership culture
  • Understand how much time you have to make decisions, use that time to make the best decisions possible and maintain a sense of calm.
  • Not only that, he found ways to connect great people with other great people
  • People who know me and my companies know that I always say that, “having a big dream brings as much work as having a small ones”
  • The second was that a business needed good, well-remunerated people, even in those departments that were unglamorous or did not turn a profit.
    • But the bonus could amount to four or five extra salaries, a potentially huge amount of money at that time.  To encourage people even more, the bonus was paid twice a year.
  • Garantia –
    • Commission workers received a small percentage of the company’s total profit.
    • “From the bank’s earnings, 25% was distributed as profit sharing, 15% as dividends and 60% was capitalized,” said Baptista. “It was a doctrine that could not be changed.”
    • While Garantia staff could become owners, reaching the top came at high price. The bank did not give an equity stake to the new partner but sold it.
  • Lojas
    • Its market value at that time did not even amount to US$ 30 million – a fraction of the company’s real estate holdings of almost US$ 100 million alone.
    • Also gave all the Garantia partners the chance to become owners of Lojas Americanas, regardless of whether they were involved in the business.
    • “It’s easier to rein in a guy who’s crazy than push someone who is slow,” is one of his favorite phrases.
    • Garantia had spent US$ 24 million to acquire 70% of the retailer. Six months after the purchase, as the operation improved, it had attracted investors who were prepared to pay US$ 20 million for a stake of only 20% of the company.
    • The three believe that to be a winner, a company has to recruit good people, preserve meritocracy and share the success amongst the best performers.
  • Beer
    • “Tropical country, hot climate, good brand, young population and poor management…
    • Prior to 3G’s involvement
      • The company’s administrative expenses jumped from 12% to 17% of its net operating revenues between 1988 and 1989,
      • Executives spent most of their time preparing overblown reports and taking part in meetings that rarely decided anything.
    • After 3G:
      • The walls of the directors’ offices were torn down and gave way to a big table they all shared.
    • One of the initiatives put into practice straight away was to hold speeches in prestigious universities to try and hook young people before they graduated.
    • “This hiring of 40 to 50 young people every year is what made the difference,” said Rodrigues. “When you take a boy of 25 and make him a manager, this inspires all the younger ones.”
    • 35% of its employees (the best, obviously) received a bonus of three to nine extra salaries,
    • Establish standards for each plant activity and measure everything. Only products that met the standards would go to the market.
    • if the plant did not meet 50% of the quality targets in the first year, no-one would earn a bonus,”
    • “We are creating new processes so that the workers feel they are better appreciated, as variable remuneration, on its own, has not been enough,” he said. “Now we are doing everything to celebrate. If the guy has completed 10 years with the firm, you have to mark the occasion in some way. We have learned that we need to celebrate.”
    • “You and your team should do absolutely nothing in the first year that has to do with the business,”
    • “Only do sensible things while you learn how the company works. If you start doing things related to the way the business operates as such, there is a good chance of making a mess of it.”
    • Within four years, the cash generation expanded by 18 times and the company started making a profit.

The Top 10 Lessons from the book “What I Learned Losing a Million Dollars”

I just finished reading “What I learned losing a million dollars” by Jim Paul and Brendan Moynihan.

This book is the excellent story of a young man who was a successful commodities trader who was entirely wiped out in a period of 6 weeks or so.

Per our usual format, we have pulled out a few interesting snip-its from the book in summary or quote form.  We would highly recommend picking up your own copy of this book.

The Top 10 Ideas 

  1. “Personalizing successes sets people up for disastrous failure.  They begin to treat the successes totally as a personal reflection of their abilities rather than the result of capitalizing on a good opportunity, being at the right place at the right time, or even being just plain lucky”
  2. Some portion of clueless beginners will get it right simply by chance – for a while.
  3. Trading, as far as I know, is the only endeavor in which the rank amateur has a 50/50 chance of being right
  4. “If you start from scratch and have a run of successes, you are setting yourself up for the coming failure because the successes lead to a variety of psychological distortions.  This is particularly true if you have unknowingly broken the rules of the game and won anyway”
  5. “The successes in my life had given me a false sense of omniscience and infallibility.  The vast majority of the successes in my life were because I got lucky, not because I was particularly smart or better or different.  I didn’t know it at this point in the story, but I was sure as hell about to find out.”
  6. “The pros could all make money in contradictory ways because they all knew how to control their losses.”
  7. “Participating in markets is not about being right or wrong, nor is it about defeat, it’s about making decisions”
  8. “Internalizing an external loss is a lot easier to do with the other type of loss-producing activity: a continuous process [vs. a discrete one like a basketball game]  – an activity that has no clearly defined end.  Losses from continuous processes are much more prone to become internalized because like all internal losses, there is no predetermined ending point”
  9. “Regardless of you [profit] methodology, before you decide to get into the market you have to decide where (price) or when (time) or why (new information) you will no longer want the position”
  10. “Participating in the markets is about making money; it’s about decision making implemented by a plan. And if implemented properly, it’s actually quite boring waiting for your buy/sell criteria to materialize.  The minute it starts getting exciting, you are gambling”