Crucial Conversations in Agribusiness

 

Strategies for approaching difficult conversations with customers

 

Originally published in Wisconsin Agribusiness Association Magazine – Fall 2017

Ken was a hard-working livestock producer that I sold feed to for about 15 years.  A second-generation producer in his late 50’s, he expanded the operation 3X over what his parents farmed.  Over the 15 years, I worked with him, I never had any reason to doubt his financial stability.  Yet, here I was.  Sitting in his office engaged in a Crucial Conversation.  Times had changed and so had Ken’s financial picture.   It wasn’t making sense to extend him credit any longer.   As an unsecured supplier to Ken’s farm, we extended credit with no collateral.  Collecting accounts receivables was purely based on his good word and my ability to get a check.

Going back a bit in time to twelve years prior to this conversation, we had gone fairly deep in debt with Ken.  He ran into a cash flow crunch and needed 90 days to get to the other side of the crunch.  We extended the credit, which he used every bit of.  At the end of those 90 days, he began the repayment plan just like we agreed to.  From that day forward, Ken was a big advocate of ours in his group of fellow producers.  So why then, 12 years later, were we sitting in his office having a different conversation?

Times had changed.  Ken’s financial picture was much different than it was twelve years prior.  Poor decisions in his personal life landed him in a tough financial spot.  Unfortunately, this time, I was at his office to tell him we were not going to extend credit like we did the previous time.  My stomach and chest tightened as I drove to Ken’s office.  What do I say?  How do I say it?

Maybe I could say, “Sorry Ken, we don’t trust you anymore!  Thanks for the business and hope you keep on buying from us, COD of course.”

Maybe I could use that sandwich effect I hear is the best technique for delivering difficult news.  That is where you say something positive, then negative and finish it up on a positive note.  Such as, “You are a truly great customer Ken.  We love doing business with you.  However, from here on out, it’s cash only.  We believe in you Ken and want to help as best we can.” 

With the Ag economy in tighter times now than in the past 10 years, you will find yourself in this type of conversation more often.  It’s not if, but when you do, here are some things that will help.

What makes a conversation Crucial?

  1. Stakes are high
  2. Emotions are high
  3. Opinions vary

What’s your story?

In an event where emotions run high, notice the story that people tell themselves.  Just listen to a friend that is going through a divorce or difficult family situation.  There will always be “their” version of the story.  As a third-party observer, it’s easy to notice that story.  However, as the person in the story, it can be difficult to see the story you are telling yourself.

In their book on Crucial Conversations, the authors tell us the three typical stories people tell are:

  • The Victim Story: This is when you tell yourself that this whole situation is not your fault.  “I am just an innocent victim of the situation.”  In truth, most of the time, we have a hand in the problem.
  • The Villain Story: This story results in us heaping all of the blame on the other person because after all, they are the villain in a black hat.  We even go one step further and assign evil intent on their actions, inactions, verbal and non-verbal communications.
  • The Helpless Story: Similar in nature to the Victim story, except this one has an additional twist of helplessness.  Meaning, you tell yourself, I am a victim and I really can’t do anything about it.

Which are you in and which have you placed the other person in?  Most often, we put ourselves in the victim story.  We were just minding our own business, doing good things and along came this villain.

When you become embroiled in a crucial conversation, it takes a lot of self-awareness to realize what is happening and try to rise above it.  Here are some tips to help:

  • Separate Fact from Story – Separate what you know for a fact is true versus what you interpret as true. Let them share and vent.  Then start asking questions.  People have a natural tendency to embellish when they tell their negative stories.  Let them finish and navigate through the exaggerated story with questions.
  • Admit your own role in the problem – be humble, own up to it and figure out how to move towards a solution. If you are truly innocent of any part in the story, you can admit that you misunderstood or should have been there sooner to help alleviate the situation.
    • In my example, this customer’s credit just got out of hand and he wasn’t able to keep up with terms. While I didn’t really have a hand in his financial problems, I approached the situation with, “I should have been out here talking with you sooner on this before it got this far on your account.  Can we talk about what is going on?”  It’s a small gesture of being a part of the situation.  It doesn’t admit wrongdoing but sets a collaborative tone to get the discussion going.
  • Tell a different story – One that gets you back to dialogue.  It’s tough to have a dialogue when you view the other person as the evil empire.  Realize that you might have made that story up in your head without all the information.
    • In my example, I could have told myself the story that this customer’s out-of-control personal life, lead to his out-of-control work life and will cost me and my company financially.  Maybe that is true, but you need to verify it before basing it all on one late payment or rumors in the industry.
  • Use questions to get dialogue moving – When emotions run high, people often make statements, accusations, and threats. Our response is to immediately refute those accusations, shout our own statements and then make retaliatory threats.  Practice using a different approach.  First, it requires maturity to not react immediately.  Stop, take a breath and “Seek to Understand”.  Questions have a way of disarming even the angriest of customers.  Their mind has to process to answer the question.  This processing shifts their mindset.  If even for just a moment, it allows a slight cooling off moment.  Secondly, it shows you care enough that you are trying to understand.
  • Mirroring & paraphrasing – We have all heard the classic mirroring technique that starts with “So, what I hear you saying is……”. It’s ok, but to me, it can sound patronizing, like you are “putting words in someone’s mouth”.  I like the “To me” approach.
    • For example, “To me, it looks like you want to extend credit with us but you don’t want to sign the agreement to repay it because it feels to you like we aren’t trusting you. Is that a fair assessment of how you feel?”
  • Non-Verbal versus Verbal – Often, the nonverbal messages weigh heavier in the conversation than the actual words (verbal). Secondly, in crucial conversations, the words (verbal) will often get twisted by the other person towards the negative.
    • In my example, I started off my conversation with, “Hey, can we talk about finances for a minute, I’d like to help you if I can?” His response was, “Oh sure, you want to HELP me!  By HELP, you mean you want to cut me off!  You and your big company don’t care about us little guys trying to make it!”  My initial internal response to his incorrect paraphrasing of my words was anger.  I wanted to start laying it out there for him.  I wanted to say, “Look, we have extended you an open line of credit for 90 days, you ran that bill up way over what we allow for most customers, you haven’t made a payment, yet you have received income from your products.  Oh, on top of that, I heard you went to the Bahamas on vacation.  Unless we figure something out, you’ll go to collections”.   A little harsh, but it’s what ran through my mind as the conversation went on and he made further misinterpretations of my verbal and nonverbal messages.

 

With these tips in mind, you are ready to approach crucial conversations in a more methodical approach and hopefully come away with a positive outcome.

There are two other key factors in a crucial conversation:

Timing & Location.  They can be as important as the conversation itself.  The timing needs to be right for both you and the other person.  Both people need to be able to devote their attention to the conversation.  Don’t catch the producer walking across the yard and start in on an accounts receivable discussion.  Yes, you need to get answers quickly before a customer is cut off.  So, don’t procrastinate when it comes to having the conversation.  Just pick a good time.

Location is also important.  Most of our conversations take place on the farm or in the customer’s office.  Wherever it takes place, it needs to feel like a safe environment for both of you.  Safe for privacy as well as safe from feeling like one side has a huge advantage of location.  Protect their privacy by letting them know the topic of the discussion ahead of time to allow them to pick the right location.  If they don’t pick a good location, suggest you move the meeting to a better place.  The location also needs to feel neutral to some extent.  If you bring them into your office and then invite your supervisor and your accounting person into the meeting, it can easily be viewed by your customer as ganging up on him.  The initial conversation needs to be just the two of you so both of you can safely discuss the issue.  Then bring in the others if needed to help arrive at a solution.

In my example, we figured out a solution.  The producer agreed to it and it was tolerable on our end from a risk standpoint.  However, I could tell he felt distrusted in the relationship.  There was a lot of ego and status in the industry to deal with in this situation.  He stayed with us initially but eventually split his business with my competitor.  Within a year, he had sold his business and now works in the industry.  While it wasn’t the perfect outcome, we did eventually collect on the credit we extended.

In summary, crucial conversations don’t always turn out the way you want them to, even if we follow a good process.  They are high stakes and highly emotional conversations.  Following the tips above, you can, at a minimum, feel good about how you handle them.

For more information on Ag sales training, coaching or business development, contact

Greg Martinelli at Ag Sales Professionals, LLC at (608) 751-6971.

Email is Greg@GregMartinelli.net 

Web site is www.GregMartinelli.net

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