During a recent sales training workshop the participants and I had a spirited conversation about giving away business.
The discussion stemmed from my suggestion that it sometimes makes good business sense to walk away from a deal and to give that sale to a competitor. The moment the words escaped my lips a look of horror appeared on the group’s faces.
One individual immediately spoke up and expressed his concern noting that if he gave away a sale he would face severe consequences from his manager. Others in the room nodded in agreement. So, for the next 30 minutes or so, we discussed the merits of walking away from a sale and actually recommending that the prospect use a competitor.
This is a difficult concept for some sales people to accept because they believe that any sale is better than none especially if it means that the prospect will go to a competing company for the product or service.
A few years ago I was coaching the owner of a small independent retail store that sold nutritional products and health supplements. She had many customers who consistently asked her to price match her competition and she always agreed to their requests even when it meant she sold the product(s) at a loss. She felt that those customers would see the value of her knowledge and service and eventually be willing to pay full price. I suggested that she stop price-matching and focus her attention on driving more customers who were willing to pay full-price to her store.
Unfortunately, she was reluctant to make this change and she continued struggling to make her business profitable.
There are two key reasons companies go out of business…
1. Lack of sales
2. Lack of profit
The health retailer I mentioned had the top-line revenue but she didn’t have the necessary profit to pay her bills and she eventually closed her doors.
It is never easy to walk away from a deal but sometimes your business can actually benefit from it.
In many cases, the people who demand your absolute lowest price are the most difficult people to deal with after the sale is closed.
They appear to be needy. They constantly call with a problem of some sort. In short they are high-maintenance. As a result, you end up spending value time dealing with them when you could be out selling to high-value customers instead.
Every minute you waste with a low-value, low-profit customer the less time it gives you to focus on your high-value, high-margin/profit customers and prospects.
What do you think?
Do you think it makes sense to walk away from a sale and/or give away the business to a competitor? I’d enjoy hearing your perspective on this topic. Please feel free to add your comments.