Tuesday, June 28, 2011

 

Five reasons to walk away from a sale

You've qualified the deal, you've got a decision maker engaged, there's budget to move forward. All signs are positive.

Then something happens. The prospect goes dark. Or you start to get a funny feeling that things aren't right.

No matter how motivated or focused you are on closing business and accelerating revenue, sometimes it's best for you and the business to just walk away. Here are five situations in which walking away will save you time, headache and money.

1. You will lose money
Sometimes a deal with acceptable margins for your business gets negotiated down to a position where you just can't make money. And at the end of the day, you're not in the sales business or the revenue business. Your company is in it to make a profit. Make sure you have a clear sense for the level at which it's better to walk away than take a loss just to get the client.

That goes well beyond the initial sale as well. Do you have a sense for the lifetime cost of servicing that customer? Will the cost of service exceed the revenue you expect to receive? Could a good sale today become an unprofitable and unhappy relationship (on both sides) down the road?

2. Your values do not align
Your customers represent you. They are an extension of your business and your brand. How they use your product or service, and to what effect, will reflect on you too. Sometimes at the beginning of the sales process you know the basics about the prospect - enough to qualify that they're the right kind of company to buy what you're selling.

But sometimes you learn more - about what they do, how they treat their own customers, and how they conduct business. Misalignment now is only going to fester and get worse. and if you're at all nervous about the prospect's own sense of values, there's a higher likelihood that the end of the relationship won't go well either. Seller beware.

3. They are not prepared to execute
This is a hard one to gauge. I'm pretty sure the gym I belong to didn't worry too much about how often I'd actually come in. A car dealer won’t mind if you buy a sports car and leave it in the garage. But in many businesses (especially B2B services and SaaS), active usage is critical to achieving the lifetime value you expect from new customers.

Software as a Service (SaaS) businesses especially will build a revenue model that assumes a certain lifetime of recurring revenue from new customers. Although that same model likely assumes its fair share of churn, a new sale to a customer that clearly isn’t set up to execute and succeed (due to lack of resources, internal alignment or a number of factors) is a near guarantee to churn quickly. What’s worse, they may blame their lack of success on you, even if they never completed implementation.

4. They have a bad history of paying
A quick check of a prospect’s credit score can save you a lot of time, hassle and money. If they appear highly qualified, make a quick decision to buy, but are late or worse on their payments, you could be in a situation that’s not a whole lot better than not having completed the sale in the first place.

Happy customers are one thing. Reference accounts are even better. But if they’re not paying their bills, you won’t be able to take advantage of those testimonials for very long.

5. The deal keeps getting delayed
At a certain point, if your prospect is unable or unwilling to make a decision or commitment, you need to walk away. Oftentimes this is a sign that a deal wasn’t properly qualified to begin with. If there isn’t urgency on the buyer’s end, if there isn’t a compelling event or alignment around solving an immediate problem, then it’s a nice to have. And nice to have objectives don’t get approved and funded in today’s environment.

But no matter the reason, deals that continue to fester are costing you valuable time – time you could be spending pursuing or closing other business. If the prospect has changed his or her mind, if there’s an organizational change that’s slowing things up, put the onus on the prospect’s end to show signs of short-term interest and move on. Give yourself a reminder in a couple months to check in, and/or put the prospect back on a marketing nurture campaign to more actively stay in touch. But don’t be afraid to walk away. Sometimes that’s the fastest path to the sale.

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