In sales we are often challenged to provide the service or product at a price point that our prospective client can afford. Very often the temptation is to “do whatever it takes” to make the deal work … and yet that is rarely the right answer.
One skill that I learned early in my sales career, and that I often observe to be missing in young sales people today, is the ability to understand what is “good business” and what is not.
Quite often I see the look of disbelief in the sales person’s eyes when I tell them to walk from a piece of business. They sometimes argue fervently in favour of the deal, because it means “dollars in our pocket”! They cannot understand that sometimes dollars are just not enough … and very often there are not enough dollars!
Companies of every type are measured based on ratios and percentages. If a company today has $1 million in bottom line profits that sounds good, but if that is based on $100 million in revenues … it is not so good! Any kind of market fluctuation could cause that company to go out of business. So … reasonable margins are needed in order to preserve a healthy bottom line.
If company profits are not enough to reinvest in the company to keep up with industry trends then that company is already heading out of business … it doesn’t quite know it yet!
Sometimes the cost of doing business is too high. If a client is a very high maintenance client, and demands excess time from key resources, executives etc. then often that is an account that is just not worth servicing. It could be termed champagne service on a beer budget!
Often sales people just look at their own cost and
forget all of the other costs that a company needs to cover! Not just the salesperson’s income, but their management and sales support infrastructure; the back office, technology, marketing, admin and HR. The cost of money because clients push out their payments, corporate giving to charities and membership in industry associations, rent, and of course the taxman wants his! There is no end to the money going out … so the money coming in needs to cover that!
This is a lesson every sales person needs to understand … not all business is good business!
“Winning doesn’t always need to be at someone else’s expense.” Frank Sonnenberg