A "no stupid deals" policy will improve your brand
One of my clients taught me a great lesson about selling, branding and marketing. Sometimes, in our quest to find revenue, we forget something more important - trust.
Our goal as an organization is to deliver on our commitments reliably and predictably. By doing so, we build the trust needed to sustain a healthy relationship for many years. The sum of these healthy relationships is a strong brand. A strong brand is evidenced by happy customers.
At Macon Raine, we put skin in the game and invest in our client’s sales, marketing and business development process. If we are going to promise revenue growth, and if we are going to bet on the successful outcome and consistently meet client expectations, we can’t sign-up for bad deals. In fact, if we sense that the client can’t deliver on their side of the agreement, we need to back off fast.
Bad deals cost too much. No matter who is at fault, bad revenue costs everyone dearly in reputation and pain.
That is why we have a “No Stupid Deals” policy. It makes a lot of sense. No one wants to be in a “stupid deal.” The “No Stupid Deals” policy has yielded immediate benefits for our clients and for our business. Our quality of life improved because we were no longer spending too much time putting out fires and this increased client satisfaction as well. Our ability to manage expectations and deliver on our promises grew rapidly.
Clients don’t want stupid deals either. Making an investment in a vendor is a big deal. Finding the right vendor is a big deal. Finding a vendor that can help move the needle is a big deal. Clients want long-term, trusted relationships as much as we do. If they don’t, they are generally not a good customer.
But it takes a leap of faith to say no. it is hard to walk away from dollars. In this economy, why would anyone turn down a deal? But if you can’t establish a dialogue with the client and modify the project into a win/win, it is probably not worth doing.
Our goal as an organization is to deliver on our commitments reliably and predictably. By doing so, we build the trust needed to sustain a healthy relationship for many years. The sum of these healthy relationships is a strong brand. A strong brand is evidenced by happy customers.
At Macon Raine, we put skin in the game and invest in our client’s sales, marketing and business development process. If we are going to promise revenue growth, and if we are going to bet on the successful outcome and consistently meet client expectations, we can’t sign-up for bad deals. In fact, if we sense that the client can’t deliver on their side of the agreement, we need to back off fast.
Bad deals cost too much. No matter who is at fault, bad revenue costs everyone dearly in reputation and pain.
That is why we have a “No Stupid Deals” policy. It makes a lot of sense. No one wants to be in a “stupid deal.” The “No Stupid Deals” policy has yielded immediate benefits for our clients and for our business. Our quality of life improved because we were no longer spending too much time putting out fires and this increased client satisfaction as well. Our ability to manage expectations and deliver on our promises grew rapidly.
Clients don’t want stupid deals either. Making an investment in a vendor is a big deal. Finding the right vendor is a big deal. Finding a vendor that can help move the needle is a big deal. Clients want long-term, trusted relationships as much as we do. If they don’t, they are generally not a good customer.
But it takes a leap of faith to say no. it is hard to walk away from dollars. In this economy, why would anyone turn down a deal? But if you can’t establish a dialogue with the client and modify the project into a win/win, it is probably not worth doing.
Tags: branding, management, marketing, sales, selling
Comment
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Comment by Karl Goldfield on December 11, 2008 at 8:30am -
Ben,
Your three points are solid but there a few other important pieces of the puzzle that are not listed. These stem from the holistic nature of the sale from start to finish.
1. Yes it is important to be profitable but was it worth winning the business in relation to other opportunities? if it took you 6 months to get a deal and in exchange you could have spent that time closing three of slightly lesser value, you lost dramatic amounts of time and effort. Always evaluate the ability to execute and accomplish goals by account.
2. While your offering may benefit a client and they may see it, if the have a negative attitude and are complaining about everything form your product to their other vendors to the color of the walls in their office, I suggest you walk away. These people cost you headaches in their ability to infuriate tech support, complain about you to other possible clients, and sully your overall experience as an organization.
There are a couple more but let's keep the conversation flowing.
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Comment by Ben Bradley on December 10, 2008 at 7:39pm
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So far the conversation thread has talked about a couple of deciding factors...
1) profitability
2) gut instinct
3) likelyhood the client will be pissed when the job is done
Anyone have additional criteria to add?
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Comment by Tim Rohrer on December 10, 2008 at 7:33pm - I think it's great to have a "no stupid deals" policy - as long as the criteria for establishing what is stupid and what is not has been disseminated to the masses. Do you have any suggestions on how best to come up with the criteria?
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Comment by Ian Brodie on December 9, 2008 at 2:36pm -
Yeah - but I wish I knew what the "right answer" was! At the extremes - with huge deals that are unlikely to be repeated - the normal rules are difficult to apply.
Ian
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- Great example!
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Comment by Ian Brodie on December 9, 2008 at 2:08pm
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Sometimes stupid deals are no brainers. Other times they're really difficult to walk away from. Here's an example of a toughie:
At a firm I worked for when I was in my first year as a consultant (so this was well over a decade ago) I was involved in some analysis work for a client to define an improvement programme for them. Our analysis showed that they were in big trouble - their revenues were set for a big decline and it would take a big investment in an improvement programme just to get them back to "ground zero" - what their business plan already showed for the next 3 years.
But the client didn't want to accept that. They essentially said "look, if we're going to buy a big project from you, we need to see our profits go way over our current plans - not just equal them".
So we had a choice. Walk away, or "sign up" to targets for the project we knew weren't achievable. There was no contractual commitment to the targets - just a customer expectation.
The project would have been a huge win. The second biggest in our history in the UK. If I remember rightly it was North of £10 million for a year long project. Which if you know management consultancy and the typical project sizes and the margins involved is a very, very big project. And there was no economic downside - it would have been hugely profitable. The sort of projects that the partners that sell them get million pound plus bonuses for.
The downside, of course, was that we all knew that eventually reality would kick in and the numbers would show our initial analysis to be correct - even with the project they would just hit their original business plan - not the inflated numbers they were looking for.
But we played along. We took the money. The project was cancelled after 6 months. We made lots of money along the way. It was very painful for the consultants involved (luckily I wasn't one of them), and a waste of money really for the client as they didn't finalise the implementation.
A stupid deal? I still don't know to this day.
Ian
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Comment by Tibor Shanto on December 9, 2008 at 1:48pm - Ben, I like you post, I think having a “No Stupid Deal Policy” is great, but the policy needs to be clear specific and have big teeth. Knowing when to walk away from a deal is something I wrote about recently, and it always makes economic sense.
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Comment by Skip Anderson on December 9, 2008 at 11:34am - I'm all for walking away from stupid deals. And I like the idea of a global policy that states it within an organization.
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Comment by Will on December 9, 2008 at 11:21am - I know from my own experience, that walking away from deals in the short term is not a bad thing. When you are not making money or promising a commitment that is too difficult to keep - why do the deal? Even when the economy is not at its greatest, there is still market share for you to take. With so many potential deals and sales to be made out there, I think it is wise to walk away from these troublesome deals.
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When these kinds of "opportunities" fall into your lap, accept the fact that you need to walk away. But don't walk away until you have spent time building the relationship. The current vendor will fail. If you play your cards right, you can walk back in and rescue the project.
How do you prepare your sales people? I think the profitability of the deal should be a major factor in many of your decisions. The idea of giving losing money on a deal to "get the account" sets a bad precedent. The numbers don't lie.
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