One of the many myths that sink companies is the mistaken belief you must do everything to land a new customer, particularly if that prospect is a large company. In fact, when it comes to every prospect, you should be indifferent whether or not there will be a deal. Because how you win new business is important.
This may seem counter-intuitive…but it’s essential to long-term growth, profitability, and your sanity.
Hurting Your Company To Win New Business
Now if you chase a particular prospect to “earn” their business, you will inevitably compromise on the fundamentals essential to running your company profitably.
For example, it’s common for competitors to try to outdo each other to win the big customer, each sweetening the pot with special offers (e.g. lifetime service guarantees) that they would never make to their average customer. And more often than not, the bidding war gets out of hand.
Because the “winner” creates a money-losing relationship with the big client. And with the size of the orders, the losses stack up quickly.
Frankly, it often makes sense to let your competitors win the big contract if it’s costing them a fortune for that Pyrrhic victory.
Concessions During Negotiation
Should you make concessions to land a corporate whale? Perhaps.
But only on terms you know ahead of time will be favorable to your company. In fact, you should think ahead about what you are and aren’t willing to do to convert any prospect into a customer.
For instance, two weeks ago, I was negotiating a business deal where the other side triggered 4 red flags (out of 11) that I have for disqualifying a prospect.
Those non-negotiables were developed ahead of time, which made it easy to identify this would be a PITA (pain in the ass) deal despite the potential for growth and national exposure.
Rather than pretend otherwise, I politely cut off negotiations, and referred the prospect to competitors. Now the prospect might be the perfect match for those I referred to. But it would have been a money-suck and time vampire for my company to have converted the prospect into a customer.
Your Business Isn’t A Lottery
Don’t fall for the assumption that taking a losing deal will somehow create for you the ability to showcase that big customer to land profitable deals with others.
Instead, you’re chaining yourself and your company to one bad customer in the expectation of winning the lottery with others. That’s a horrible way to run a company.
In A Nutshell
Each transaction should be measured on its own terms — not based on speculation and hope that an unprofitable customer now can function as a rainmaker for profitable ones in the future.
Take emotion out of the equation.
And win new business on terms you need. Or say no thanks and walk away.