What are the consequences of a salesperson who just can’t say no? Surprised to hear that the best salespeople often have to say no in order to win business? Surprised to hear that saying “yes” isn’t the best course of action when closing business? Don’t be. It’s easy to say yes when working with customers. Yes is the easiest of answers because it is the simplest way to please a customer. It’s less confrontational, easier to say and is often seen as the surest way to keep customers engaged. However, sales success has never, and will never, just be about saying yes. Sometimes, salespeople must be able to say no. It means the difference between business won and lost, and ultimately means the difference between your company making a healthy profit on sales, and losing out entirely.
Saying “Yes” is Easy isn’t it?
Salespeople are supposed to be engaging, willing to help, and always cognizant of what it takes to close the sale. However, they must also be willing to work within the confines of a company’s established norms, or put differently, within the company’s specific service capabilities. It’s these service capabilities that must be clearly defined, not only for sales, but also for the company’s marketing and customer service departments. These are essentially the boundaries by which sales, marketing, and customer service, must operate.
Going outside the company’s service capabilities often involves an increase in costs, and it's this increase in costs that reduces gross profit on sales. It’s just that simple. Salespeople will often claim that granting a particular customer request was needed in order to close the sale. While this is a valid argument, it typically occurs when companies have not specifically stated their service criteria. Left to interpretation, sales will do everything needed to bring on a sale. After all, it’s in a salesperson’s makeup to close orders, and saying “yes” is seen as the fastest way to close.
Given the importance of working with the company’s established service norms, what must your company do to ensure that your sales people are less likely to capitulate and give customers everything they ask for? We’ll answer this question by defining how your company should set guidelines on service. Next, we’ll provide a simple example of the high costs of saying “yes” to everything a customer asks for.
1. Define Your Company’s Service Criteria
Your company must clearly define its service criteria. Your salespeople must have a clear understanding of the limitations they must work within. Otherwise, they’ll continue to make assumptions or claim that the only way to close the sale was to capitulate to customer requests. In essence, your customer service strategy must start with marketing & sales. They alone should define the conditions of a sale, a sale that your company has determined to fall within its core competencies. It’s ultimately this message that must be provided to your market and its customers. Here are some questions to consider.
- Does your company include freight as a service, or an added cost?
- If freight is included, have you defined the geographical limitations of including freight to specific customers that fall within a given location?
- Does your company have a specific pricing model, a model that’s matched to slim profit margins, or are those profit margins healthy enough that sales can make deals and discounts in order to close more sales?
- Does your company manufacture custom-made products and have a clearly defined procedure in place for charging NRE (non-recurring engineering charges) for custom designs?
- Is your business predicated on high volume sales, ones where pricing can only be reduced if they are matched to high purchase volumes?
These are just some of the possible questions that your enterprise must answer when looking to define its service capabilities. These capabilities are often defined by the market, or industry itself, and by competitors who all operate under the assumption that there are standard industry practices on payment, ordering and shipping.
2. Manage Customer Expectations Based on Service Criteria
Managing customer expectations is the single most important aspect of managing customer relationships. It should always be done at the outset of a new relationship, one where both customer and vendor can have a free exchange of needs, wants and capabilities. The importance of managing your customer's expectations can never be ignored. The consequences of not managing those expectations are severe. How severe? Well, when your sales team doesn’t properly define your company’s service criteria, your customer will define them for you. They will assume a position of control and measure your ability to service them based on how they were serviced by your competitors, competitors that have different service competencies. When this happens, your team will forever be in catch-up mode.
This video is from the post: The Impossible Customer: Everything Begins & Ends with Your B2B Approach
3. Gather Costs on Service Upgrades
Managing a customer’s expectations is never static or stationary. What do I mean by this? Simply put, your service capabilities may change over time, but they must only change when your company has thoroughly assessed the costs of these changes. Defining the costs of upgrading your company's service capabilities allows you to clearly define the impact of these changes on sales, and consequently, on your company's gross profit. If something is needed by customers, then by all means, provide it. However, make it a point to define what it means, and costs your company, to make these changes.
- Will this increase your cost to serve?
- Will this change increase sales and grow market share?
- Is this upgrade a result of a new trend in the market or a fad that may, or may not, hold over time?
- Is it something your competitor is doing and if so, why are they doing it?
- Are multiple customers asking for additional services, or is it limited to one or two whose business volumes don’t justify the upgrade?
An Example of Always Saying YES!
I once worked for a sales manager whose whole approach to winning business was to say yes, or to easily capitulate to customer requests. Now, by no means am I implying that saying “No” is always the best answer. It isn’t. However, after reading this example, it becomes painfully obvious what the costs are of someone who simply can’t say no.
Our company finally had a chance to win back business at a customer account, an account that had moved to our competitor. Fortunately for us, the competitor was short shipping volumes on large full truck loads of product. When our customer found out, they immediately called us to move forward. I handled the call and set the table for closing the order. However, I left early for the day, and in the short period of time that I was absent, my direct report handed over a series of costly concessions.
- First, he agreed to have the truck diverted to a weigh station before and after delivery, in order to provide the customer with weight totals on the shipment. He wanted to alleviate any concerns on our volumes.
- Second, he agreed to cover this cost without fully understanding what those costs entailed.
- Third, he didn’t define how long our company would provide this service. In essence, he left it open to the customer's interpretation.
The consequences of these three actions were substantial. The cost to divert the truck was $90.00 each way, for a total cost of $180.00. The actual cost to weigh the truck was never discussed and consequently, the customer assumed we would cover that cost. It turned out to be an additional $250.00. Finally, there were a total of 8 trucks ordered. Each diversion cost $430.00 on each truck making for a total cost of $3440.00! Keep in mind, our profit margins on sales were slim. Our cost to service was already high, and our company’s costs to finance receivables for $40,000.00 per order were substantial.
At the end of all this, my sales manager said “They always seem to call me”, as if to state that he alone held the keys to closing business. I replied with, “that’s because you always say yes!”
Bottom line, saying yes and going outside your company’s established service criteria and capabilities has a cost. That cost erodes gross profit. Left to interpretation, your customers will fill in the blanks for you. If they do, they’ll assume whatever pleases them, and that will always cost your company money. Now, am I trying to say that companies should never “bend a little” in order to win business? Absolutely not! However, your company must clearly define how and when your salespeople grant customer concessions. Otherwise, the consequences will be severe and extremely costly.
Improving your sales forecast accuracy: How Do I Improve Our Sales Forecast Accuracy?
Comments