Gaining More by Not Closing the Deal

Jim Schibler
Aug 11, 2017
6 min read

Sales revenue generates cash flow, the lifeblood of any company, and pressure to achieve sales targets tempts us to close any deal we can. However, turning down a deal is sometimes the best thing we can do for our business.

An Easy Case: Don’t Take On Undesirable Customers

Sometimes, a prospective customer shows signs of being ‘high-cost’ during the sales process. Such signs can include demands for:

exhaustive documentation
extended product demonstrations
custom features not likely to be needed by other customers
big discounts

Other warning signs include:

lack of respect for your time and effort
“moving-target” requirements that grow every time you meet the previous set
a “zero-sum game” mentality (me winning means you losing), rather than seeking a mutually beneficial outcome
objections that are based on emotional factors you couldn’t possibly address, rather than on functional or political issues that you could take action to resolve

Clearly, customers who show these signs in the sales process are likely to cost your company far more in support resources than you gain in direct revenue and reference value. You’re often better off letting your competitors serve such customers and deal with their problems. If you can keep a long-term perspective, you won’t find it too hard to turn down such a bad deal.

I Was Once An Undesirable Customer

Just out of college, I set out to buy my first vehicle, a small pickup truck. I visited a few dealerships to check out the offerings and assess which would best satisfy my needs.

A perceptive Toyota sales representative realized, after chatting with me for just a few minutes, that I was not going to be a good customer for him. I was analyzing specs carefully, and looking for a good deal. Realizing that he could probably spend his time more profitably with another customer, he pointed out a few ways in which the Toyota truck was less ruggedly built than the Isuzus he used to sell, and he suggested I go down to the Isuzu dealership.

The sales rep at the Isuzu dealership ended up spending a lot of effort to close a

deal with me. I was armed with a lot of information that gave me advantages: I knew the truck I wanted was the old model year, it had been sitting on the lot a long time, and the dealers got incentives (allotments of sports cars) based on the number of trucks they sold. By the time we closed a deal, the truck listing for $14,000 was sold to me for just under $9000, with after-market air conditioning added and 2 tankfuls of gas.

Only later did I realize what a wise decision that Toyota sales representative had made.

A Tougher Case: Your Solution Is Not the Customer’s Best Option

Sometimes you are faced with an ethical dilemma: you really want to close a deal with a good potential customer, but you know a competitor’s solution would be a better fit for the customer’s needs than what you can offer. What should you do?

There’s no easy, universal answer. You have to weigh many factors:

how big the gap is between your offering and the competitor’s
whether your product is adequate for meeting the customer’s needs
whether you are likely to have future sales opportunities with the customer
the lifetime value (and cost) of the customer
how much influence the customer is likely to have on other customers
how desperately you need the deal
how much your reputation could be affected if you take the deal

Sometimes your analysis will make clear what your decision should be; other times you’ll still feel torn. When the choice is not clear, it helps to take a long-term view.

I’ve learned an important principle from some wise and very successful sales professionals: the relationship is far more important than any one deal. Yes, sales people must achieve their targets each fiscal period, but the wise ones know that building and maintaining an impeccable reputation for trustworthiness is essential for sustained sales performance. How do you achieve that impeccable reputation? By always doing what’s best for the customer.

Sales professionals who have the discipline to guide customers to the best solution—even a solution that’s not part of their own portfolio—earn trust. They are perceived not as hucksters, but rather as trusted advisors. They are the first to be called when a new need arises, and their clients tend to look for opportunities to reciprocate and help them. Examples of such help could be advice for a specific sales situation (politics, timing, competitive intelligence, and strategy), or it could come in the form of leads to other potential business. And companies that behave like these disciplined sales representatives reap similar benefits.

Turning down a sale can be very difficult to do—especially if results for the period

are below quota—so it’s important to keep in mind the long-term payoff of maintaining a sterling reputation. Of course, declining any one deal gets easier if you have many deals in play—a good reason to keep the sales funnel full.

You may sometimes be tempted to put your reputation at risk if you don’t expect to be in the same role or serving the same customer for long, but a bad reputation has a way of catching up with you and following you forever, especially in the Internet age.

A Company That Gained More By Declining a Deal with Me

In my early days using the Internet at home, my needs soon grew beyond the capacity of a dial-up modem, so I sought a better solution. At that time, the two high-speed options available were cable and DSL. Not knowing much about DSL, which was fairly new at the time, I ran a Google search, and one of the top hits said “Learn all about DSL” and “Free buyer’s guide to DSL providers”.

Intrigued, I followed the link to 2Wire.com. They provided me with easy-to-digest educational material that gave me a basic understanding of the technology. When I clicked on the link for the Buyer’s Guide, they asked me to enter my street address. This set off warning bells in my mind, but they promised to keep it private and not to use it for marketing purposes, so I reluctantly entered my address.

The site then provided me with a detailed table of some 20 DSL plans available in my area, with the provider name, upload and download speeds, pricing, and contact information. I was able to quickly find a plan that matched my data needs and budget, and clicked on a link to order service from the corresponding vendor.

At that moment, 2Wire redirected me to a page on their site that basically said “Maybe this isn’t such a good idea”. Using a nice graphic, it showed how DSL performance varies with distance from the phone company’s switch – in essence, performance was high for miles 1-5, then dropped off rapidly over mile 6. The ‘you are here’ indicator showed me at mile 6, where performance would likely be poor.

Somewhat disappointed, but glad to have not spent time and money on a substandard solution, I contacted @home and ordered cable internet service.

Did 2Wire make the right decision? Absolutely! They gave up a small commission on a single sale, but they established a solid reputation with me by doing what was best for me. (They also kept their promise to keep my address private – I was never bothered with unwanted marketing material.) I was so impressed by how well I’d been treated that I began citing this case as a model of responsible behavior, at various meetings of professionals. Over the course of 5 years or so, I shared my story with probably 1000 other technology professionals, in effect becoming an evangelist for 2Wire.com. By declining what would have been a bad deal, 2Wire gained plenty of free marketing that increased awareness of the company and how well it had treated at least one potential customer. (2Wire was eventually acquired by Pace and then ARRIS.)

My experience with the cable internet service provides a contrasting tale. @home gave great service, and that didn’t change when they got bought by Excite. When AT&T bought that business, I was inconvenienced by being forced to change my e-mail domain suffix from @home.com to @attbi.com, but otherwise the service was still good. Then Comcast bought the cable business from AT&T, and screwed up what had been working well. They jacked up the price from $60 to $75 with no additional benefit to me, and tried to sell me up to a $100 package that bundled Internet, phone, and cable TV (which was of no value to me). Service interruptions that I’d never experienced before became commonplace, and the quality of the technical support was mediocre at best. Over time, the Comcast experience has become less painful, but they treated me poorly and have not earned back my loyalty, so I’m ready to switch to a better solution anytime one becomes available.

Should You Close The Deal or Walk Away?

Clearly, every sales situation is unique, and there will be times when deciding whether to pursue a deal or not will be difficult. Weigh the factors mentioned earlier, and if you’re still having trouble deciding, consider the long-term view. Reputation and relationships are often worth more than the returns of any one deal, so have the courage to recommend what’s best for the customer. You may be rewarded in surprising ways.

Image credits: Coins courtesy Jeremy Schultz on Flickr.com; Business Man On Phone courtesy David Castillo Dominici at freedigitalphotos.net; Stop Hand courtesy steafpong at freedigitalphotos.net; Isuzu pickup courtesy classicvehicleslist.com; Accept/Reject illustration courtesy Stuart Miles at freedigitalphotos.net.