Saying no to “big customers”: Selectivity in sales

(3 mintues read)

Regardless of their size, it is always tricky for companies to say no to a big customer.  Either they are looking for additional growth or trying to survive difficult times, there is always a “perfect reason” for the compromise.  Many companies continue to do business with customers to whom they cannot say no because they believe they cannot afford it, and therefore they are afraid.  In sales, we all have such customers.

Then comes the dilemma of being fear-driven vs. opportunity-driven.  It is easy to say so, but how to be opportunity-driven when you want to say no to a customer representing 60% of your sales. How can you overcome your fear and look for new opportunities?

The first question to ask is about the value.  What value this customer represents for your business in terms of profit, reputation, prestige…?   What makes this customer an important customer for your business.

Once you have your honest answer, then comes the opportunity cost.  What could you and your team do if you would free your time by dropping this customer? Would you look for new customers? Work on developing existing customers representing 40% of your revenues?  How much time would it take you? What would be the estimated cost for you? More importantly, how would your business look like without that “big customer”?  

If you realize that this “big customer” is indeed a low-value customer for you, it is clear that you are missing higher-value customers because of your fear.  Do not let the size, prestige of the customer bias your reading of the situation.  Commitment to the truth is critical here, and it is essential to visualize your business without this customer considering other opportunities.

All you will need is to work hard enough to replace this customer’s share in your sales with other high-value deals.  You may suffer in the short run, but you will be rebuilding your revenue build-up and profitability in the midterm.

On the other hand, if you realize that this “big customer” is profitable for you but gives you a hard time in each deal, you might need to reframe the customer.  The best way to do it is additional charges for the services you provide free of charge.  For example, if the customer asks you to prepare tens of samples for each purchase, you might consider revisiting your project management method.  You may propose three samples for free and charge the customer a significant fee for each additional sample preparation.  In that case, either the customer will be more selective or will accept to pay you a premiuim fee for the work done.  In both cases, you will increase the value of the customer for you.

In summary, it boils down to value and the way you measure the value of your customers?  The following points may help:

• Profitability of  customer
• Convenience to work with
• Prestige
• Market share

It is a combination of those points… take a step back and compare. Look around the market.  You will likely see other opportunities.  Then, give yourself honest answers to build your path. 

You will undoubtedly make some mistakes.  The most important thing here is that no matter what happens, you stay in charge and choose to work or not to work with a particular customer.  This is what I call selectivity in sales.  The more selective you will be, the faster you will learn how to select better.  Set your value measurement criteria, and do not let the size or names of some customers impress you. And remember, at some point you will disappoint some customers when you start doing what is best for your business.