Question: My market is difficult right now and so are my customers. Services that I billed for in the past are now expected. And the amount of time I’m putting into some of my accounts just doesn’t seem worth the effort. What should I do?
Answer: In good times or bad, it’s good to periodically look at your accounts in terms the amount of time invested vs. the profitability of the account.
During tough times, customers tend to scrutinize proposals a bit more than usual. As pressures are placed on buyers to skim costs, those pressures are often passed on to the salesperson handling the account. However, before you fire your customer, you should ask yourself if the scrutiny is short or long term.
In the short term, if you help the customer out, without giving the ship away, you may strengthen your relationship. However, if it looks like you’ll take a beating by continuing the relationship, it’s probably a good idea to break up.
Here are some tips for surviving the demands of tough customers:
Analyze the value of each account – Too often, salespeople look at current and potential business in terms of type of industry or gross dollar sales. It’s equally important to assess the "soft costs" that eat at your profitability. For instance, if your customer expects services beyond the initial agreement, the time invested will erode your profitability over time.
When you assign account values, think about all of the attributes that make your "good customers" worth working with. (Like, they are easy to work with, you understand their needs well, they pay their bills on time, etc.). Then, do the same for your "demanding customers." As you prepare proposals for each, take these factors into consideration and adjust your pricing accordingly.
Use established price lists – Or, itemize investment for services in your proposal. Clarify terms of your agreement in advance of beginning any work. If you’re leery about a particular customer, ask for a deposit in advance of work; 25% to 30% is customary for most services. If a customer objects to the investment of a particular service, refer to your pricing guidelines and let the customer decide if he or she wants to take advantage of the service or not.
Make sure that "value-added" is understood – If you decide to give your customer services that are above and beyond what you intend in the proposal, itemize the services outside of the proposal instead of listing the items as "included."
The services that you are providing may be simple for you to perform and therefore comfortable for you to include. However, the customer may expect the service and may even expect more of the service than you originally intended.
On a recent sales call, I witnessed a salesperson spend two hours debating how a service would be performed that he had "included." After the fact, he said that he wished he had not included the service. because not only was it not seen as a value, it was now the issue of scrutiny.
Sell to multi-levels – Selling to various levels in organizations is always a good idea to protect you from sabotage. In tough times this is often dictated as more people within buying organizations are expected to participate in buying decisions.
I recently sat in a sales meeting with 13 executives involved in a buying decision, which was highly unusual for this particular market. However, if the sales rep had not identified these influencers and brought them together to explain the program he was selling, he may have lost the sale. Be careful not to get bogged down in giving too much information to each.
Be careful of invisible nibbles – Nibbles are those demands that customers make after the sale is complete, expecting them for free. First of all, when customers make demands, don’t assume that they expect them for free. If this happens, stay positive by clarifying the expected services and the investment. Worse than nibbles are invisible nibbles. These are concessions that customers take without earning them, like discounts or terms for early payment or not paying bills on time.
Fire customers that are not profitable – Or, fire customers that are consuming too much of your time. Walking away from business is always hard for salespeople, especially in tough times. Compare the amount of time demanding accounts are taking vs. the time that you are investing in developing new business.
There are many ways to fire customers. Probably the most effective is to simply state something like, "Our goals are no longer the same and I don’t see our business relationship continuing." Then, recommend another service for the customer if you can.
Marcia Gauger is the president of Impact Sales, a performance improvement and training company with offices in Wisconsin, Florida and Arkansas. You can contact her at 262-642-9610 or
marciag@makinganimpact.com. Her column appears in every other issue of SBT.
Oct. 11, 2002 Small Business Times, Milwaukee
