Winning new accounts is one of selling's biggest challenges. If this needs proof, recently while driving I was listening to the radio and heard a sales research analyst reveal that statistically, across all industries, it's six times more difficult to land a new client than retain an existing one.
This was staggering yet as I began considering the number of cold calls required to make a single appointment, and the number of appointments to make a single sale, its validity was obvious. So I set my mind to touch base with clients I hadn't had regular contact with over the last six months as it was too costly not to.
The following week, one of my clients called me, seeking my opinion concerning a dilemma he was facing with one of his largest clients. Specifically, he was pondering what sales people should do with a client who pays its bill but is never satisfied despite the concessions and extra effort made.
In the face of the time and money spent acquiring an account, he asked, "Is there a scenario when it's OK, or even preferable, to resign a client other than for lack of payment or blatant dishonesty? And if so, what's the criteria?"
I reflected again on the sales analysts' research yet began thinking about the rationale of keeping a client at all costs. My client was right: Acknowledging the time and money investment a salesperson and her company makes to acquire a new account, she surely doesn't want to just give one away. Or does she?
Now, very intrigued, I asked my client for the background and it was quickly understandable why he was debating cutting this client loose. In short, my client had hung himself by over servicing this client on one occasion. Several months back, his client was in a bind and needed a rush delivery. Since it was a low ebb period at my client's company, he rushed a large order in an incredibly short period of time without extra charges. During normal production times, this quick turnaround time wouldn't have been possible. Moreover, a hefty rush order fee would be applied due to the bumping of other orders.
My client's client believed that if it could be done once, it not only could be, but should be done every time without exception. When my client tried to explain that he fulfilled this one order as an act of good faith and explained that it wasn't physically or fiscally possible to do so regularly, his client only balked. The client demanded he receive this service with every order time or threatened to walk without any regard for my clients' need for profitability.
Was this illegal? No. Unethical? Perhaps. Unprofessional? Unquestionably. My client's client decided this one exception should become the norm, exploiting the good will previously established.
But resigning a large client who pays on time is a difficult business decision for many reasons. From a practical standpoint, a salesperson is often in a comfort zone with such a client. Barring a major goof by the salesperson, he can count on a specific amount of business during a specific time period.
This means he'll have steady sales resulting in steady commissions and big steps toward regularly meeting quota. And from an emotional standpoint, the account is the result of his hard work. He earned it and it's very hard to just let it go, especially considering the amount of time and lost commissions it will take to replace it.
As I advised my client, however, I firmly believe that a salesperson in a similar situation or in one where the following conditions exist, is warranted in dropping the client:
- You're spending twice as much time on this client than any other of similar size without twice the sales.
- You're regularly providing concessions such as rush orders without charge, higher than average price breaks, and/or `freebies' to sweeten each sale.
- The customer often threatens to switch to a competitor if you don't meet their demands.
A customer's decision to buy your offering as well as your decision to sell it should be nothing less than mutually beneficial and respectful. As much as clients feel they're in control of the relationship, they cannot be overly controlling.
Remember your product or service is secondary to the expertise and professional guidance you provide. Don't underestimate the added value your wisdom and experience offer. As Austrian economist Ludwig von Mises observed, "Value is not intrinsic; it is not in things. It is within us."
Because you are a skilled sales professional, the client should view you as a trusted consultant and never hold you hostage. There's nothing wrong with ethically playing hardball and pushing for the best deal. However, parameters must be established from the start and respected by both parties.
As I acknowledged, resigning a hard-earned client is a difficult decision that ultimately, however, can be very liberating. First, doing so will immediately pry you from your comfort zone and demand that you exercise many of the sales skills you likely hadn't routinely been using. Second, it can improve your self-esteem and emotional well-being.
Happiness and fulfillment are often contingent on your focus, thus removing negative influences lets you spend energy on positive areas: namely, winning new accounts. And third, the lesson learned is a valuable tool to be added to your sales toolbox. When a similar scenario arises, you'll know how to handle it expertly.
You should never be held hostage by a client or a client by you. If a client is determined on being your captor, surprise him. Exercise the famous line: "Don't walk away mad. Just walk away." My guess is he won't be satisfied with any vendor.
Roy Chitwood is an author, trainer and consultant in sales and sales management and is president of Max Sacks International, Seattle.