Copyright Appraisal Institute of Canada 2005If your company is dependent on larger sales from fewer customers, then you could put yourself at financial risk by taking on the wrong customer. One of the most common mistakes business owners make is to accept money from anyone who is willing to pay for their product or service - even if the customer is not the ideal fit for their business. Whether you are a startup or a large corporation, taking on a new customer who does not match your ideal customer profile can be a big mistake. Here are seven situations that indicate you should say no to new business. If you do not heed this advice on when you should turn down new business, you will be in serious danger of having a database of customers that can take your business into bankruptcy.
#1: Your gut instinct says no.
This reason is at the top of the list. Your gut instinct or intuition is the most powerful weapon you own that is always correct...even if it is not always a logical thought. You should never ignore a nagging feeling that something is not right. When you hear that little voice inside telling you to turn away the new business, you should follow it or you could regret your decision later. Here is a common scenario that raises the gut instinct red flag. You are sitting in a new business meeting and everything on the surface seems to be going well, but you cannot ignore a sinking feeling in the pit of your stomach. You cannot put your finger on it, but you know something just isn't right and you feel you are not seeing the whole truth. Then your head gets in the way. Your rational voice talks you out of those feelings and, instead, you dismiss your instincts as ridiculous so you take on the new customer. Ultimately, that customer does not pay their bills or makes unreasonable demands that take away any profits you could make on the deal. You then realize you should have listened to your original gut instinct.
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Sometimes there does not have to even be a logical explanation why you do not trust the situation. Just remember that, if you get that inner message, do not let financial greed talk you out of your first impression. Your gut instinct is the best resource you have. Listen to it at all times.
#2: The customer does not appreciate the value of what you offer.
While some people make decisions based upon price, the most profitable business for your company will be from customers who appreciate the value of what you offer. Value could include your expertise, credibility, service, knowledge, reliability, and guarantee. Anybody who selects your company based on price alone views you as a commodity, not a valued service. A disloyal customer who is more concerned with price rather than value will switch very readily to any competitor who will undercut your price. Your chances are greatly diminished for repeat business from a customer who does not appreciate the value of your products or services.
#3: The customer expects you to invest time and resources into pursuing their business without any financial commitment on their end.
Anyone who is just shopping around and is looking for free advice is not going to be a good customer. You should determine how much time and energy you are willing to spend for free before you ask the prospect to make a commitment. Giving away products or services for free before the prospect makes any financial commitment diminishes the value of your company. It also raises the level of what they expect you to deliver beyond what you would normally offer for a specific price, because they have already received something from you for free.
#4: The customer does not treat you in a courteous or professional manner.
Profitable business is based on strong relationships between you and your customer. This does not mean your customer has to be your best friend, but, in essence, your best customers will be those who respect and value your professionalism. Anybody who constantly questions your recommendations, nit-picks at your pricing, or questions your credibility or judgement, is not interested in developing a long-term relationship with your business. There is no opportunity for trust here. Your business is being viewed as a commodity and the customer is clearly showing that they do not value your business or want to establish a long-term relationship.
#5: The customer asks for services you do not provide.
There are times when someone will approach your business for services you already provide and will also request additional services you do not already provide. They value your relationship and ask you if you would be willing to venture out into new opportunities. If this new opportunity is a stretch on your capital resources or your existing operational structure, or it is not congruent with the mission of your company, it is best to decline this business. Before you instantly accept a new challenge and opportunity, make sure it will not stretch your resources and develop into more headaches than successes for your company.
#6: The customer's requests are too large for your operation.
If a company approaches you to provide something that stretches beyond your current capabilities, consider the cost to expand your operations versus the profit potential. Take into account any capital expenditures, additional employees, training expenses, and the opportunity costs of other business lost while you are meeting the needs of this new customer. Controlled growth for your company is more manageable and typically more profitable than a large increase in business within a short time frame, if you are not currently set up to manage that quick growth.
#7: The customer does not share the same values as you.
The right customer for you is someone who shares your values. It will be very apparent by the manner in which the customer treats you if you share common values. Do not lose sight of your company's mission and values even if it means turning down potential business. When you compromise your values to pick up new business, it will not result in profitable business for your company in the long run.
© Source Communications 2004
Debbie Bermont is president of Source Communications, a marketing consulting firm in San Diego, CA, and author of Outrageous Business Growth(TM) - The Fast Track To Explosive Sales In Any Economy. Debbie is a leading expert on helping businesses reduce their marketing costs and accelerate their sales growth. For more information go to www.outrageousbusinessgrow th.com, email us at info@outrageousbusinessgrowth.com or call (619) 291-6951.
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