Walking away from a deal?

Walking away from a deal?

Postby akw » Sun May 16, 2010 12:07 am

I was reading the section on Forecasts and Pipeline Reviews and happened on "The best teams .....know how to walk away from bad deals"

When I read this my first thought was similar to the response received when we explained to someone in marketing that we don't test the entire product every release. Something akin to WHAT THE ....

After thinking about it I guess this makes sense. Not every deal can be a good one.

How would one know that a deal is "bad"? What are the indicators? Are the indicators different at different stages of the sales cycle?

Adam
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Re: Walking away from a deal?

Postby InsideSpin » Mon May 17, 2010 5:49 pm

Some sales leaders would take in all revenue regardless of any downstream impact on the Company. Some examples would include:
1. Credit risk -- prospect is a credit risk but sales does deal because the comp plan pays on bookings not collections. The company spends time collecting bad debt which distracts finance from other activities.

2. Bad fit -- the customer wants the product, the sales person has the deal in hand, the SE feels it is a bad fit for the customer and it won't solve their needs. The deal goes through and the customer is not happy producing a negative account reference (the customer complains on blogs and forums). This talks to where the SE should report to in order to maintain some level of deal impartiality.

3. Product misrepresented -- not what you want to see but perhaps the sales pitch talks about product capabilities in a way that exaggerates what the product can actually do. The customer would not be happy and product support or the post-sales support team would be left to deal with things. Sometimes you sell ahead of what is delivered if you know it will be delivered in the shorter term -- but it is a risky proposition.

4. Wrong business model for the deal -- too much discounting, poor margins -- perhaps even a loss. Unless you need the reference account, you walk away from deals that would undermine the street price (e.g. value) of the product.

If you manage forecast and pipeline properly you can have sufficient coverage to delay or walk away from a bad deal.
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Re: Walking away from a deal?

Postby akw » Sun May 23, 2010 6:26 pm

InsideSpin wrote:Some sales leaders would take in all revenue regardless of any downstream impact on the Company. Some examples would include:
1. Credit risk -- prospect is a credit risk but sales does deal because the comp plan pays on bookings not collections. The company spends time collecting bad debt which distracts finance from other activities.

2. Bad fit -- the customer wants the product, the sales person has the deal in hand, the SE feels it is a bad fit for the customer and it won't solve their needs. The deal goes through and the customer is not happy producing a negative account reference (the customer complains on blogs and forums). This talks to where the SE should report to in order to maintain some level of deal impartiality.

3. Product misrepresented -- not what you want to see but perhaps the sales pitch talks about product capabilities in a way that exaggerates what the product can actually do. The customer would not be happy and product support or the post-sales support team would be left to deal with things. Sometimes you sell ahead of what is delivered if you know it will be delivered in the shorter term -- but it is a risky proposition.

4. Wrong business model for the deal -- too much discounting, poor margins -- perhaps even a loss. Unless you need the reference account, you walk away from deals that would undermine the street price (e.g. value) of the product.

If you manage forecast and pipeline properly you can have sufficient coverage to delay or walk away from a bad deal.


:shock: Wow - this is good stuff. I have some thinking to do on this.
akw
 
Posts: 63
Joined: Sun May 09, 2010 10:31 pm
Location: Toronto


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