“It’s Like Deja Vu All Over Again”
Another quarter sales target just barely made. It was a close call. As you go over the numbers with your team you realize that trying to close a sale with XYZ Industries cost you a ton of time, almost made you missed your quota and almost cost you your job (maybe – you never know, but you suspect it).
It’s not that you haven’t been down this path before. As Yogi Berra would say “It’s Like Deja Vu All Over Again.” It’s not the first time there was a close call because somebody wasted your time. And there were other bad deals in the past.
What if there was a way to know bad deals before they happen? What if you didn’t feel like you don’t know when to walk away from a bad deal? What if you could keep your emotions in check and avoid getting too deep into a process and wasting your time or striking a bad deal? What would that mean to your bottom line?
I came into the world of sales an unusual way. First I was a CPA, then a law school graduate and eventually I was an attorney for some of the largest law firms in the United States. After that started my own law firm and later a business strategy firm. As time progressed I did more and more sales and more and more sales teams called me for advice and training.
But this role and unusual path have allowed me to look at negotiations in a completely different way. I often get to be a neutral advisor to many negotiations which allows you to see so much more.
And one of the most powerful things to know is knowing when to walk away from a bad deal. Let’s set some ground rules so you can easily walk away from that next bad deal – before it almost costs you your job!
We are going to replace your instinct of “if I don’t keep going, I won’t make quota” to something better for you. The reality is chasing after a lead that’s never going to close is one of the quickest ways to miss quota. Instead, it’s better to get ruthless about walking away the second you can see it’s not going to pan out.
RELATED: 5 Psychology Tips From An FBI Hostage Negotiator That Will Make You Sell Better
Six Tips On How To Know When To Walk Away From a Bad Sales Deal
If you keep this six tips close to you you’ll know better when to walk away from bad deals.
1) The Best Time To Think About Walking Away is Before You Start
It’s important that you think in terms of when you will “walk away” from a deal at the start of the negotiations. “Walk away” simply means the time and place when it no longer makes sense to negotiate and move on to other options.
As you go into future negotiations you should always be thinking about what your walk away is before you start. This is a discipline that you can build that should become natural to you. Every time you open a file for a prospective client set your walk away terms as described in this section.
Every time you into a new sales call, start thinking about a purchase or otherwise prepare to negotiate stop and think about what terms you will accept and what you would be too much give. Write this down now. You want to record what you think is fair – and what is not – before the heat of the moment takes over. If you do that you’ll know when things are going too far and when these are getting unfair.
When I’m negotiating on behalf of my clients, I often started the preparation for the negotiation by getting them to agree to what they will accept and what they wouldn’t accept as an outcome. Knowing how much give is too much before you start will allow you to shape your behaviors.
In sales, we’ve all heard of BANT, but there is another helpful acronym here known as BANTA. At the Harvard negotiation school, they often talk about your “BATNA” or your Best Alternative to a Negotiated Agreement. This is a helpfull concept. Think about the power to know what alternative you have if your deal doesn’t work out. Where will you go? What will you do if this negotiation doesn’t work? You’ll feel less trapped. In the simplest terms know how good and likely your “Plan B” is.
I have a simple saying the drives the point home: “The person that can’t walk away loses.” If you aren’t ready to leave the negotiation you are going to lose.
2) Always Keep An Eye On Your Walk Away
As you get in the negotiation always look back to that walk away that was set before the negotiation was started. Are we still in the bounds of a possible agreement or is it time to consider leaving the negotiation? How far have we gotten to our goals versus getting closer to the walk away? Have the terms gotten into the range of your walk away? Because we know what a good deal is for us (and what a bad deal is for us) we can start to walk away as soon as a deal starts to turn bad.
Imagine you’re trying to sell a software package to a customer. Before you went into the negotiation you knew that $99 per user per month would be your floor on pricing. You’ve now invested substantial time into the negotiation and you found that your customer will only pay $89 per user per month.
The old you may have felt compelled to keep going to win this. But because you have a clear walk away and you set that standard before you start it you now know that this customer will not be a win for you. You can now easily walk away and move on to find customers that will be able to justify that $99 per user per month minimum.
3) Know When You Are Acting On Emotion
Sales is an emotional process. We are all told about how to connect to our customer and how to understand their emotions and feelings.
We sales professionals are no different. We also have emotions. The problem is that our emotions often come in and cause us to push for bad deals. We have to get that win. We want to look good for our bosses and impress our colleagues and friends.
This means we will often get emotionally invested in closing the deal. We aren’t thinking about our overall numbers, our job or the quota – we are thinking about winning this deal.
When emotion takes over we often strike bad deals. So let’s, instead, focus on winning deals not serving our emotions.
4) Keep An Eye On Your Back-Up Options
Having backup options will make it easier to walk away. That way you know that you don’t have to stay in the current offering or current deal if the terms turn bad.
Let’s say you’re in a sales discussion and your buyer is starting to signal that it may not be the right deal for them. Your price point is too high or they just aren’t sure they want to make a commitment at this time.
Having seen the situation play out many times I know that those without backup options, ie other strong leads in the pipeline, often feel like they have to force the sale to make their quota or goals. That’s why it’s so critical to have backup options. If you know you have a pipeline that is converting to sales you won’t feel stuck in any one deal.
5) If It Doesn’t Feel Right, Reassess
If you are in the middle of a deal and it just doesn’t feel right, it probably isn’t. So keep an eye out and think about how you are feeling and why. Ask yourself, “Am I uncertain about closing the sale because I lack confidence or do I actually see some red flags?”
Many studies have shown that humans are actually very perceptive. Ignoring warning signs and these feelings will not help you in the long term. Believe in your intuition. If you’re seeing the wrong things and the sales process is not moving forward, then back out and start over again with a new prospect. It’s okay to walk away.
6) Remember Your Values
Another item that makes it easy to walk away from a bad deal is to remember your personal values. What are your goals and why are you on this journey? Who are you trying to take care of? Is it your family? Close friends? Or some broader societal mission?
If you stay focused on your life’s mission and your big goals, every single deal really plays a small role. As such, when you can remember your big picture it’s easier for you to walk away from a bad deal because you know that you can still serve the big mission.
RELATED: How To Walk Away From A Business Deal Without Burning Bridges
Do’s and Don’ts for Walking Away From a Bad Deal
The rules above will let you know when to walk away. Here are some Do’s and Don’ts for walking away from bad deals.
Do: Set a Walk Away
Always go into a deal with a walk-away. Know exactly when you’ll leave and what terms are unacceptable. For selling situations this usually means a bottom line on price or terms that you will not accept. If you set the walk away before you go in it will be easier for you to recognize when the deal becomes bad.
Do: Limit The Emotions
We’re humans and we’re emotional creatures. More and more research shows that human emotion is very important in business and success. And you’ve certainly seen the sales materials that have told you about emotions and how emotions can be learned to increase sales.
In considering walk-away scenarios limiting your emotions with respect to winning the deal can be critical to successful outcomes. So don’t tie emotion to whether you get the deal or not. Keep your eyes on the bigger picture.
Do: Focus on Winning The War, Not The Battles
Life, and selling have many battles. Don’t focus on winning each battle. Think about your big goals and what you’re trying to accomplish. That’s what you should be focusing on,not winning each individual deal.
Don’t: Feel the Need to “Win”
Many people get stuck in a bad deal because they feel the need to win. They have to get that trophy of getting the best possible deal. Perhaps bragging rights. That need to win has caused many people to put too much time or too much effort into bad deals.
Give up the need to win everything. It will be liberating in that it will make it much easier for you to walk away.
Don’t: Get Emotional About Walking Away
Many people associate walking away from a deal or losing a transaction as being a loss. Categorizing walking away as a loss, or a bad event, triggers those normal emotions of loss in us as humans. Make walking away a logical decision, not an emotional event.
It’s just business after all. So if you walk away from a bad deal know that you’re doing the right things for your business not losing some part of yourself.
Don’t: Box Yourself In
Don’t box yourself into any one transaction. Know that it’s a big world, a complicated business environment and there are many options out there. There are many paths you can take to meet your goals and accomplish success in life and business. You don’t have to follow any one path. If you can keep your paths open and keep many options going you won’t feel boxed in and it will make it very easy to walk away from a bad deal.
Don’t Lose the Big Picture
Is closing a deal with a bad prospect really a “win”? Many salespeople are paid on an account management model now, meaning they have to pay back the commission within a certain time period if the customer bails. Even if that isn’t the case, the customer success rep who gets stuck with your bad apple isn’t going to appreciate your “close at all costs” efforts.
Add on top of that that that terrible prospect may call you again for additional business (restarting the cycle) or refer you their friends that are similar to them!
You may think that you will lose face with your peers if you don’t close every day. In reality you might lose face pushing for the wrong closes and drive yourself crazy in the process.
The post Part 1: How to Walk Away from a Bad Deal appeared first on Sales Hacker.