Walking away from a sale is something that is tough for most business people to do . . . particularly in a tight economy when selling opportunities may be few and far between . . . but sometimes it\u2019s the right move.\u00a0 A business is set up to effectively and efficiently serve a certain market segment in whatever way the demands of that market segment require.\u00a0 In other words, it is set up to deliver certain products or services with specific pricing, delivery schedules, payment terms, etc.\u00a0 However, sometimes an opportunity presents itself that doesn\u2019t fit neatly into the way our business is organized.\u00a0 Should we take it?\u00a0 For more on this, please read below.<\/p>\n
Awhile ago, I heard a presentation on pricing.\u00a0 In that presentation, the speaker admonished his audience to know your \u201cKenny Rogers\u201d . . . the point at which a price gets negotiated down and passes from profitable to unprofitable.\u00a0 More broadly, it\u2019s the price point at which making the sale is no longer attractive.\u00a0 The old pricing joke is, \u201cSure, I lose a little on every transaction, but I\u2019ll make it up on volume.\u201d\u00a0 You better know where your Kenny Rogers is, and painful as it may be, walk away if your customer is trying to push you beyond it.<\/p>\n
Think of the big box stores like Walmart or Home Depot.\u00a0 They are famous for demanding deep discounts from their suppliers.\u00a0 More than one of those suppliers went out-of-business because they were seduced by the promise of huge volumes and allowed themselves to be pushed below their Kenny Rogers.<\/p>\n
But the Kenny Rogers concept doesn\u2019t apply only to pricing.\u00a0 It can apply to any of your normal business practices.\u00a0 For instance, let\u2019s say your normal payment terms are net 30 days.\u00a0 What do you do when you can land a very large new customer, but that customer demands 120 day terms?\u00a0 Or let\u2019s say you\u2019re set up for 2-week delivery times.\u00a0 Now comes a high-volume potential customer who requires next day delivery.\u00a0 Do you take it?<\/p>\n
There are no right or wrong responses to these situations.\u00a0 As business people, we need to recognize and seize opportunities that come our way.\u00a0 However, when the opportunity requires that we step outside of our normal operating parameters, there\u2019s probably a Kenny Rogers in there someplace and we need to make sure we\u2019re not being asked to go below it.<\/p>\n
Opportunity almost always carries some level of risk, and we need to be prepared to evaluate whether the risk is worth the reward.\u00a0 But let\u2019s not get caught betting the whole ranch when we thought we were only betting the south forty.\u00a0\u00a0 Knowing your Kenny Rogers will prevent that.<\/p>\n
If you don\u2019t know where your Kenny Rogers is or how to find it, call me.\u00a0 We should talk.<\/p>\n","protected":false},"excerpt":{"rendered":"
Walking away from a sale is something that is tough for most business people to do . . . particularly in a tight economy when selling opportunities may be few and far between . . . but sometimes it\u2019s the right move.\u00a0 A business is set up to effectively and efficiently serve a certain market<\/p>\n