ACTIVATION
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The power of No
Saying ‘no’ in business can often be the hardest thing to do, especially in these uncertain economic times. But saying no is, strangely, the right thing to do in a surprising number of cases.
‘Yes’ on the other hand can get a business into all sorts of trouble. And yet many would have you believe that saying yes to just about everything is the route to success.
Some customers want it all and preferably without having to pay for it.
Oh develop this feature and we’ll buy it! Stock that line and we’ll stick with you! Work on reduced margins and we might place more business with you in the future!
Popular sales talk will have you believe that the customer is always right. It’s sounds good to say it doesn’t it “the customer is always right”. It sounds even better to the customer.
But the best deal you can give your customer is to make a profit year in year out. Ultimately customers get the suppliers they deserve.
Delusion and false economy
So you like saying yes.
Well, it certainly makes one feel good. And it’s nice to be liked, to spread a little happiness once in a while. But is it commercially wise? or are you deluding yourself or hoodwinking your shareholders when it comes to doing the right thing for the long term health of your business.
So how do you know when to say no? Retrospective costing exercises make money. What did you actually make on that sale? Stop guessing, know!
And remember every working person on the planet has an hourly rate. What’s yours and why, and was the cost of time associated with the job or project part of your profit calculation? Chances are you and your colleagues cost much more than is realised. Just take a look at the average balance sheet and you’ll doubtless find that salaries account for a significant proportion of costs.
Boxes of stuff purchased for a fixed price are easy to work into your costings. But the cost of 6 meetings, 12 phone calls and 32 emails between 7 people, well that’s a little harder to nail down but it still has a price tag.
Create demand with No
Line extension. Over engineering. Over serving. These issues all eventually destroy margin.
So it’s important to understand where the optimum value level is. If you can get a First Class price for a First Class service then that’s great. And never be scared to explain the merits of relative value. Customer’s frequently need reminding that there is a good reason why a Rolls Royce is more expensive than a Mini.
Apple didn’t become the most valuable business in the world by saying yes to everything. In fact ‘no’ has played a big part in defining Apple’s brand. No you can’t develop any old software for the Mac. No you can’t connect an iPod to another system. No you can’t view those files on an iPad.
As Henry Ford said “Any customer can have a car painted any color that he wants so long as it is black”.
So profit yes. Addiction to the instant gratification of taking an order……just say no.
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