Of all the decisions we make as business leaders, saying “no thanks” to a potential customer willing to pay us money is among the most difficult. The more your business is in need of orders and revenue, the harder it is to turn away a paying customer. Sometimes, however, it is absolutely the right thing to do.
Strategies help us decide what to do: products and markets to invest in, development approaches to pursue, key customers to win. Good strategies also tell us what not to do. In too many cases, however, strategies are overbroad and overly optimistic so while they encompass what we need our companies to do, they aren’t specific enough to provide clear guidance regarding what we shouldn’t do—at least right now.
The area where I see this most often is in target markets. More companies fail as a result of focusing on too broad a market than from thinking too narrowly. Your product or service might be a great solution for a broader set of customers, but you probably lack the resources currently to address more than a slice really well. Hitting a lot of singles is a great strategy for baseball, but hitting home runs generally is a better marketing strategy and way to build a strong brand position. A big fish in a little pond always has the option of growing the pond. A little fish is always a little fish.
This brings us back to saying no. I see lots of strategies based on what a company could do in a perfect world rather than how to focus available resources laser-like on a few places where it can hit home runs. The result is that too many companies end up with a little success here and a little success there. Rather than foreshadowing future success across many markets, this approach serves mainly to deleverage the sales and marketing process because it offers little leverage for the future. Worse, it commits the company to servicing and supporting customers that are not truly strategic. Each customer win should make the next win more likely and come at a lower cost. One customer each in the banking, travel, health care, and construction markets is generally less useful than three or four customers in a single segment. From a position of strength in one market, say banking, you can strategically target additional segments with a much highly probability of success.
Next time an excited sales rep brings you a bluebird opportunity, weigh the revenue against not only the direct cost of servicing and supporting the customer into the future, but also the opportunity cost of deleveraging your sales and marketing engine. Saying no to revenue is hard, but sometimes it is the best way to make money in the long run. Your strategy should stretch your organization and encourage it to achieve ever higher levels of performance, but it is hard to excel without lots of focus. If you aren’t crystal clear about what your organization shouldn’t be doing, then the people that work for you probably aren’t either.
Tags: performance, target market