Service Offerings: Why to walk away from a sale
By Ian Richardson, Principle Consultant, Fox & Crow Group
Inspired by Thursday Process with guest Michael Crean, Solutions Granted
Service Offerings
Saying no to money is tough to do. Who doesn’t like making a sale in business? Walking away from an opportunity takes discipline and a “long game” point of view. Unfortunately, most people tend to abandon discipline and chase the extra dollars.
If it is a current customer asking you to perform the work, the temptation can feel overwhelming. Fear and anxiety can set in. Fear of the client leaving our service. Fear of a competitor coming in and saying “yes” when we said “no”.
Diluting your service offerings with custom, specialized, “one off” sales is a distraction. It also turns out they’re likely to be a drain upon your business’ performance.
Why to walk away from a sale
Michael Crean of Solutions Granted shared wisdom on this with me. Michael said
“Just because you can do [a product or service offering] doesn’t mean you can do it well.”
That lack of “doing it well” is the crux of why a mature business should walk away from a sale.
Whenever you add a variable to an offer (product or service), you introduce complexity. Complexity increases overhead. It will always take more resources to perform complex work versus simple work. Businesses counteract complexity with process. Process tells the workers at an organization to “do this task in this way.”
At its core process helps “simplify” the complexity of an organization’s offer. It does so by dictating how to perform the offer.
So, what happens if we add in a variable?
The process no longer functions as designed. It requires modification, iteration, or changes to accommodate the variable. Add enough variables, and the process breaks. Deliverables and outcomes don’t go as planned.
This isn’t a “new” concept. Peter Drucker detailed it in depth in his essay “Managing for Business Effectiveness.”(1) I’m heavily paraphrasing the article, but Drucker essentially reveals that the true cost of an organization’s products or services is directly related to the number of transactions required to deliver said offer (things like quotes, service calls, manufacturing runs, etc.).
Custom work will need more inputs, due to the higher level of complexity. Likewise, standardized offers need less labor inputs, and requires less customer interactions. Those increased inputs translate into increased costs.
That leads to my favorite math problem. Increase costs in turn decreases the profitability of the offer.
Final Thoughts on service offerings
By pursuing that extra “sale”, you’ve decreased the operating efficacy of your business. You would have been better off walking away from the sale.
In fact, your customer would have been better off from you saying “no” as well. Adhering to standards improves your customer’s experience working with your company.
I explore this in a different blog, coming soon!
In the end, it’s far better to take Michael’s advice:
“Stop trying to be everything to everyone. Be what you said you wanted to be, and … be amazing at that and stop being distracted.”
If you’re struggling to select core offers or standards, I’m happy to help.
I talk offers in my newsletter
I’m always happy to chat with people around offer selection and standardization. My calendar is here.
References:
Peter Drucker, Harvard Business Review, “Managing for Business Effectiveness”. May-June, 1963.
