To Grow Your Business, Just Say, “No”

When it comes to growing your business, keep in mind that "no" isn't a four-letter word, says Kim DeMotte, author of the new book, The Positive Power of No: How that Little Word You Love to Hate Can Make or Break Your Business, (Facts on Demand Press, 2003). Even in today's tight economy, DeMotte insists you must turn down customers who aren't right for your business.

"'No' is a powerful word and it's surprisingly difficult to say," asserts DeMotte. "Fear drives many companies to accept any new business, even if it doesn't make strategic sense for them. Sometimes the problem is that the company has no strategy—unless desperation counts as a strategy. Filling your net with minnows leaves little room for the big, healthy, profitable fish that will swim with your company instead of against it. Remember that saying "yes" to the big fish requires that you say "no" to the minnows. If you don't learn this vital truth, you're not going to survive."

Here are some of DeMotte's tips that will help prepare you to take care of those big fish:

Understand the value of a clearly defined "red ring." A company should define its limits by using an archery target as a model. The yellow bull's-eye in the center represents those customers to whom you say "yes." What's more critical, however, is the red ring encircling your bull's-eye. It represents "no." In an ideal target, the red line is clearly defined and sharply delineated. It should not be paper-thin and ringing a huge bull's-eye.

Implement the six checkpoints of financial decision-making. How do you sharpen that critical line between red and yellow? How do you decide which customers benefit you and which ones do not? Maybe you don't want customers with orders under $100,000; or those that pay in over 60 days or those that demand lower quality specs. The Positive Power of No presents six "checkpoints" to examine in the decision-making process:

1. Are all areas of the business represented in the characteristics? Identify all departments that are the roots of the issues. They should have the information, reports or numbers that you'll need to define your limits.
2. Are limits consistent with corporate goals? If they're not, your employees will not know what to do when a conflict arises and they will bring all such problems for you to resolve. Or the limits will be followed and your company will end up facing a different direction than where your strategic initiative was aimed. Or you'll go broke.
3. Can limits be quantified in relationship to corporate goals? Make sure your reporting system shows that sales volume actually does equal better profitability, i.e., that a customer with $100,000 in annual sales will provide the desired level of profitability
4. When applied to the customer base, do limits produce strong dividing lines? If not, then review three areas for their accuracy—the relationship between the stated limit and the desired limit, the reporting system for current business and the weighting of the limits—to make sure the most important limit has the most effect on your list.
5. Can all limits be routinely reported and quantified? Your system must be efficient and easy to use. It will become part of your everyday procedure. With regular use and reporting, the limits will become ingrained in your company's culture.
6. Are there any major feedback issues? Look for clues that you need to adjust your limits. Don't change them on a whim or bend under the pressure to include a particular prospect. Changing your limits requires careful consideration.

Don't qualify prospects; DISqualify them. It's ironic that the term "qualify" is associated with prospecting for customers. A person prospecting cannot qualify anyone or any company, any more than you can force useless silt to become gold dust. Sales managers don't facilitate the sales process when they order their salespeople to qualify prospects. If a salesperson asks, "Do you think you will ever, ever need our widgets?" the prospect decides there is no cost in saying "maybe," or even "yes." And the salesperson's heart grows lighter as he drives back to the office. He mistakenly tells himself, "Yes, I've got one!" You can avoid this scenario by having a filtering process based on a sharply defined target. A prospect is either a bull's-eye or he's not a bull's-eye. The salesperson hasn't qualified a prospect—he's failed to disqualify him or her.

Failing to disqualify can be very costly. A publishing company had a direct mail database of about 14,000 organizations. Every year, the company would send about $27 worth of direct mail to each of these names. That's $378,000 in direct mail costs to "prospects." Yet, in one 30-day telephone sampling of this database, the company discovered that 42% of these prospects were either out of business, had moved, no longer had a working phone number or didn't have any use for the client's products or services. They were spending $158,760 sending mail to people who weren't even there or would never need their product or service.

Disqualify prospects using logical and emotional criteria. "Logical qualification" is a measurement of how much you or your company will have to bend (expand your bull's-eye) in order to do business with this prospect. It involves asking questions like "Do you ever buy widgets?" "Any plans to ever buy widgets?"

"Emotional qualification" is a measurement of how far your prospect has to bend (expand his bull's-eye) in order to do business with you. Perhaps he's satisfied with his current source, or he buys from his brother-in-law or he just doesn't like you. If prospects don't have LQ and EQ ratings within your present numbers, they must be disqualified. Forget them and move on.

When you find prospects who fail to disqualify themselves on both scales—these are the ones you are looking for!

It's okay to move your limits—as long as you do it purposefully. Suppose you're getting a lot of requests for bids on green widgets. So far, you've allowed green widget buyers to disqualify themselves because you don't make green widgets. You can make the decision to go into the green widget business, but do it on purpose. If you relax the limits, it should not be for one or two prospects, but because you think an untapped niche exists for the product. You can budget for the green widget line and make it work from a strategic point of view. Likewise, you may find that a limit of annual business of $50,000 is so tight that you find a suitable customer only every two years. You might decide to lower that limit and design methods to handle $30,000 customers more profitably—on purpose.

Always live by your brilliance. A big part of determining who your customers should be is knowing and communicating what you do better than anyone else. Celia Rocks, one of DeMotte's colleagues, calls this "brilliance marketing." It encompasses and affects virtually everything a company does, from product development to advertising to hiring to sales. It's a holistic way of doing what comes naturally which, in itself, draws the right customers to you. "Brilliance marketing steps back and takes a good hard look at what your firm's individual gifts are—and are not—and then finds natural ways to build relationships and reap sales based on those gifts," writes Rocks. "It is never frantic, because the brilliance marketer knows his or her offer is sound and that he can afford to wait until customers are ready to buy."

Conclusion
"It takes real courage to establish a limit and give your sales team marching orders NOT to take any business with gross margins under 7%," says DeMotte. "It takes real guts to look at an applicant for a critical position that has been vacant for 14 months and pass because he or she doesn't have the experience required. The big test will come when you want so badly for someone to commit to your proposal, but you can see they're struggling to agree. Helping them say "no" moves everyone toward the most successful conclusion. Your counterpart is relieved by not committing to something that was outside his limit (although he may not have realized it). And you don't end up with the inefficiencies and ineffectiveness of less-than-total commitment."

Kim DeMotte is the founder and managing partner of Power of NO, a St. Louis-based firm specializing in improving corporate sales and management effectiveness. He can be reached at kim@powerofNO.com or at (877) 245-8250. His Website is www.powerofNO.com

Learn more about increasing your company's sales effectiveness at these AMA seminars:

• Principles of Professional Selling
  
• Customer Service Excellence: How to Win and Keep Customers
  
• Coaching Your Sales Team