Service Offerings: R&R explores why to walk away from a sale.
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. When it comes to ignoring opportunities that are adjacent to your current service or product offerings, many people can get “itchy” to abandon discipline and chase the additional dollars. If it is a current customer asking you to perform the work, the temptation can feel overwhelming. Fear and anxiety can set in about the potential for the client to leave our organization, or to replace us with someone who will say yes. Diluting your service offerings with custom, specialized, “one off”, or otherwise not “core focused” items is a not only a distraction, but it also turns out they’re likely to be a drain upon your business’ performance.
Why to walk away from a sale
My friend Michael Crean, CEO of Solutions Granted, shared some wisdom on the Richardson & Richardson webinar series, The Thursday Process, around this topic. 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 (whether materials, labor, or both) to perform complex work versus simple work. Businesses counteract complexity with process: Process essentially 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 by dictating how to perform the offer.
So, what happens if we add in a variable? The process no longer functions as designed – it will need to be modified, iterated, or otherwise changed to accommodate the variable. Add enough variables, and the business will start to struggle to deliver proper returns. This isn’t a “new” concept – Peter Drucker detailed it in depth in his essay for Harvard Business Review in May-June of 1963, “Managing for Business Effectiveness.” 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 require more inputs, due to the higher level of complexity, versus standardized offers that can be delivered quickly, with less labor inputs, and requires less customer interactions. Those increased inputs translate into increased costs, which 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 [a topic we explore in a different blog, located at Standardization improves Customer Experience – Richardson & Richardson (randr.consulting)]. 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 with creating a catalog of core offers or standards, figuring out how to navigate determining which opportunities are the right ones to pursue, or getting alignment with your team on the need to invest in the effort, Richardson & Richardson can help. Check out our case studies for stories of organizations that we’ve assisted with similar issues and download our white papers for deep dives on tools you can use in your organization. If you’re wondering where to start, book a complimentary session with one of the Richardsons today to come up with a plan on how to move forward.
Share this Post