5 mistakes that lead to unsustainable sales deals

Sustainable selling is something we frequently speak about.

Why is that? It’s because sales is a specialism that’s full of people offering quick fixes, which can result in unsustainable sales.

Search Google for sales questions and you’ll find plenty of “clever” questions designed to manipulate customers. Not to mention the countless lead gen businesses promising you’ll get rich quick.

Any business initiative should deliver quick wins of course. But not at the expense of delivering value over the long term.

Sales should be a strategy, not an Elastoplast to patch up damage in your business.

What makes sales unsustainable?

Usually this crops up where the selling organisation becomes obsessed with getting the deal across the line.

Suppliers are there to be squeezed for every last penny. Every potential customer becomes a mark, with a number on their head. Employees can be stretched until they leave. If you can’t stand the heat, get out of the kitchen.

Some businesses behave like this and get results. They usually invite us in when they’ve run out of road. When they realise there needs to be a more predictable – or simply a less exhausting – way of doing business.

What are some of the symptoms of unsustainable sales?

Deals that only work for one party

Think of your experience of buying things and you’ll usually buy from someone who’s easy to do business with. Most people can readily name organisations they gave up on because it was just too difficult to get the sale finalised.

This applies especially to difficult terms and conditions. How many times have you given up on an online transaction because the website demanded you login or leave personal details?

Professional buyers are trained to agree specification and then add incrementally to the deal. Add-ons like early payment discount and over-riders make the buyer more money. But there’s a point at which they encourage sellers to look elsewhere.

There is another side to this principle though: Sellers who undervalue their product or service.

It’s always tempting to offer a competitive price to win business, especially in the early years of your business.

But it doesn’t take you anywhere. Anybody can sell cheaply and if your main focus is on reducing costs for buyers then you’re in a race to the bottom.

Doing all you can to identify value in your proposition and pricing on the basis of value, not cost, should drive transactions that work for both parties.

Deals you can’t deliver

You’d like to think this is usually the fault of a rogue sales person. The one who missed a couple of days induction training and got too excited in front of a potential customer.

But some companies have it baked into their sales culture. The long-standing management adage is to under-promise and over-deliver, thereby delighting the boss.

But some sales organisations run the other way around: Say anything to get the deal and worry about customer complaints at a later date.

It’s particularly tempting in industries where repeat sales are low. But bad reputations are hard to shift and you break this rule at your peril.

Discounts

Price is possibly the most under-rated weapon in the sales armoury. Increase your price by a pound and that pound drops straight to the bottom line as profit.

Yet the reverse holds true. A business making a 25% margin will need to sell 67% more to make up for a 10% price cut.

It’s such common practice for supermarkets and websites to offer big percentage cuts that we’re almost immune to this. But not many organisations can run two thirds faster just to make the same amount of money. The effort just doesn’t make it worthwhile.

Discounts are a road to oblivion and unsustainable sales!

Deals that aren’t legal

It seems too simple to point out that selling needs to be legal. Who would consider the alternative?

Well… take a look at the financial services industry where mis-selling endowments cost the industry billions. Or the Volkswagen emissions scandal that cost an estimated $30bn in the US alone.

Or read the extraordinary story of the US opioid crisis, told in the book Empireland. The estimated cost of this to the US taxpayer is now over $1 trillion.

Problems like this don’t start from someone trying to break the law. They happen incrementally through bosses setting ambitious sales targets, teams chasing hard-to-reach customers and shareholders expecting bigger dividends. It can happen anywhere.

Revenue is vanity, profit is sanity

This is another business adage and one that can be forgotten when setting sales measures.

There’s a lot to be said for keeping sales targets simple, but if you opt to bonus your team on revenue then make sure someone behind the scenes is keeping a close eye on margin.

Many of the world’s biggest companies like Amazon, Uber and Tesla grew their business whilst leaking cash at a super-charged rate.

But they could afford that because the money they were spending came from investors. The rush to on-board customers was funded from outside the business.

Most organisations don’t have this luxury. Your customer lifetime value might be positive, but you have to manage cashflow in the short term to ensure you’re still trading when they finally become profitable.

You’ve probably worked for companies that break one or two of these principles. They’re not black and white rules where stepping the wrong side of the line will guarantee failure.

But if you pursue too many of them, too often, there’s a good chance it will result in unsustainable sales.

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