5 Red Flags of a Bad Sales Deal
Learn to recognize these signs before committing your company's time, energy and resources.
As a business owner or sales executive, I don't need to explain to you that sales are the lifeline of a company. Without revenue, the company doesn't exist. There have been countless books and articles about the importance of the relationship-building that needs to take place during the sales process, especially in major account sales.
It typically takes six to 18 months to close a large account. You can imagine how many calls, meetings and presentations are often required to land that nice piece of business. It's important for the prospect to get to know you, your organization and the solution and services. But what nobody talks about is what to do if "you" don't like the prospect and when to walk away from a deal if the prospect is not the right fit for your organization. Remember, once the deal is closed, you are now going to be working very closely with that company, especially for large implementations.
Over the course of my career, I've made thousands of sales calls and onboarded hundreds of clients, so I've learned how to look for red flags in prospects. Often when I don't get a good vibe from a company, whether it's my contact there or the decision making team, I know that it's time to decide whether I want to proceed into this working relationship or not.
Here are five major "red flags" to help you walk away from a bad sale or a bad customer before it's too late:
1. An unpleasant sales process
Usually, prospects are on their best behavior during the sales process. They haven't signed on the dotted line or paid anything yet and this is when the "stakes" are the lowest. So if you see signs of a prospect's bad behavior or a bad fit during the early stages of the sales process, don't be afraid to walk away. Because if you don't really like your prospect now, wait until the project starts and you run into the inevitable delays and challenges. From past experience, every time I go against my instincts and try to talk myself into working with a prospect or thinking, "maybe they won't be so bad once the deal is done," the client almost always ends up driving me nuts.
2. No respect for boundaries
Bad customers tend to have issues with making excessive demands or failing to respect your boundaries in terms of communication or time of day. If you start seeing some signs that you don't like during the sales process, you might want to consider walking away. It won't always be a big or obvious sign, but over time, you start to know it when you see it. For example, I've had prospects emailing me evenings and weekends. expecting me to immediately respond to questions. I've seen email subjects like "call me now," "need to speak right away" and "emergency." And these are folks that I've had one or two sales calls with; we haven't even started working together yet. If the prospect is already annoying you and invading your personal time before they're even paying you money, it will only get worse.
3. The micromanager
The best clients look to you as a trusted adviser and industry peer who looks out for their interests and offers credible advice and solutions to their business problems. But sometimes bad clients will try to treat you like a doormat or like "dumb labor" there only to serve their needs. For example, at my company, my job is to design and develop lead generation programs for my clients. If I'm on a call with a prospective client and the prospect starts acting like he or she knows more than me about how to get new business leads for his company, that's a big red flag. After all, the whole reason the prospect is talking to me is because what is being done isn't working. If a prospect is not open to new ideas and is not willing to treat you like a respected expert in your field, that is a bad sign. When a prospect says he wants your firm because of your expertise and excellent solutions, but acts like he or she wants to micromanage you, this is a disaster waiting to happen.
I was working with a cybersecurity firm and the owner insisted business owners didn't know the term "cybersecurity." He insisted we call his company a "network-security" firm. He thought that was the reason why his company wasn't generating leads. When I tried to explain to him otherwise, he got agitated and said unless we used his terminology, his company wouldn't go with us. Sure enough, folks weren't interested in "network-security." After seeing that we weren't generating leads, he let us run with cybersecurity.
4. The guarantee-er
This is the person who tries to pinpoint you into guaranteeing or committing to specific results or numbers before you're ready. I'm very honest with prospects. I always get asked, "If we work with your firm, how many new sales leads do you think we can expect?" That is a fair question. Based on what they tell me and what I know about the prospect's business, I can often make a reasonable guess. But when someone tries to force me into a number, that's uncomfortable and is often a red flag.
Many sales processes are hard to estimate. Sometimes you don't really know the full picture of a client's challenges, the full scope of implementation work or other factors that contribute to the final costs. Whether it's software implementations, consulting projects or other complex business solutions, it's impossible to be a fortuneteller.
When someone tries to force me you into making exact predictions, this is a bad sign that they don't really trust you, they don't fully know the details or appreciate the complexities of their own company. Either way, you don't want to work with them.
5. The quick close
This one is counter-intuitive, but sometimes the biggest red flag clients are the ones who initially seem like the easiest people to work with. But be wary if a new sales prospect seems like they're a little too eager and ready to close to the deal. These have been some of my toughest clients. My average sale takes multiple conversations with multiple people over a period of weeks or even a few months. Occasionally, I get a person who, after a single 30-minute call, asks for a contract and is all ready to get started.
Sounds great, right? No. This is also a bad sign. People who are too quick to buy from you are impulsive people who have not thought through the details. When a prospect is too quick to close the deal, usually they assumed things they shouldn't have, didn't ask the right questions or for lack of a better word, have some screws loose.
When this happens, I always get another sales call on our calendars before allowing a sale to close, just to make sure we are all on the same page. Even if a customer is really eager, I make sure to spend some extra with them so really understand what they're getting into and to make sure that they're the right fit for your company.
You don't necessarily have to "walk away" from these types of customers and sales deals, but it helps to know what you are getting into. Every sales process needs to be a two-way communication: The client sets his expectations and conveys his standards and you as the sales person need to do the same. Spend some time vetting the customer, asking good questions, advocating for your company's interests and figuring out whether this customer is really the right fit. You might need to ask for a more flexible schedule, extra budget or better payment terms. Sometimes even the most difficult customers are worth keeping, as long as they pay you enough to feel good about the deal.
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