We have a natural affinity for saying yes. The word yes is surrounded by positivity and feelings of goodwill. Saying yes means making the most of every opportunity. “Would you like to go for a drink?” Yes. “Do you want fries with that?” Yes. The word yes supports risk-taking and promotes an open-hearted approach to life where growth occurs.
In business, this effect becomes even more exacerbated given the financial incentives linked to saying yes. “Should we develop unique offerings for customers?” Yes. “Should we satisfy investor requirements?” Yes. “Should we transition offer incentives for customers to pay more quickly?” Yes. The list goes on and on. The word yes is powerful and has its purpose in business, but from a pricing perspective, saying yes can be strategically and financially toxic.
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Why It's Hard To Say No To A Customer
Unlike the word yes, we have a much harder time saying no, especially when it comes to talking about pricing with customers and internal stakeholders. The word no is frequently associated with negativity - the expression of criticism of or pessimism about something. It is easy to see why companies avoid saying no - it is not a warm send. No matter how you wrap it up, the word no is tough to deliver in large part because of its negative connotation. This sentiment holds true across the board:
- We are far more upset when we lose money than if we gained an equal amount.
- Negative first impressions are more memorable than positive ones.
- Negative job feedback has a much more profound effect than positive feedback.
Past the perception hurdle, many companies are afraid of conflict and avoid saying no because they feel customers may take their business elsewhere or punish them in some way.
The opposite to saying no is saying yes all the time and continually conceding to customer asks. You become a "pleaser" where you automatically say what the customer wants to hear, agree with their ideas, and bow to their agenda without hesitation. If your customer relationship is structured in this manner, you are delusional to think you can ever achieve win-win scenarios, given that the other party has no motivation to provide any accommodations.
Why It’s Important to Learn How to Say No
The purpose of pricing is to allow companies to properly charge for the value that they deliver to customers. The inability to pass pricing actions can lead to depressed profit levels and prevent you from funding future growth. Over the long run, these barriers can result in bankruptcy. Due to the gravity of pricing actions, they are usually well prepared for and surrounded by deep analyses.
These analyses could include value benchmarking, elasticity, breakeven, segmentation, etc. Essentially, you are bringing your data and insights together to understand how to best achieve the corporate goals. Compromising on your well-considered position compromises your objectives.
How No Benefits Your Company
By saying no, you draw a hard line on what is up for negotiation and what is not. “No, I will not roll back our price increase because costs have increased.” “No, I will not sign up for incremental promotions because we have the #1 brand on the market.” Remember that customers are trying to maximize their bottom line and this does not always correlate to you driving yours.
When “No” becomes a permanent part of your company’s pricing vocabulary, you will establish:
- Integrity: Integrity is essential in establishing trust with a customer. If your corporate agenda can be “adjusted” based on customer pushback, you will compromise your principles and values sooner or later.
- Focus On Your Own Goals: if you were to meet the needs of all customers, you would be pulled in so many directions that you lose sight of the agenda. By saying no to unnecessary asks, you enhance focus.
- Corporate Courage: If customers are not satisfied with your pricing action and you hold your ground, they may try to punish you. For example, they may threaten to delist some of your products or give competitors special benefits. Empowering your Sales team to say no despite these threats helps develop the organization's backbone and reinforces your commitment towards front-line implementation.
It is your responsibility to set limits with customers and saying no gives you that power. The more you say no, the more comfortable you will be saying no in the future. To understand your limit, you must develop a deep understanding of your value and use insights to make data-driven decisions. Always ensure you are looking at things from 3 perspectives – the Customer, the Competitor, and the Financials to make sure you are making market-based decisions.
In rare cases, you will find some people who will fight your no regardless of the issue. Such folks take your boundaries as a personal affront. The word no is their call to arms. For example, do not take no for an answer is probably the best sales technique of all. To overcome this challenge, defend your value positioning. To do this, talk to your customers about the key benefits you provide versus the competition, and help them understand how you best fulfill their needs.
In the end, remember, it is well within your rights to say no. It does not mean you have an ego or do not care about your customers. It means the proposed pricing asks are fully justified and you have the customer value to support. The ability to say no is an essential part of doing business. Whatever the consequence may be when you say no, your corporate backbone is defined by your ability to say it.
ABOUT THE AUTHOR Michael Stanisz is a Partner at Revenue Management Labs. Revenue Management Labs help companies develop and execute practical solutions to maximize long-term revenue and profitability. Connect with Michael at [email protected]