How to Walk Away from a Bad Deal Without Burning Bridges

“It’s Like Deja Vu All Over Again”

Another quarter sales target just barely made. It was a close call. As you go over the numbers with your team you realize that trying to close a sale with XYZ Industries cost you a ton of time, almost made you miss your quota and almost cost you your job (maybe – you never know, but you suspect it).

It’s not that you haven’t been down this path before. As Yogi Berra would say “It’s Like Deja Vu All Over Again.” It’s not the first time there was a close call because somebody wasted your time. And there were other bad deals in the past.

What if there was a way to know bad deals before they happen? What if you didn’t feel like you don’t know when to walk away from a bad deal? What if you could keep your emotions in check and avoid getting too deep into a process and wasting your time or striking a bad deal? What would that mean to your bottom line?

I came into the world of sales in an unusual way. First I was a CPA, then a law school graduate and eventually I was an attorney for some of the largest law firms in the United States. After that I started my own law firm and later a business strategy firm. As time progressed I did more and more sales and more and more sales teams called me for advice and training.

But this role and unusual path have allowed me to look at negotiations in a completely different way. I often get to be a neutral advisor to many negotiations which allows you to see so much more. And one of the most powerful things to know is knowing when to walk away from a bad deal. Let’s set some ground rules so you can easily walk away from that next bad deal – before it almost costs you your job!

We are going to replace your instinct of “if I don’t keep going, I won’t make quota” to something better for you. The reality is chasing after a lead that’s never going to close is one of the quickest ways to miss quota. Instead, it’s better to get ruthless about walking away the second you can see it’s not going to pan out.

RELATED: 5 Psychology Tips From An FBI Hostage Negotiator That Will Make You Sell Better

Before we dive into the tips, let’s cover WHY you would WANT to walk away from a deal, and the importance of not burning bridges.

Here are 6 of the most important reasons to walk away from a deal…

6 Reasons to Walk Away from a Deal

Reason 1

You only have one contact in the account and this person won’t let you speak to anyone else.

You’ve ended up being trapped by the gatekeeper. This is usually a person with the responsibility for procuring a product or service on behalf of others within the organization but they don’t actually own the business problem themselves.

This makes it hard if not impossible to sell on the basis of value. Their job is usually to get the best possible price for a solution that meets a minimum specification. He or she doesn’t want you to talk directly to line of business managers as that would allow you to position the strengths and advantages of what you offer, and why it’s worth paying more.

If you can’t find a way to speak to at least one person who actually experiences the pain or would see the gain from addressing the issue in question, then walk away.

Reason 2

A competitor has obviously written (or helped to write) the RRP / specification. There are always tell-tale signs when one of your competitors has helped write the specification. You’ll find requirements written in a way that makes it very hard for most vendors to meet – with the exception of the competitor of course!

If the buyer is this far along their buying cycle, you’ve missed the opportunity to influence their thinking, and winning the deal is going to be a long shot. Many software and hi tech equipment manufacturers have a no bid policy for ‘blue bird’ RFIs and RFPs (i.e. the opportunities that sales people only find out about when the RFI / RFP arrives in the mail).

Reason 3

A customer already has a product or service similar to yours and you can’t identify a compelling reason for them to change.

You’ll come across some people in business who will engage and talk and talk for hours and hours – because they have a particular interest in a given area or they want to find out what’s available in the market. As sales people, we like talking to people who like talking to us! Unfortunately, this type of ‘buyer’ can be a huge time sponge.

The key here is to get them to identify a clear and compelling reason to change to your solution from what they have now. Then you have to get them to sponsor you to another decision maker or senior influencer to test this reason out with them. If you can’t do both these things you have to politely disengage.

Reason 4

There’s no budget allocated for the project and you haven’t been able to identify a business challenge your solution addresses, with sufficient upside.

Just because there’s no budget currently allocated doesn’t mean you walk away from the opportunity. Some of the most profitable sales come from situations where initially the customer hasn’t fully recognized and quantified the business challenge they face and don’t yet have a budget allocated for a solution.

You have to get to the senior people in the organization who own the business issue and work with them to put a number on what it would mean to solve the problem or take advantage of the opportunity. However, if that number turns out to be too small to make the business case, then there is no opportunity for you.

Reason 5

The opportunity is too small to warrant the sales effort.

As sales people we are hard-wired to go after any opportunity where it looks like there’s an easy deal to be done. We forget there are only 16 working hours in a day (only joking) and we have to focus on the deals that are big enough to get us to quota and beyond.

No matter how low hanging the fruit appears to be, all sales that require a sales person to close them will take time to take through the sales process – especially when it’s a new account. You have to ask yourself, is the margin on the deal worth the time and effort?

Reason 6

Your product or solution is a poor fit for the customer’s requirements and will require extensive customization or development effort just for this account.

We’ve all heard stories of the sales person who used PowerPoint to add a new field or button to a screen grab of a software product, to indicate that a certain feature is available!

Usually, of course, the promise to develop new functionality to win a large deal is made with the full knowledge and support of senior management. As sales people, we could take the view that if we can persuade management to go along with this then we’ll get the deal done and the commission in our bank account!

However, projects sold on the basis of huge one-off development work are rarely delivered successfully and often turn into a financial black hole. If we’re interested in building profitable, long-term customer relationships that deliver ongoing commission for us, we have to resist the temptation to sell what we don’t yet have! We can either persuade the customer that what we offer is so valuable they can do without the feature we don’t have, or we can walk away from the deal.

Why Not Burning Bridges Matters (An Example)

The background

At one point in my career, I was handed a MEGA enterprise account from an inside sales team under the premise of having “the best and biggest accounts with the best salespeople.”

But as I soon found out, the person who originally set up the deal in the first place (on the last day of the previous quarter I might add) did so in such an unrealistic fashion. All parties, thus, were destined for failure. And the customer was PISSED.

The beat-down

The entire first call was nothing short of an hour-long beat-down. They did not like being duped and wanted out—with nine months left to go in their contract.

I was able to disarm them by listening, being empathetic, and trying to figure out where things went wrong. I even flew out to visit them on more than one occasion to discuss how we could get them the most value possible for their money (including switching up their service/product plan and a full blown training program that I personally oversaw across multiple locations).

The split

We ultimately both agreed that this arrangement wasn’t the right fit and created an action plan for how to phase the relationship out. This royally killed me on my numbers, but I pursued anyway because it just didn’t make sense.

The comeback

Fast forward 3 years where I was working with a different company with a better solution that could absolutely help them, they didn’t forget the way I handled the previous interaction with them.

And not long after, we closed a 6-figure deal. Furthermore, they are still a great contact to this day!

Folks, sales is a long game and the world is small. The people you’re talking to today could be your customers 15 years in the future too. Or, even your employer. So bottom line—make sure you have the best interests of everyone you interact with in mind at all times.

You never know when you’ll run into them again in the future.

Six Tips On How To Know When To Walk Away From a Bad Sales Deal

If you keep this six tips close to you you’ll know better when to walk away from bad deals.

1) The Best Time To Think About Walking Away is Before You Start

It’s important that you think in terms of when you will “walk away” from a deal at the start of the negotiations. “Walk away” simply means the time and place when it no longer makes sense to negotiate and move on to other options.

As you go into future negotiations you should always be thinking about what your walk away is before you start. This is a discipline that you can build that should become natural to you. Every time you open a file for a prospective client set your walk away terms as described in this section.

Every time you into a new sales call, start thinking about a purchase or otherwise prepare to negotiate stop and think about what terms you will accept and what you would be too much give. Write this down now. You want to record what you think is fair – and what is not – before the heat of the moment takes over. If you do that you’ll know when things are going too far and when these are getting unfair.

When I’m negotiating on behalf of my clients, I often started the preparation for the negotiation by getting them to agree to what they will accept and what they wouldn’t accept as an outcome. Knowing how much give is too much before you start will allow you to shape your behaviors.

In sales, we’ve all heard of BANT, but there is another helpful acronym here known as BANTA. At the Harvard negotiation school, they often talk about your “BATNA” or your Best Alternative to a Negotiated Agreement. This is a helpful concept. Think about the power to know what alternative you have if your deal doesn’t work out. Where will you go? What will you do if this negotiation doesn’t work? You’ll feel less trapped. In the simplest terms know how good and likely your “Plan B” is.

I have a simple saying the drives the point home: “The person that can’t walk away loses.” If you aren’t ready to leave the negotiation you are going to lose.

2) Always Keep An Eye On Your Walk Away

As you get in the negotiation always look back to that walk away that was set before the negotiation was started. Are we still in the bounds of a possible agreement or is it time to consider leaving the negotiation? How far have we gotten to our goals versus getting closer to the walk away? Have the terms gotten into the range of your walk away? Because we know what a good deal is for us (and what a bad deal is for us) we can start to walk away as soon as a deal starts to turn bad.

Imagine you’re trying to sell a software package to a customer. Before you went into the negotiation you knew that $99 per user per month would be your floor on pricing. You’ve now invested substantial time into the negotiation and you found that your customer will only pay $89 per user per month.

The old you may have felt compelled to keep going to win this. But because you have a clear walk away and you set that standard before you start it you now know that this customer will not be a win for you. You can now easily walk away and move on to find customers that will be able to justify that $99 per user per month minimum.

3) Know When You Are Acting On Emotion

Sales is an emotional process. We are all told about how to connect to our customer and how to understand their emotions and feelings.

We sales professionals are no different. We also have emotions. The problem is that our emotions often come in and cause us to push for bad deals. We have to get that win. We want to look good for our bosses and impress our colleagues and friends.

This means we will often get emotionally invested in closing the deal. We aren’t thinking about our overall numbers, our job or the quota – we are thinking about winning this deal.

When emotion takes over we often strike bad deals. So let’s, instead, focus on winning deals not serving our emotions.

4) Keep An Eye On Your Back-Up Options

Having backup options will make it easier to walk away. That way you know that you don’t have to stay in the current offering or current deal if the terms turn bad.

Let’s say you’re in a sales discussion and your buyer is starting to signal that it may not be the right deal for them. Your price point is too high or they just aren’t sure they want to make a commitment at this time.

Having seen the situation play out many times I know that those without backup options, ie other strong leads in the pipeline, often feel like they have to force the sale to make their quota or goals. That’s why it’s so critical to have backup options. If you know you have a pipeline that is converting to sales you won’t feel stuck in any one deal.

5)  If It Doesn’t Feel Right, Reassess

If you are in the middle of a deal and it just doesn’t feel right, it probably isn’t. So keep an eye out and think about how you are feeling and why. Ask yourself, “Am I uncertain about closing the sale because I lack confidence or do I actually see some red flags?”

Many studies have shown that humans are actually very perceptive. Ignoring warning signs and these feelings will not help you in the long term. Believe in your intuition. If you’re seeing the wrong things and the sales process is not moving forward, then back out and start over again with a new prospect. It’s okay to walk away.

6)  Remember Your Values

Another item that makes it easy to walk away from a bad deal is to remember your personal values. What are your goals and why are you on this journey? Who are you trying to take care of? Is it your family? Close friends? Or some broader societal mission?

If you stay focused on your life’s mission and your big goals, every single deal really plays a small role. As such, when you can remember your big picture it’s easier for you to walk away from a bad deal because you know that you can still serve the big mission.

RELATED: How To Walk Away From A Business Deal Without Burning Bridges

Do’s and Don’ts for Walking Away From a Bad Deal

The rules above will let you know when to walk away. Here are some Do’s and Don’ts for walking away from bad deals.

Do: Set a Walk Away

Always go into a deal with a walk-away. Know exactly when you’ll leave and what terms are unacceptable. For selling situations this usually means a bottom line on price or terms that you will not accept. If you set the walk away before you go in it will be easier for you to recognize when the deal becomes bad.

Do: Limit The Emotions

We’re humans and we’re emotional creatures. More and more research shows that human emotion is very important in business and success. And you’ve certainly seen the sales materials that have told you about emotions and how emotions can be learned to increase sales.

In considering walk-away scenarios limiting your emotions with respect to winning the deal can be critical to successful outcomes. So don’t tie emotion to whether you get the deal or not. Keep your eyes on the bigger picture.

Do: Focus on Winning The War, Not The Battles

Life, and selling have many battles. Don’t focus on winning each battle. Think about your big goals and what you’re trying to accomplish. That’s what you should be focusing on, not winning each individual deal.

Don’t: Feel the Need to “Win”

Many people get stuck in a bad deal because they feel the need to win. They have to get that trophy of getting the best possible deal. Perhaps bragging rights. That need to win has caused many people to put too much time or too much effort into bad deals.

Give up the need to win everything. It will be liberating in that it will make it much easier for you to walk away.

Don’t: Get Emotional About Walking Away

Many people associate walking away from a deal or losing a transaction as being a loss. Categorizing walking away as a loss, or a bad event, triggers those normal emotions of loss in us as humans. Make walking away a logical decision, not an emotional event.

It’s just business after all. So if you walk away from a bad deal know that you’re doing the right things for your business not losing some part of yourself.

Don’t: Box Yourself In

Don’t box yourself into any one transaction. Know that it’s a big world, a complicated business environment and there are many options out there. There are many paths you can take to meet your goals and accomplish success in life and business. You don’t have to follow any one path. If you can keep your paths open and keep many options going you won’t feel boxed in and it will make it very easy to walk away from a bad deal.

Don’t Lose the Big Picture

Is closing a deal with a bad prospect really a “win”? Many salespeople are paid on an account management model now, meaning they have to pay back the commission within a certain time period if the customer bails. Even if that isn’t the case, the customer success rep who gets stuck with your bad apple isn’t going to appreciate your “close at all costs” efforts.

Add on top of that that that terrible prospect may call you again for additional business (restarting the cycle) or refer you their friends that are similar to them!

You may think that you will lose face with your peers if you don’t close every day. In reality, you might lose face pushing for the wrong closes and drive yourself crazy in the process.

How to Walk Away from a Business Deal—The Step-by-Step Guide

Step #1: Stop, collaborate, listen

Something isn’t feeling right? Make Vanilla Ice proud – STOP. COLLABORATE. LISTEN. Hit the pause button and look at the big picture, both individually and with your team internally.

Ask yourself:

  • Is it actually a bad situation or can it be corrected?
  • Are you in a contract?
  • What obligations do you have to fulfill?
  • Is this a new customer or existing?

Each of these things will have an impact on how you move forward. Many times, the situation is not as bad as you think it is and can be corrected by setting/resetting the stage (read: better communication).

If that’s not the case though, you’ll want to be prepared for the conversation that needs to happen.

Study the contract for any obligations you might have to fulfill and review your touchpoints with the customer so far. Look for creative solutions and ways to benefit both parties and articulate that. Bounce ideas off your team members and get feedback.

The goal here is to figure out what is going on and make sure you can articulate it. The more work you do up front, the better you’ll be able to handle the coming conversation in a non-emotional fashion in the moment (critical to making sure they remember you favorably).

Step #2: Get on the phone and call a timeout

If things really do appear to be destined for failure based on your analysis, don’t assume. Do some rediscovery and ask the right questions. But do it right away. Putting it off will only make the backlash worse later.

Start the conversation with questions. Make sure to understand your customer’s goals NOW vs. before and whether they are still the same as yours (this applies whether they are an existing customer or new customer).

If they have changed, make sure you understand WHY.

Remember, the purpose of this call is to confirm or deny whether this deal is good for BOTH of you. Listen actively and pay attention to the space between where you need to. Empathy goes a long way in this situation!

Related: Why active listening is the sales skill you need to learn NOW

Step #3: Reach a consensus and set expectations

If after the call it’s clear that your goals are dramatically different, the next step is to lay it all out on the table and outline why it’s time to move on.

But, never cut things off cold turkey. You don’t want to leave them high and dry and fending for themselves (especially if they are an existing customer).

At the end of the day, even if what you’re providing isn’t the right solution, it likely is a partial solution. And if your customer is already using it, leaving them in the lurch is going to leave them and their business spinning.

Instead, have a discussion about your findings and the outline you built and set a timetable for when the partnership will end. Help them find the right solution if you can, whether that’s a referral if you haven’t entered an agreement yet or simply sticking with them long enough until they can find the one that is right.

They WILL remember this—very few people genuinely want to help others around them when there’s nothing immediately in it for them in the short term.

The Our Shawn McBride (aka R. Shawn McBride) is the Chief Innovation Officer of McBride For Business, LLC and the Managing Member of The R. Shawn McBride Law Firm, PLLC. He works with organizations to execute their plans to grow in the future economy. He is the author of Business Blunders on avoiding common business mistakes, It’s About Time on Time Magicment™ and What Your Business Needs to Know NOW about Blockchain. When you see The Our Shawn in person you’ll know him in a second – he is normally wearing unusual suits the embrace the message of Do Business Differently™ because he believes finding your uniqueness is a key to business success. When not writing you’ll find Shawn speaking and consulting on topics related to financial transactions of the future economy.

More like this...

Join Us Today

Insider access to the GTM network and the best minds in tech.

Join Us Today

Insider access to the GTM network and the best minds in tech.

Trending Now

You may also like...