You closed a nice deal, you shared the news with everyone else at the office, you entered it into your CRM, you provided the information to get the deal invoiced, you went home and calculated your commission and before you could collect the money, it got taken away. Ouch! This story should explain exactly what actually happens nearly every time you take business away from another company.
I made a decision to follow my banker to his new bank. I hate having to reeducate new bankers so it was an easy decision, especially after the new banker at the old bank started emailing his questions. Yesterday, I called to get the payoff for our line of credit and that caused me to receive calls from three of the bankers at the old bank.
First I heard from the new loan officer. He wanted to know what they could do to keep our business.
Then I heard from his new boss. He told me he was brought there after 30 years with Bank of America to stabilize the turnover in the department and that he assures me that, moving forward, there would be stability. He wanted to know when he could meet me to begin to develop our relationship.
Then I got a call from the underwriter who approved our line 5 years ago. He asked, "if we can sweeten the pot and match the deal you got at the new bank, can we get you to stay?" I told him that I didn't leave because of a better rate, but I got a better rate when I left. I explained that matching the rate was a nice gesture, but it wasn't the reason I left. I thought he was going to cry. Then came the guilt trip. "After all we did for you when you needed us, how can you leave us like that? I thought there would be more loyalty than what you are showing us." I expected the guilt trip but I didn't expect him to make stuff up! I told him again it wasn't about the rate. I was being loyal - to my banker - and thanked him for trying. After he sent a few parting shots the way of my old banker, he hung up and I think he was actually crying.
When you close a deal to replace an incumbent, for any reason, you must expect that the incumbent will attempt to retain that customer and pull out all the stops to succeed. If your new customer is moving their business to you only because you were able to beat the price they were paying, you will certainly be hanging over the cliff, ready to fall, because they will match or beat your price to keep their customer. It costs a lot of money to acquire and replace a lost customer. On the other hand, if this customer is moving to you because you uncovered their compelling reason to buy from you and you are uniquely qualified to solve their problem, all the begging and pleading in the world won't cause your customer to return to their old vendor, the one that was not able to solve their problem.
If you know that the incumbent will be calling to undo what just got done, what can you do to prevent an unhappy ending? Prepare your new customer for the call! Ask, "So what will you say when ABC calls and offers to match our price?" "What if they lay a guilt trip on you?" "What if they start to beg?"
What can you learn from this beyond the importance of selling the value instead of selling on price?
You had better be sure that all of your customers are happy with you or you may find yourself in the same position as my old bank.