In 2013, Joaquin Cordero, a fellow class member at MIT's Entrepreneurial Masters Program and the cofounder of Grupo Lumen, a small communications agency based in Guatemala, met with a marketing director from an international car manufacturer. As Joaquin explained to us when we spoke to him recently, he had gone into that meeting hoping the marketing director would choose his agency for a large branding project. He had been trying to close big deals like this since starting his company four years earlier, in 2009, but so far they had eluded him, severely limiting the growth of his business.
Cordero's meeting with the marketing director started off well. But then the director said he wanted access to a large mailing list Cordero possessed, which would allow them to boost the branding project with some direct marketing. As far as Cordero saw things, the list wasn't essential to the deal, but if including it would help him win the business, he would do it. And since Cordero badly wanted the deal, he was inclined to say yes. Before responding, however, Cordero took a moment to consider some past experience that he shared with us.
The Cost of Being Agreeable
Over the years, Cordero had been asked by lots of prospects to include extras or to make concessions. If he felt, as he did now, that agreeing to the request was worth it to win the business, he would agree. Why not? He was an agreeable person, and saying yes to these kinds of requests was what came most naturally to him.
But, as Cordero told us, he looked at the marketing director and flashed back in his mind to the time when another prospect had made a similar request. Cordero had agreed, expecting the deal to close, but then the prospect had asked for more, and then more, and eventually Cordero had found himself in a position where the deal wasn't worth it anymore, and he'd had to walk away. Other times, after Cordero agreed to something, the prospect had simply said, "Let us think about it. We'll call you in six months." And then the prospect had continued to string him along. Sometimes agreeing paid off, of course, but that was usually with smaller clients who--with tighter budgets--had fewer options when it came to choosing vendors.
The Business Killer
Cordero's past experience had taught him a harsh lesson: being agreeable was often a business killer. It didn't make deals close faster and it didn't help him land big clients. So, he wondered, if saying yes to the marketing director's request was going to put the deal at risk, would saying no actually be the wiser option? He was about to find out.
He finally answered the marketing director's question. "No."
The marketing director drew his head back in surprise. "Come again?"
"I'm not interested in giving you access to the list," Cordero said flatly.
The marketing director sat back, pondering. Then Cordero noticed that the man was looking at him differently--with more respect, it seemed. The director stopped asking for the list, and the two men moved on to other aspects of the deal.
A Different Outcome
Cordero would eventually close the branding deal, giving his business a massive lift. He has no doubt that saying no at that pivotal moment in the negotiations made the difference. If he had agreed to the request, Cordero believes the prospect's perception of his value would have dropped, lowering his interest in working together. And that wouldn't have been easy to recover from.
Passing the Test
As Cordero sees it now, prospects often make requests, not because they are crucial to the deal, but because they want to test you. They want to know how far they can push you. They might not be doing it consciously, but how you respond can dramatically effect their perception of you. And if you are too agreeable, you drop a peg in their eyes. You become a client desperate to win business. You become someone less interesting, less valuable. And then more often than not, you become someone who loses the deal.
Saying no to certain things is often the way to put yourself on the same level as the prospect. It makes them see you as a peer, and when that happens, they're more likely to want to do business with you.
Winning the branding deal with the car manufacturer would prove to be a turning point in Cordero's business. From that point forward, he became more careful about agreeing to requests. In practice, this meant saying "no" way more frequently than he ever had before. "Yes" became a rare word for him. The result: his success rate with these large deals skyrocketed. His revenue went from $1 million the year before to $3 million in the current year, and he would double his staff from 12 to 24 in the same time period. He's on target to double again this year.
Despite his success, Cordero acknowledges that it's not easy to say no when the opportunity on the table is a large one and the request seems trivial by comparison. It's also not easy to say no when you're a small business owner and your prospect represents a large company. In the heat of the moment and with the deal hanging in the balance, it's really easy to succumb to the natural reflex to be agreeable. It takes discipline to say no.
We can attest to the difficulty of saying no. In our case, for years we offered free trials for ClearFit. We believed this is what our customers wanted, so we gave it to them. But it was a costly proposition that was draining our resources. We were paying for thousands and thousands of free trials that never converted into paying customers. So we began to think about saying "no" to a free trial. The thought of actually doing that scared us. We worried that our business would drop off a cliff. But, like Cordero, we felt we had to take the risk in order to grow. So we pulled the plug on the free trial and waited, with bated breath. The result: we more than quadrupled our paying customers.
If you feel your own growth is held back by not saying "no" enough, consider following these three guidelines from Cordero:
Cordero's 3 Guidelines to Closing Big Deals
1. Resist the natural reflex to be agreeable. "No" is a powerful negotiating option.
2. Know the true stakes. In the case of the branding deal, the email list itself wasn't what was really at stake. What mattered most was the prospect's perception of Cordero. Saying "no" created a more positive perception than saying "yes."
3. Create a partnership of equals. Cordero has learned that saying yes a lot creates a client-vendor relationship where the client holds the majority of power. By comparison, frequently saying no creates a partnership where both parties profit.
By following these three guidelines, Cordero has discovered, as we have, that you can say no a lot and still grow your business.