‘Customer is the king’  goes the adage. During recessionary times sales managers  would like to close as many orders from all and sundry. But is that so? Would you  believe that IT majors  are letting go of the clients who do not contribute  more than a few hundred thousand dollars per annum are getting the axe?  Called as Tail Accounts, such clients neither add to margins nor are a strategic fit to the vendor’s business.

“We are knocking off many of our tail accounts which do not bring a value proposition” Says T.K. Kurien CEO of Wipro. Last year Wipro has dumped 40 clients who were providing   revenue of $ 8 Million ( Rs 45 crores) iGate is also not renewing contracts with 70 clients fitting the above category. The company in turn has reduced the number of active clients from 344 to 293.

The strategy behind such a move is to free up the limited Sales Force bandwidth to focus on winning large clients. Sometimes less can be more!

Do you have such customers who keep you busy, show a marginal revenue on your top line but do not add to your margins? Think it over.

(with inputs from Big IT Pulls the Plug on Small Fish – Companies Cut out tail accounts to focus on key customers.- Economic Times: 26/11/12 p1)

(Refer my article:  All Business is not Good Business : Contextual Selling p241,  visit http://www.paradigm-info.com for book details)

We were organizing a program on 30^th & 31^st  October in Mumbai and we received nominations from a HR manager from Bangalore for the same.  As both the customer and the vendor were from Bangalore, we asked the HR manager to send the payment directly to the Bangalore office before the commencement of the program in Mumbai. However, the manager refused to send the payment. Instead a cheque payable at Bangalore was handed over by the participants at the venue in Mumbai. The reason: the client must have thought it is better to send the payment with the participants and play safe rather than sending to the vendor directly. In case the program gets cancelled, it is easier for the company executives to carry back the cheque rather than try to retrieve the same from the vendor. This illustrates an implied lack of trust.

When you are making a cold call, particularly to a new prospect, you must have observed that the prospect is quite hesitant to grant you an appointment. Only after repeated calls, you may get an appointment and that too for about 5-10 minutes only. Why are customers reluctant to entertain unknown salespersons?

Some of the reasons from the customer’s perspective are:

a) He is a stranger. I do not know him.

b) He just wants to sell me something, which I do not need.

c) Why should I trust him to what he says?

d) Does he have credibility?

e) I have other priorities & my time may get unnecessarily wasted.

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