Beware of sleeping with Elephants”
Friday Freebie 4. As Tom Golisano says in Built not Born, "Beware of sleeping with Elephants” because reeling in deals with a "Huge" customer can be a dream that turns into a nightmare for both parties- so have a sustainable sales strategy and negotiation for long term success.
UPS and Amazon are a great recent example of Tom's warning and the race to the bottom. Amazon, the elephant that sales folks salivate over. The fortune company with big orders but also often the high maintenance customer that rejects most invoices, has an issue with every delivery, slow to pay, often signaling they're ready to find someone else. The elephants are successful because of shrewd business deals and a line of other options for its business.
'Business' requires profits and reasonableness to be sustainable for both parties (not just a list of impressive customers (unless they impressive paying customers). UPS hustled and bustled for years but couldn't seem to satisfy the customer and led itself into decreasing and decreasing margins.
Meanwhile, Amazon thought they could do it better and started its own delivers, becoming competition to their supplier. As they say, all is fair in love and war, I guess. I like conscious capitalism. A whale often signs a deal with the company that:
A) promise the sky and moon with white glove approach; and
B) at the lowest possible cost to the whale. The sales and exec team just see the gross profit potential and what it could be.
Sales Strategy is Key: Can you deliver the sky and moon? At what cost to teams stress, profit, and other customers, can you profit at those low margins? Tom says Whales: often take a long time to close, not as profitable as you might expect, want big discounts, and you'll have to increase your overhead capacity to accommodate the elephant - what if they walk after all that expansion. Negotiate during the contracting phase.
With a bad deal, when you start failing the customer asks for more discounts, more time, and it spirals. Tom said his company didnt have any customer that accounted for more than 1/1000th of total revenue. UPS fearing all their chips are on black are switching up their approach - partly because of strategy partly because Amazon was shifting away anyway.
The customer isn't always right and despite being worth it to the sales person with the commission, isn't always worth it long term for the company.
So as you look at this 2025 year and are reeling in deals whether with Whales or not, negotiate - make smart deals that are accomplishable with reasonable customers that want a long term relationship where efficiencies and understanding grow and both do well because being slowly bled out by a customer isn't the way. Having all your eggs in one basket isnt the way. If it cost 20 to make 10, that isnt the way.
Good luck!
the One Vie Team.
