Counselor

Yes, You Can Say No

It can be powerful to rid your business of customers and deals that are causing pain.

One of the largest companies in the United States made a calculated and fascinating decision early last month. CVS Health, which also just changed its name from CVS Caremark, stopped selling tobacco products at its stores on September 3. The company had previously announced earlier this year that it would stop the sale of all tobacco items beginning October 1, but the retailer made the move official a month early as it launches a reinvigorated focus on healthy living – and, thus, the new name.

“We saw a growing contradiction between selling tobacco and delivering health care in a retail environment,” said Larry Merlo, president and CEO of CVS, in announcing the sped-up move. “The contradiction of selling tobacco was becoming a growing obstacle to playing a bigger role in health care delivery.”

To run the numbers here, CVS had sold tobacco products in its 7,700 stores nationwide to the tune of about $2 billion a year. Yes, the 12th-largest company in America just made a decision to walk away from billions of dollars in revenue. And shareholders – the only group besides tobacco makers who you would think would be decrying the move – actually applauded on the day of the announcement by pushing up CVS’ stock price by more than a percentage point. In fact, the company’s stock was up nearly 10% since it initially made the announcement in February that it would rid its stores of tobacco products.

The $2 billion that CVS will be foregoing from their previous sales of tobacco products amounts to about 2% of their overall more than $120 billion in annual sales. For CVS, the company is taking a calculated risk that it can make up that 2% – and, most likely, more – by the PR boost from the announcement, as well as the additional shelf space it can now use for potentially more profitable and healthier products.

Indeed, it helps today to take a stand in business. Sometimes that means saying ‘no’ to certain client requests. The customer isn’t always right, and it’s something all companies can learn from last month’s CVS news. Saying ‘no’ is something that William Ury has made a career out of. He is the co-founder of Harvard’s Program on Negotiation and author of the books Getting to Yes: Negotiating Agreement Without Giving In and The Power of a Positive No: How to Say No and Still Get to Yes. And, he firmly believes that people in business today need to find ways to say ‘no’ to customers at times.

“In saying ‘no’ well, we are giving ourselves a gift,” says Ury. “We are protecting something of value. We are creating time and space for something we want. We are changing the situation for the better. In short, we are being true to ourselves and to our businesses.”

Let’s boil all of this down to the ad specialty business, where distributors are continuously complaining that clients are looking for low-priced vendors. A full 60% of distributors in Counselor’s 2014 State of the Industry survey said that their clients shop primarily based on price. The pain is felt even further by smaller distributors, 70% of which say price is their customers’ number-one question when buying promotional products.

So, it’s time for distributors to analyze their businesses – exactly like CVS has done – and determine which 2% or 5% of their clients they could do without. Certainly, there are some clients that are a drag on your company’s resources. Now is as good a time as any to determine which clients they are, and walk away.

The time that will free- up salespeople and service representatives will undoubtedly result in additional opportunities for potentially more profitable and lucrative business. It’s a step that companies really should be taking multiple times a year – analyzing their operations, seeing where the biggest impingement's are on their resources, and then reallocating efforts to business that is more rewarding. That would have a real impact on distributors’ bottom lines.

Don’t be afraid to say no sometimes. CVS just did it in a big way. So can you.

Enjoy the issue!