Why Margins Don't Really Matter in B2B Deals: A New Perspective on Profitability

If you've ever been part of a B2B deal, you've probably heard the word 'margin' more times than you can count. It's that elusive metric that seems to determine success or failure in the minds of many salespeople. But what if I told you that margins aren't the be-all and end-all of business success?

Yes, you read that right. As important as they may seem, margins are not the definitive measure of success in B2B deals. I know this might be hard to swallow, especially for the CEO and Sales Leaders who've been taught to treat margin as the Holy Grail. But stick with me. I promise this will be worth your time.

The Challenge with Margins

The primary challenge with relying on margins is that they are often based on shaky foundations. Many salespeople use margins as a yardstick without understanding the marketplace dynamics or having a proper competitor dashboard. This lack of understanding leads to a fixation on the only metric they can control.

So, the critical question we need to answer here is: Are margins the most reliable metric for evaluating the success of a B2B deal?

Unmasking the Margin Myth

Let's look at three reasons why margins may not be the best measure of success:

1. Margins are only as good as your cost data: If your cost data isn't accurate, your margins won't be either. And unfortunately, cost data can be notoriously tricky to pin down accurately.
2. Margins don't reflect market dynamics: Margins can't tell you about market trends, customer preferences, or competitor actions. They're a snapshot in time, not a dynamic representation of your business environment.
3. Margins can discourage growth: If you focus only on margins, you might miss growth opportunities. For instance, a lower-margin deal might lead to a long-term partnership that significantly boosts your revenue over time.

The Real Measure of Success

So if margins aren't the definitive measure of success, what is? Well, that depends on your business goals. But generally speaking, it could be revenue growth, customer satisfaction, market share, or even employee satisfaction. Don't let margins blind you to the other essential factors that drive your business success. You can check out more about these measures in this article.

Conclusion

To sum up, margins aren't the holy grail they're often made out to be. They're just one piece of the puzzle, and focusing on them too heavily can lead to missed opportunities and skewed perceptions of success. So the next time you evaluate a B2B deal, remember to look beyond the margins.