Why ‘Bad Revenue’ Can Harm Your Business More Than No Sales, According to Ryan Reisert

In a recent LinkedIn post, Ryan Reisert discusses a critical distinction in sales: the detrimental impact of closing deals with the wrong kind of customers. He argues that pursuing revenue at any cost can lead to significant long-term problems that outweigh the short-term gains of a closed deal.

Reisert frames the issue by stating:

“Bad revenue is worse than no revenue.”

He elaborates on the predictable negative consequences of acquiring customers who are primarily driven by price. According to Reisert, these customers often become a drain on resources and are unlikely to contribute positively to the business’s growth or reputation.

The Downside of Price-Sensitive Customers

Ryan Reisert highlights a common scenario that unfolds after a deal with a price-sensitive customer is closed. He points out that such clients typically exhibit several undesirable traits:

• High support costs coupled with low profit margins.
• A high likelihood of churning (discontinuing service) within a short period, often less than a quarter.
• Being unsuitable for use as a positive case study or testimonial, thus hindering future marketing efforts.

This situation creates a perverse incentive structure within sales teams. As Reisert notes:

“But the rep who booked the meeting got rewarded. So next quarter, they’ll book more of the same. Oops.”

This dynamic, Reisert suggests, perpetuates a cycle of acquiring unprofitable business, as sales representatives are incentivized to book meetings and close deals, regardless of the long-term value or suitability of the customer.

Rethinking Sales Incentives

To combat this issue, Ryan Reisert advocates for a shift in how sales performance is measured and rewarded. Instead of solely focusing on the number of deals closed or the total revenue generated, he proposes that companies should incentivize the quality of sales interactions and the suitability of the customers acquired.

Reisert argues for a more nuanced approach to sales compensation:

“Reward reps for getting into conversations, not booking bad meetings.”

In his view, this means that sales representatives should be recognized and rewarded for identifying and engaging with prospects who are a good fit for the company’s products or services, rather than simply closing any deal that comes their way. This could involve rewarding activities like discovery calls, qualification efforts, and building genuine relationships, which are more likely to lead to long-term customer success and sustainable revenue.

By aligning incentives with the acquisition of valuable, engaged customers, businesses can avoid the pitfalls of “bad revenue” and foster healthier, more profitable growth.