Latest / Closing the Deal with Fexingo: Sales, Negotiation, and Revenue Conversations for Operators / The Sales Rep Who Won by Delivering Bad News Early
Transcript
- Lucas: There's a piece of conventional sales wisdom that says never give a buyer a reason to say no. Don't volunteer problems. Let them fall in love with your solution first. And that advice is wrong enough that it costs people millions. Luna: You're going to tell me the rep who leads with the bad news is the one who wins the deal. Lucas: In a surprising number of cases, yes. And I've got a specific example that changed how I think about this. I was working with a SaaS company selling to mid-market manufacturers. One of their top reps lost a two million dollar deal because she hid a limitation. The customer discovered it during implementation anyway, felt blindsided, and walked. The rep who replaced her on the next deal — different customer, similar limitation — told them about it in the first demo. Luna: And that deal closed? Lucas: Five hundred thousand dollars, signed within sixty days. The buyer later said that the honesty made the rep credible. They trusted everything else she said because she didn't hide the one bad part. Luna: So the first rep got burned by not disclosing, and the second one got rewarded for disclosing. But the risks feel different. What if the buyer just walks away immediately after hearing the bad news? Lucas: That's the fear. And it happens sometimes. But here's what Harvard Business School research on this shows — and I'm drawing from a study by Francesa Gino and colleagues — when you deliver negative information early, it signals competence and honesty. Buyers interpret it as you being in control. You're not hiding problems; you're managing them. That creates a trust premium that actually makes the rest of your pitch stronger. Luna: So the bad news becomes a feature of your credibility rather than a liability. But the timing matters, right? Early in the conversation, not after they've already decided. Lucas: Exactly. The key word is early. If you wait until the last minute, it feels like a bait and switch. But if you put it on the table in the first or second meeting, it reframes the whole dynamic. You're now the partner who's looking out for them, not the vendor trying to hide something. I've seen reps use this to actually accelerate deals. Luna: How does bad news accelerate anything? Wouldn't it slow things down while they reassess? Lucas: It speeds it up because you remove the fear of the unknown. The buyer is constantly playing out worst-case scenarios in their head. When you name the real limitation, you take away the mystery. They know the worst thing, and it's manageable. That reduces their anxiety. They can then make a faster decision because they're not waiting for the other shoe to drop. Luna: That makes sense. I remember a case from a procurement consultant I spoke to. She said that in her experience, the vendors who disclosed a significant flaw early were the ones who got repeat business. The ones who tried to gloss over it either lost the deal or got stuck with a nightmare of a contract negotiation later. Lucas: Right. And the worst outcome isn't losing the deal — it's winning a deal that turns into a disaster. That two million dollar deal I mentioned earlier? The company delivered it, but the customer was so angry that they not only terminated early, they left scathing reviews that cost the vendor three other opportunities. Hiding the bad news actually hurt more than just one deal. Luna: So it's a long-term play. You're trading short-term win rate for long-term trust and reputation. Lucas: Precisely. And here's where the crafting comes in. You can't just blurt out 'our product can't do X' and leave it there. You frame it. You say something like, 'Here's something I want you to know upfront. Our platform handles A, B, and C really well. D is possible but takes a workaround. It's not as polished as some competitors, but here's why it's still a solid fit for your use case.' You own it, and you position it. Luna: And that also gives the buyer a chance to test you. If they ask follow-up questions and you dodge, the trust is gone. But if you answer honestly and even offer to show the workaround, you've proven your credibility. Lucas: Exactly. I had a rep tell me once that he deliberately brings up a product flaw in the first call. He says, 'Look, I know you're going to find this eventually. Let me tell you now so you can decide if it's a dealbreaker.' He said nine times out of ten, the buyer says, 'Thanks for being upfront, that's fine.' And that one time it is a dealbreaker? Good. He saved months of pursuing a lost cause. Luna: There's a nuance here about the type of bad news. I think there's a difference between 'this feature isn't available' and 'our implementation will take two extra weeks.' One is a permanent limitation, the other is a timeline issue. Does the approach change? Lucas: The principle is the same, but the language shifts slightly. For a timeline issue, you want to frame it as proactive management. 'We've looked at your environment, and to make sure everything integrates smoothly, we need an extra two weeks. I'm telling you now so we can plan together.' That positions you as the expert who's on top of things. The buyer usually respects that because it shows you've done your homework. Luna: And if they push back? What if they say, 'Two weeks is too long, we need it sooner'? Lucas: Then you negotiate. Maybe you can offer a phased rollout or a dedicated support resource. But at least you're negotiating from a position of transparency. The alternative is you promise the original timeline, miss it, and then they're furious. The trust is broken and you have nothing to trade. Luna: So you're essentially pre-negating the objection before they even raise it. Lucas: Yes. It's the sales equivalent of under-promise and over-deliver. But it takes discipline because your instinct is to say yes to everything. The best reps I know have a habit of asking themselves before every meeting: 'What's the one thing the buyer would be most upset to find out later?' And they bring it up themselves. Luna: That's a good filter. I'm going to steal that. Quick honest thing — a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many of these episodes. If these conversations have moved your work forward in some small way, that's the thing that keeps it going. Lucas: Yeah, and we don't run ads, so it really does come down to people who find value in it. Appreciate every one of you. Anyway — back to the bad news tactic. I want to talk about a specific piece of language that one rep used that was particularly effective. Luna: Let's hear it. Lucas: He was selling a cybersecurity platform, and his product had a gap in monitoring for a certain type of legacy system. Most reps would avoid mentioning it. But he'd say, 'I want to show you something we don't do well. Here's a blind spot. Here's why it matters for your environment. And here's how we recommend you handle it.' He literally called it a blind spot. The buyers loved it. They felt like he was giving them insider information. Luna: That's brilliant. He's not just admitting a weakness; he's giving them a strategy to compensate. That's a consultative move. Lucas: Exactly. He turned his own limitation into a value-add. The buyer went from 'you guys are missing a feature' to 'you guys are the ones who helped me fix a security gap.' And that deal closed at a premium, not a discount. Luna: So the bad news actually increased the perceived value of the solution because it demonstrated expertise and honesty. Lucas: Right. And this is consistent with something called the 'pratfall effect' in social psychology. When a competent person makes a small mistake or admits a flaw, they become more likable and trustworthy. The flaw humanizes them. The same applies to companies. A perfect presentation feels slick and rehearsed. One honest admission makes everything else more believable. Luna: But you have to be careful about what you reveal. If you admit something that's actually catastrophic, you're not going to recover. Lucas: Absolutely. You have to calibrate. The bad news should be real but not fatal. If your product fundamentally can't do the core job they need, that's not a bad news disclosure — that's a disqualifier. The art is finding the secondary limitation that matters but is manageable. Luna: So how do you identify which bad news to share? Is it the one they're most likely to discover on their own? Lucas: That's a good rule of thumb. Any flaw that's discoverable through a Google search, a reference call, or a trial should be disclosed by you first. You want to control the narrative. If they find it on their own, they'll assume you were hiding it. If you tell them, you own it. Luna: And what about when you're competing against someone who doesn't disclose? Do you ever use that? Lucas: You can, but carefully. You don't want to badmouth a competitor directly. I've seen reps say things like, 'I'm not going to speak for them, but I'd encourage you to ask them about X. It's something we've thought about, and I'm curious how they handle it.' That plants the seed without being negative. Luna: That's slick. It's almost like you're doing the buyer a favor by pointing them toward the question. Lucas: Exactly. And if the competitor hides it, the buyer will feel like you were the honest one. If they disclose it too, then it becomes a level playing field, but you still get credit for bringing it up first. Luna: I'm thinking about this in terms of my own work. I often have to pitch consulting engagements, and there's always a risk that the timeline will shift or the scope will change. I think I've been avoiding bringing that up early because I don't want to scare them. Lucas: And instead, you should say something like, 'Here's my best estimate, but I want to be transparent that if X happens, it could stretch the timeline. Here's how we'll handle that if it does.' That positions you as realistic, not unreliable. Luna: I'm going to try that next week. I have a pitch for a large retail client, and I know the data migration phase is always messy. I'll bring it up in the first meeting. Lucas: Let me know how it goes. I'm betting the client will appreciate it more than you expect. And if they walk, they weren't going to be a good long-term partner anyway. Luna: True. So let me summarize what I'm taking away: lead with the bad news, frame it as proactive management, use it to build trust, and only share flaws that are real but not fatal. Lucas: And time it early. And own the narrative. And don't be afraid to call it a blind spot. That's the whole playbook in a nutshell. Luna: I think this is one of those strategies that sounds counterintuitive but is backed by both research and experience. It takes guts to do it, but the payoff is real. Lucas: And it's a skill you can practice. Start with small disclosures. Test it on low-stakes deals. You'll see the reaction is almost always better than you fear. Then work your way up to bigger ones. Luna: Great advice. And if anyone listening has a story of using bad news to close a deal, we'd love to hear it. You can reach us through the show page. Lucas: We'll be back tomorrow with another episode. Until then, keep closing.