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It is important that you continue to communicate with your customer regarding their progress status since their first interaction with you. Doing this creates the perception to the customer that they are in great hands and are speaking to the correct person.
Therefore, when the deal with a customer is deemed not appropriate, communicating this to the customer will not be a surprise to them. When possible, meeting them face-to-face displays a persona that you really did do the best you could and leaves a lasting impression on them, on which they could return for a similar or different deal.
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