Love that approach. You aren't losing a sale — you are (1) preventing what was almost guaranteed to be a dissatisfied customer and (2) winning over a potential future customer for life. If there is any need for your service in the future it is a guaranteed sale from a customer that already holds you in high regard.
Because in the long term it is not working against their best interest. If I know that a store will not try to sell me stuff that is a poor match to my needs, then I know I can trust that store. When I go into a store that tells me to buy a piece of equipment that doesn't match my needs, or a T-shirt in a colour that looks terrible on me, I often find out later and tell my friends.
People rave about Apple downselling and Amazon allowing low score reviews on their products because in the long run its good business.
Please keep in mind though that it is a well known technique to try to build loyalty by doing something that the customer doesn't expect that isn't in your best interest.
The problem is this doesn't always work and isn't applicable in all situations.
The customer that you sell a laptop to may or may not return. But the salesman selling oracle would get fired for pushing a competitors product under the guise of building loyalty.
The problem is that practices like this are specific to certain places and situations.
Lastly, if you are a local small dealer you simply can't afford to easily lose a sale with the hope that the loyalty is paid back for years to come. You generally have to make hay while the sun shines.
As far as this thread goes, rednukleus did specifically say "high margin places". But yeah, it's just an often-overlooked angle on a (still) hard problem.
I'm not sure about your example of the local dealer. The "local" part implies to me that personal relationships and long memories will play a relatively large role in someone's business. It could be extremely beneficial to at least be seen as looking out for others to your detriment, and it would probably be easier to do for real than to fake convincingly for a long period unless your customers are ignorant.
If a company sells a product to a customer who needs something different, that customer will assume the product is bad. Saying "my company failed because my software didn't run on those Apple machines" is nonsense to us, but your average consumer will take this as a sign to actively avoid Apple products. If that customer never had a bad experience with Apple, it's less likely they'll complain about them.
However in the case of trying to get a customer to buy something more powerful than they need, the product will work just fine from the perspective from the customer; it's just that it still would've worked fine for them and they would've retained more money if they went with something less powerful.
There may be some economic dynamics I'm missing out on (aversion to buying Apple products in the future for being too pricey, maybe), but it seems like it'd generally be in a company's best interest to try and get their customers to purchase their most expensive projects. That is why the article linked seems so unusual yet refreshing.
Because maybe next time the customer will come back shopping for a personal machine instead of one they need to run some Windows app. And they’ll remember the great service from round one.
