The 29th of March is a date that etched in the minds of most Europeans. For salespeople, it also a significant date: the end of another quarter. The difference for us though is that it is a non-negotiable, a red line, that cannot be extended by a vote of your executive team.
In sales, we create a forecast, and from that, we make red line commitments on deals that we are expected to keep. However, though, our deals slip our partners may let us down; and we are left scrambling at the 11th hour to find replacements.
Doing so has significant consequences. A research study from the Aberdeen Groupsaid that companies with accurate sales forecasts are 10 per cent more likely to grow their revenue year-over-year and 7.3 per cent more likely to hit quota.
Usually, it requires a last-minute price concession to bring a deal forward thus undervaluing your service. Like a Pavlov’s dog over the longer term, it trains the buyer to wait until the quarter end to place an order in the knowledge that they are going to get a better deal. Piling on quarter end incentives, for the sales team, partner or customers is a way to do it, but ultimately that hurts the bottom line of the vendor.
The decrease in deal size and win rate results in an estimated $98 million per year in lost revenue for the average company according to InsideSales.com. Conversely, it represents a potential gain of over 27% in revenue per company if adequately addressed.
It’s a vicious circle and one that is difficult to escape. Forecasting is a challenge in any business and one that I have been familiar with in my career, either as the sales-person or the sales manager. From the early days submitting over a phone call, to today’s sophisticated CRM platforms with whizz-bang artificial intelligence to help predict outcomes, the issue still remains. The end of the quarter is a hard line, non-negotiable day in the life of a salesperson.
What is the cause of a weak forecast, probably many attributes, but in essence it is committing deals that are not ready to close to satisfy your quota? No one likes bad news, so I am may as well keep the deal in the forecast for as long as possible just in case it comes in.
Why are deals being committed too soon, in my experience it down to not enough original opportunities? Then it follows the cause of that is not enough demand generation in the first place. Traditional methods of demand generation are decreasing in effectiveness, who now answers a cold call, opens a spam email, or a click through on advertising?
In my career, I have always taken on personal responsibility to create new opportunities. If something fell into my lap via marketing, then that was a bonus. Today, either as a channel account manager or front-line salesperson you can arrange a call out day and continue to make outbound cold calls (100 calls = 1 appointment); or even be a bit more cutting edge, and use a third party to send out connection requests on your behalf. They may work, but as I have seen over the last 12 months, they are ineffective.
We have seen organisations transform their demand generation activity to an always-on prospecting culture, where every sales associate becomes known for the expertise online. What is the common thread in these organisations: It’s an embracement of social selling. A cultural sales shift has taken place leading to genuine inbound opportunities for the sales teams.
What does this mean for the non-negotiable red line at the end of each quarter? Well, we have seen with more connections being made, more opportunities are being created, more opportunities creates that in turn can go into the forecast. More qualified deals in the forecasts will lead to more positive on time sales outcomes.
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