It is a commonly-known fact that Sales Reps under pressure will often go to extraordinary means to reach quotas at the end of calendar cycles. This behaviour is a rinse and repeat process that has become part of the fabric of the universal Sales Reps’ culture. Whilst this ‘strategy’ often successfully delivers the ‘over the line’ result at period end, the cost to the business in missed (both in unachieved AND the over-discounted) revenue is an eye-watering figure. I’ve worked with one company where we conducted a “lift the stones” exercise on the discounting practices by the sales force over a 12-month period. If they had simply reduced their concession per deal by 1 or 2 percentage points, that company would have easily SMASHED their annual sales target for that year! Now THAT’s a sobering reality.
What could the upturn in potential revenue be if this practice were to be reversed? “Everybody does it” doesn’t wash any more. It is unsustainable and the end-result is usually a change of venue for the Sales Rep to go off and continue the behaviour until they run out of rope at the next company. These counterproductive and clearly unsustainable practices CAN be de-programmed with proper mentoring, coaching, upskilling AND – improvements to the businesses’ forecasting strategies and pipeline management. Yes! There is hope!
All too often, the sad truth is Sales Reps spend far too much time chasing unqualified and poorly vetted leads. Quite often, this isn’t actually down to the quality of the lead (or of the qualifier!). Nor is it down to a lack of understanding of the prospect, their business or the need. There IS however, a balance to be struck where the Sales Rep seizes the right time to get their prospect to a decision point AND, the prospect’s readiness to purchase. Having said that, this recurring pressure from the vendor to purchase in the current timeframe to enjoy the compensation & concessions that abound is now an event EVERYONE awaits. Oh yes, Procurement & Supply Chain Managers salivate at this stage because over time, THEY too have come to expect this behaviour from Sales Reps. So – they wait, then pounce…rinse and repeat, quarter-upon-quarter.
The behaviour is reinforced by executive Sales Leaders. Their unrelenting focus on the TARGET number and the trend of artificially high volume of deals at cycle-end create a belief these heroic efforts are yielding valuable increases in the deal size & the sales revenue. So often there is also a scramble to pull deals (new business & renewals) forward without understanding the full impact on the business’ revenue.
So, how do we fix this? Well, I’ve already stated that Sales Teams need proper mentoring & coaching, and in some cases there may be some sales and product skill gaps to address. Proper management of the Sales Team is essential. Getting what you inspect, not what you expect is critical to driving positive change. Staying close to your team whilst giving them the freedom to manage their leads and pipelines and holding them accountable is key. Hold each Sales Rep accountable for their performance and get early doors control of where they are struggling to be successful. Engender a culture of openness and honesty within the team…yes! within the Sales Team! No Surprises!
Then, there’s the company’s forecasting strategy and pipeline management to consider. Good forecasting requires a good sales strategy every day of the week. You need to understand your prospect’s buying behaviours and you need a milestone driven pipeline process. Be ruthless in adjusting either your forecasting or sales strategy. It is important to invest time into understanding the behaviours relevant to your business’ time-based sales performance/track record trends over time. If your business is high volume, low value, what actual days of the week emerge for deals won? lost? Adjust your strategy for weekly deal closure. You enterprise sales organisations with low volume, high-value products – beware the month-end or quarter-end patterns where Sales Reps are pushing to close deals that are not ready. Those deals that DO close generally are of lower value or have some concession apply which help reach an immediate target but which once amortised, do not positively impact against the company’s revenue targets.
With diligent review of the sales pipeline and a forecasting strategy you can encourage your Sales Reps to create more realistic deal stages and close dates. Impose limits on discounting and create other events to drive urgency than the end of the calendar cycle. Create a structure to your sales compensation that rewards full prices sales. Drive your sales strategy and productivity efforts during the work week to experience the results that kicks the end of calendar cycle insanity into touch!