Today is the end of the quarter, and if you are in sales you know what that means. The end of the quarter marks the mad dash to get in as much business as possible before 12:00 midnight to ensure you make your number.
I’ve always found this to be an interesting dance and for those of you not in sales it goes a little like this; The V.P.’s look at the most recent reports to determine where they are in relationship to their revenue number or quota. They in turn look down into the organization to the directors and managers and ask, “what can you move into this quarter from next quarter?” This sets off a flurry of activity as the sales teams call in favors, offers deals, creates discounts, and sweeten the pot all to get revenue a day early. It’s an unhealthy way to do business.
The other reason I find the end of the quarter so interesting, by bringing in deals expected to close next quarter you, in essence, have gap to fill next quarter. This gap inevitably get’s filled the same way the previous did, by bringing in deals from next quarter by calling in favors, offering deals, creating discounts and sweetening the pot. Its a viscous cycle. Especially if your sales cycle is longer than 3 months.
I don’t like this dance and I don’t think it benefits the organization in the end. It becomes a viscous cycle that costs more in the long run, as sales people create scarcity and give away the farm to make their number. To avoid it companies need to be more disciplined in sales operations. Start with focusing on sales cycles and closing ratios. If a company has strong understanding of it’s average sales cycle length and the % of deals it wins, they can have a much clearer view of what to expect each quarter. This allows for much better forecasting and quota allocation. Secondly, companies need to have a greater focus on the long-term. The mad dash to bring revenue from future quarters into this quarter only creates a brutal cycle that is difficult to break and can cost the company millions. Take the hit in the 3rd quarter, don’t make deals that you don’t have to make if you close two weeks later, don’t give away extra product to close today, if you won’t have to close in 3 weeks. Rarely is it worth it.
Don’t train your customers. If this is a pattern, your customers will pick up on it and purposely wait till the end of the quarter to negotiate, knowing you will be more flexible on the terms to make your number.
Set realistic plans. This is a big one and could be a post by itself. My experience, is most companies build their plans through a process of, “how much can we grow?” with little analysis on what the market can bear, what the company resources can support, what the competition is doing etc. Few companies actually do a thorough analysis before committing their yearly numbers. This approach is like throwing darts.
The mad dash is just about over. My team and I will make our number, just barely. We didn’t sweeten any pots, we didn’t create any discounts, but we did have to call in some favors and that has a cost.
I don’t like the dance and don’t think it’s a good reflection of an organization. But it’s over for the next 3 months. To my fellow sales guys, enjoy the reprieve, you deserve it. Rest up my friends as the battle will resume again soon.