The 4th quarter is the most critical quarter for sales. Shit, I’d argue it’s the most critical quarter for business in general. The 4th quarter is the last chance to make the number and ensure success. Like sports, fail in the fourth quarter and that’s it, you’re done. There are no more chances. In addition to being the last chance to make the number, it’s also the last chance to get prepared for the new year.
The importance of the fourth quarter isn’t lost on anyone. We all head into the quarter with a maniacal focus on making the number and finishing strong. The 4th quarter is known for heroic efforts and herculean attempts to bring in the very last dollar. I recall one particular 4th quarter when I was a Regional V.P. I spent a good portion of my Christmas vacation working with a rep, while I was on the ski slopes, trying to finish the last bit of legal wrangling with a customer in order to close a deal. The 4th quarter is an all in quarter and that’s the problem.
Head of sales, (EVP’s, SVP’s or VP’s) have two responsibilities in Q4. Because of the maniacal focus on closing out the quarter, their second responsibility is often ignored. In Q4 head of sales is responsible for closing out the year successfully AND making sure the organization is prepared for next year. Because leadership is so focused on making sure they close out the year well and that they don’t miss their number they often neglect their other responsibility, making sure the team and the organization are in optimal shape to start the new year. When this happens a cycle begins.
What’s the cycle?
The cycle is when the sales organization starts chasing its tail year over year because it doesn’t do the important things to start the year first or as Steven Covey says, first things first. The sales organization lacks the discipline to focus on the long-term. Instead, it reacts to what is most urgent, which is almost always making the Q4 number and the year end number. The organization puts everything else on hold and then heads into the new year unprepared for the new challenges and the new number. The organization spends Q1 preparing for the new year when it should have been done in Q4. By doing it this way, the benefits of the new years efforts aren’t realized until q2 or later and now the team is another quarter or more behind, which requires another herculean effort in Q4 — the cycle has begun.
Sales is notorious for allowing the pursuit of the number to get it into a vicious cycle of chasing it’s tail. I’ve seen it in every organization I’ve ever consulted or worked in.
To stop the cycle, sales leaders and the CEO need the discipline to spend Q4 focusing on the team and the organization in addition to Q4 revenue and closing out the year.
Starting the new year right, and in this case 2013, means having the right structure, people, processess, and strategies in place. It means identifying, understanding and responding to the gap between your current environment and what is expected in 2013.
To prepare for 2013 starts with understanding the goal(s). What will the sales team be responsible for in the coming year including;
- revenue growth
- margin/margin growth
- and more
It’s critical to be absolutely clear on what the sales organization will be responsible for in 2013. Once the team’s responsibilities in 2013 have been identified, the difficult question(s) must be asked. What is required to accomplish the 2013 goals AND does the team have what is required to be successful? Answer those questions and the gap will begin to form.
With a clear understanding of what the sales team will be responsible for in 2013 and the knowledge of the current environment the gap should be clear. With the gap in mind it’s time to evaluate how the gap is going to be filled.
If only one effort is going to focus on the new year, then it has to be strategy. This one question MUST be asked AND answered before the end of the quarter. “How are we going to make our number and achieve the 2013 goals?” There is no avoiding answering this question. If not answered, I promise failure is imminent. What is the 2013 sales strategy? How will the numbers be achieved? What initiatives will be deployed? Where will investments be made? What resources will be deployed? What greatest market opportunities will be exploited? How will challenges be minimized? How is the number going to be made? Not having the answer to these and a myriad of other questions BEFORE 2013 starts puts you behind the 8 ball and sets the cycle in motion all over again.
Understanding the strategy, is the right structure in place? Are the goals for 2013 going to require farmers, hunters or both? Is achieving the goals going to require partnerships and channels? If so, are the current partner and channel functions aligned with achieving the 2013 goals. Is the organization structured appropriately to meet 2013 goals? Does the current comp plan support the 2013 goals and initiatives? Is a new comp plan required? Are the territories aligned properly? Do the territories need to be redrawn?
Are the right people in place? Is the sales team selling at its optimal capacity? Do they have the appropriate skill sets? Does the team have the right knowledge base? Is the team working together optimally? Is the organization getting the leadership it needs from the sales managers? Are all the people and related skills in place and approapriate for 2013’s goals?
Do the existing processes get you to where you need to be in 2013? Do they support the goals? Yes, processes should change. They need to align with the goals. They need to support the designated efforts of the organization. Too often sales organizations keep the same processes in place, not assessing them for effectiveness, especially when goals shift or change. Ask, do all of the existing sales processes drive the sales organization closer to the goals or not? Does the team have the processes it needs or are somethings missing?
It’s not enough to ask and answer all these questions. To be ready for 2013 requires execution in Q4. The strategy needs to be identified, the plans need to be in place, the processes need to be implemented and the structure secured before Jan 1, 2013. You are only half way there if the questions have been asked and answered but your waiting for Q1 to execute. The objective is to start 2013 with everything in place and ready to go, not spending the first quarter executing on what should have been done in Q4.
As the head of sales it’s your job to make the number and be prepared to make the number. It means you have to figure out a way to break the cycle and not start 2013 behind the eightball.
If your only focused on the finishing the year strong and your not investing the time and effort setting the organization up for 2013, get ready for the cycle, ’cause you’re gonna be in it.
It’s easy to get caught up in the pursuit of the close. Bonuses are made or lost in the 4th quarter. Careers are made and lost in the 4th quarter. The number has to be hit. Yup, I get it. But to avoid the cycle and make Q4 a little less crazy in 2013, planning has to start NOW!