By John Holland, Chief Content Officer, CustomerCentric Selling®
The days are getting noticeably shorter. That means summer is winding down and sellers will soon be in the last quarter stretch run to meet or beat quota. This is a good time to have sellers take a hard and realistic look at where you’re likely to wind up for three reasons:
- They still have “runway” with 4 months to get where you want/need to go.
- If they wait until November or December salespeople will always find a way to make their numbers, but often by being overtly optimistic in having to close virtually everything they’re working on. Sales managers know how unlikely that will be.
- How sellers finish this year can have a great impact on their 2019 achievement. If they must close everything in the pipeline they may have to face the reality of having 2019 effectively be a 10-month year.
1. Take a hard look at your pipeline opportunities.
A good place to start is to have a hard look at each opportunity in the pipeline today and answer the following questions in trying to determine if you may be “Column A” (the vendor of choice):
- What is the highest level that you’ve had access to?
- What outcomes are they hoping to achieve and is there sufficient value to justify the expenditure you are asking them for?
- Whose numbers were used to create budget?
- Who is your competition and what level have they been able to call on?
2. Remove the stale, dead weight.
If you have opportunities where quotes or proposals have been out there for more than 45 days, consider withdrawing them. If decisions are going to be made prospects like to have all vendors competing so they can have leverage in negotiating the best price. Let’s assume you have not gotten to decision maker levels. The conversation can go something like this:
My quote was issued over 45 days ago and no decision has been made. You indicated Sally Jones would make the decision. Can we meet with Sally because I’d like to offer a cost vs. benefit to estimate potential payback. I just don’t want to spin my wheels on this transaction.
Unlike fine red wines, proposals have half-lives. As each day passes a seller’s chance of getting that business erodes. Better to try to qualify or disqualify them rather than continue to hope they may close.
3. Negotiate Sequence of Events (SOE).
Once the pipeline has been given a sanity check do you have or will you be able to negotiate Sequences of Events with customer and prospects? This means allowing the buyer to estimate a timeframe for making the decision and then the seller negotiating a written document with steps and estimated dates that culminate in making a recommendation (providing a written proposal).
4. Look for new, hidden opportunities.
Try to determine what new opportunities you can uncover. If sales cycles are too long, take a hard look at any add-on transactions that you may be able to close. Typically, when dealing with customers legal documents are already in place and sell cycles are considerably shorter.
5. Crunch the numbers.
If you want to minimize the stress of year end crunches for 2019 and beyond treat each month as a small closing and track where you expect to be in the future. If your annual quota is $1,800.000 your monthly target is $150,000. Next estimate a typical length of sales cycle. If it’s 4 months, then multiply your monthly target by 4. This means you will expect to generate $600K over that period. Now divide that figure by the decimal equivalent of your close rate. For example if you have a 50% win rate on opportunities ($600K)/(.5) means your target is $1,200,000 if you are YTD or better against quota. Let’s say in January a seller was $50K short the revised target would be $1,300,000 (double the short fall and add it to the target).
By doing what amounts to 12 small closes during a year, sellers are far less likely to wind up scrambling at year-end. YTD calculations are trailing indicators, effectively a look in the rear view mirror. The calculations I suggested are leading indicators in always knowing the revenue needed to get or remain YTD in the future.
The two most significant drivers in these calculations are win rate and length of sell cycle. For the example above by increasing win rate to 66 2/3% and decreasing average sales cycles to 3 months means the target for a seller YTD or better becomes $676,000.
Starting at Key Player levels and building strong cost vs. benefit analyses will often mean shorter sales cycles.