Sales is often seen as a dirty word. This is not helped by the image of the ruthless salesperson who would sell their Granny to hit target... An image which is completely erroneous in my experience.
Anyone working in a sales knows the pressure which grows as month's end creeps ever closer. This is, of course, with good reason: The money brought in pays the bills, wages and subsequently everyone's rent & mortgages.
However, is it doing more harm than good? As the article below highlights, pushing clients or prospects so hard to say Yes usually makes them reconsider and more often than not, to lose them forever (11.4x more likely to lose the deal!).
Equally, if you are more concerned with hitting a number rather than enabling your client to succeed, it would appear to send the wrong message
- It can put undue stress on the relationship, damaging it permanently and detracting from any future work.
- Chasing a Yes shows that you are probably more concerned about hitting your number than making your client successful. This would appear be a bad foundation for a long-term successful relationship.
- Discounting undervalues your product or service.
So as the research shows, salespeople close almost three times as many deals at the end of the month as during the preceding weeks but also lose over 11 times as many. Not a very good end result. The Harvard Business Review (HBR) goes even further to spell out how destructive this can be for businesses: "The decrease in deal size and win rate results in an estimated $98 million per year in lost revenue for the average company in our data set. Conversely, it represents a potential gain of over 27% in revenue per company if properly addressed."
Seeing as the impact is so large. How then might you solve it? The HBR suggests four solutions to the problem:
Changing the focus to weekly forecasting, not just monthly quotas: If the whole company is tee'd up to focus on the end of the month, then this will surely be the time when you see the most activity. Focusing on a weekly forecast can start to shift the focus and provide a more consistent level of activity.
Incentivise the right behaviour: Linked to the above, a compensation structure which promotes the desired behaviour change (not scrabbling around to hit the big numbers at the month's end). If their compensation structures change, sales reps will notice. Consider a compensation structure that rewards salespeople for not procrastinating. For example, perhaps the organization can offer a larger bonus for deals closing between the first and the 17th of the month, a medium bonus for sales between the 17th and the 24th, and remove the bonus for deals closed the final seven days of the month.
Adhere to the customer's deadline. Not yours: Every smart salesperson knows they should focus on what’s in it for the customer. The best salespeople have all of their business concluded well in advance and when the time comes for them to push a little harder to close something ahead of a deadline, then their clients are usually willing to listen because they know this is with good reason and they are willing to do their vendor a favour. Equally, if the content
Up-skill your workforce: "To get away from the traditional end-of-quarter desperation tactics, improve your sales team’s skill sets. Encourage them to brainstorm new, more strategic ways of selling."
To conclude, it's inevitable that at some point you will get drawn into this end of month behaviour, however, by planning well in advance and by putting your client's interests before your own, you will probably keep yourself on the right side of the fence and separate yourself from the plethora of other vendors.
I, for one, will be doing my best to avoid it at all costs.
Business to business sales organizations need to rethink their end-of-month sales strategies. Sales reps may be pushing too hard to close deals that are not ready; consequently, deals increase by 2.9x, but deals lost forever skyrocket by 11.4x. Win rates drop 51.1% the last day of month as sales people swing for the fence but they strike out twice as often. Compounding the damage, deal sizes plummet by 34.5% on the final day of the month.