A constant reality for salespeople is quota pressure. There are years when everything goes well and hardly a thought is given to whether numbers will be achieved. If this year has been a year like that, I hope you’re enjoying it.
Remember that coming off a strong year often means starting January 1st at zero with more aggressive numbers to make. For B and C Players, most years are a grind to achieve quotas. If sellers are less than year-to-date (YTD), they have ground to make up. That usually amounts to finding new opportunities and may require more business development activities to build pipelines that will make up the deficit.
On average approximately half of salespeople meet or exceed quota.
I wanted to provide my thoughts about how to manage to your number:
1. Don’t be overly optimistic. Have an appropriate sense of urgency throughout the year. As a first-line manager I found salespeople to be overly optimistic. They always thought they could make their numbers. Unless a seller had a huge opportunity in his or her pipeline, how realistic was it to expect a person that achieved 33 percent of quota in the first nine months to sprint through the fourth quarter closing 67 percent of his or her quota? Salespeople didn’t have the appropriate sense of urgency to be YTD or better until the fourth quarter. Often, they realistically ran out of runway and had little chance of getting where they needed to be.
Many sellers and managers figure they need two to three times their quota in their pipelines to feel good about what the future holds. The challenge is that if a high percentage of opportunities are at the top of a seller’s funnel, a false sense that “all is well” can result.
2. Take stock every month. It‘s important for sellers to take stock of their YTD position against quota every month. Some sellers will need a manager’s help in doing so.
- First glance in the rear view mirror to see where a seller is against quota.
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Keep in mind that YTD position is a lagging indicator, so the next step is to look forward and project where sellers will be based upon opportunities in their pipelines.
- If a seller’s win rate is 33 percent, he or she should have three times or more of what is needed to be YTD in his or her pipelines.
- If a pipeline is thin, it should become clear that time needs to be allocated to business development activities to bring new opportunities into the funnel. The good news is that catching deficiencies early allows them to be more readily addressed.
3. Be realistic about stale proposals. In projecting forward, take a realistic look at proposals that are more than 60 days old. In my experience, proposals, unlike fine red wines, don’t improve with age. At some point it becomes necessary to heavily discount the probabilities of these opportunities closing. Sellers may want to have discussions with buyers about withdrawing stale proposals, so they can determine whether or not they are still viable.
A potential warning sign for managers is seeing sellers push back the forecasted close dates on proposals issued two or more times.
4. Don’t close too early—or aggressively. There are decisions to be made when sellers need decisions made by year-end. Buyers may feel pressured and sales can be lost. A common outcome is that sellers have to discount to get the business early. It usually will be easier to ask customers to make decisions before year-end. Sellers and their manager should take care not to jeopardize future orders with prospects by closing too early and aggressively.
When management pressures salespeople to close before an opportunity is ready, such as at the end of a quarter, future gains often are being traded away for smaller near-term results. Good opportunities can become derailed.
Before asking the buyer to buy, sellers should ask themselves the following questions:
- Does the individual I’ve been selling to have the ability to buy?
- Have I documented the buyer’s goal(s)?
- Have I diagnosed and documented the buyer’s current situation?
- Have I documented how the buyer’s goals can be achieved using my offering?
- Have I provided the buyer with proof that my offering can provide them with what we have mutually determined they need to achieve their goal?
- Have I provided them with pricing?
- Have I documented the value to the buyer and the buyer’s organization?
- Have I documented what will happen between signing my agreement and having our offering fully available for their use?
- What other selling/evaluation steps need to be completed?
Being able to answer, “Yes,” to these questions, or at least most of them, should help the salesperson become more comfortable with the idea of attempting to close earlier than planned. Otherwise, the salesperson and manager may need to rethink the strategy.
5. Always look a sales cycle ahead. Looking a sales cycle ahead throughout the year also will address a common problem for sellers going into a new year. If necessary, sellers will close anything that is closeable. Even if they are successful and make their numbers, they’ll have dreadful first quarters because there’s so little left in their pipelines. The worst of both worlds occurs when sellers drain their pipelines and miss their number.
While important to know your YTD achievement (the rear view mirror), shifting to a leading indicator (looking a sales cycle ahead) will help keep a sales team on target.
Remember: Bad news early is good news.
It primarily applies to disqualifying low probability opportunities early. It also applies to evaluating current and projected positions against quota to minimize the impact on pipeline management and forecasting accuracy. Expecting sellers to close unqualified transactions in a given month is a recipe for disaster and will produce disappointing results.
Better to evaluate pipelines on a monthly basis rather than get a wake-up call in the fourth quarter when it may be too late to address.
Frank Visgatis is president and chief operating officer of CustomerCentric Selling. Since 2002, CustomerCentric Selling (CCS) has delivered world-class sales training in workshops around the globe. It provides organizations with the selling skills and tools needed to win in highly competitive marketplaces. CCS helps companies define and implement organizational sales processes, from market awareness and sales techniques to sales improvement and sustainable sales success. For more information, visit http://customercentric.com/
