If I’m to believe the pipelines I spend lots of time reviewing, there is an odd phenomenon, at least 95% of customers make their purchase decisions and issue POs on the last day of the quarter.
At least that’s the data sales people tend to share with me. Every pipeline I look at says the same thing.
I got to wondering about that. Since we are in Q4, I think it’s remarkable and very kind of customers to come in from their holidays on December 31, to hand us POs. I worry them might get writer’s cramp, signing all the POs because every sales person they deal with has probably set the same close date, regardless of what the customer might be buying. We ought to at least give them bottles of champagne so they can celebrate the New Year.
Hopefully, you realize my tongue is planted firmly in my cheek. But go look at your pipelines, I bet at least 95% of your deals will, it will come in on December 31, even though that’s about 10 weeks away.
What’s happening here?
Well, actually, a lot of orders do come in the waning days of the quarter because we have trained our customers to do this. They know we are most likely to give price or other concessions at the end of the quarter when we really want/need the business. So even though they may have decided, it’s in their best interest to wait until the end of the quarter.
But there are orders that will come in on October 22, November 13, December 16 and other days in the quarter. Of course there are a lot of orders that will also come in January, February, March, April……..
The reality is sales people are, too often, choosing the closing date they want to try to make happen, the latest date the need to make happen, or what their manager is forcing them to make happen. But in reality it’s largely wishful thinking on the part of the sales person.
And we know what happens. A few of the deals do happen (perhaps with those discounts), we struggle to pull a few from next quarter into this quarter, and a very large number don’t happen, slipping into the next quarter (probably showing up in the pipeline at March 31.
We waste lots of time playing these games, each and every quarter. We see the same results–or lack of results–each and every quarter.
What would happen if we changed our approach? What would happen if we used the date specified by the customer based on what/when they are trying to achieve something, not when we want/need them do do something?
Lots of good things would happen. We’d be in lockstep with what our customers are trying to achieve. We’d be much more accurate in our forecasting. We’d stop wasting time on stupid games, freeing it up to find more business.
It might just produce far better and more consistent results…….
Recently I wrote, “What If We Kept The Target Close Date Sacred?” It focused on improving our pipeline management, discipline, and integrity.
But the way we address these issues is in our deal strategies and how we engage the customer in each deal.
Most of the time and too much of our training focus on the things we must do to sell our solutions to the customer. We qualify them, we identify their needs and priorities, we understand who’s involved in the decision, who the competitors are, and develop plans to get the customer to select us. We politely address all their concerns, handle their objections, present our value, and seek to convince them we are the best solution.
Typically, we project a target close date (usually based on what we want to have happen and not what the customer needs to have happen). We assess a probability of winning, usually based on where we are in the selling process and very little on customer verification.
And then we cross our fingers, hoping we can keep the customer focused and choosing us.
Unfortunately, it’s not very helpful to what the customer is doing in their buying process. The customer’s biggest issues are not with solution selection. In fact any solution on their short list is likely to solve their needs.
The customer struggles with a lot of other things. They struggle with aligning the diverse agendas, motivations, priorities of the people involved in the buying process. They struggle with an increasing number of people involved in the decision. They start and restart their buying journey, they go back and revisit/re-do old issues, change their minds, change their priorities, get re-directed by their management, and go back to “Go” without collecting $200 (a Monopoly reference too many no longer recognize).
They are focused on other things than selecting a solution, after all, they aren’t really on a buying journey, but rather they are seeking to address a business opportunity, solve a problem, improve their internal operations. Solution selection is a small part of what they are facing, and probably the easiest part.
They are worried about risk, business and personal. They are worried about the decision, are they making the right decision, are they making the best decision, what happens if they don’t?
And, 53% of the time, they fail to complete their buying journey. They fail to address, or choose not to, the business issue and opportunity.
And the deal falls out of the pipeline, NDM, or it slips and the close date moves, and moves, and moves. We aren’t achieving our goals because the customer is failing to achieve their own.
What if we changed our deal strategies, focusing on how we work with the customer to help them navigate their buying and problem solving process? What if we helped them identify the need and urgency of changing, establishing a goal of when they want to have a solution in place?
What if we helped them understand the risks, the uncertainties–perhaps not reducing it but helping them become more confident that the actions they are taking are the right actions?
What if we leverage the tools they use for these kinds of projects–develop and execute a collaborative project plan? What if we used project management principles to help them achieve their goals, what they set out to do on the schedule they originally set for themselves?
Doing these things would seem to maximize customer success—and, by the way, maximize our success!
We would develop more focused, collaborative strategies. We would reduce the NDMs, closing more opportunities. We would have greater predictability on the deals and when we will close the deals.
Somehow this seems to address our most critical issues in selling, while simultaneously helping the customer achieve their goals.
Just finished one of those “aha” conversations with a client. Thought I would share the concepts with you.
One of the things I pay a lot of attention to, as I review pipelines or deal strategies, is the Target Close Date, and how many times that date has been changed.
I believe sales people should do everything possible to:
- Identify the most realistic target close date possible.
- Do everything possible to keep that date sacred.
Sadly, most target close dates seem to be unrealistic and meaningless. They are driven by what a sales person (or their manager) wants or needs, but have little to do with the customer need to buy.
Then as the customer embarks on their buying journey and we execute our sales process, as things get delayed, as priorities shift, the target close date shifts and shifts and shifts…..
Some years ago, I was looking at a major deal at a client. It was a huge deal, it would make the client’s quarter. Yet as I looked at it, the target close date had changed 11 times in 11 months—the pattern was at the end of each month, the sales person would slip the target close date 30 days. The sales person had no idea when the customer would make a decision and just kept slipping it, thinking, “Hopefully they will make a decision next month.”
How do we keep the target close date sacred?
First, we set the target close date incorrectly. We set it based on what we want or need, perhaps tempered by our experience. For example, we have an average sales cycle of 90 days, so we arbitrarily set the target close date 90 days out.
The target close date needs to be driven by the customer need to buy! It must be driven by understanding, with the customer, when they need to have a solution in place and what the consequences are of missing that target date.
Ironically, this is part of qualifying an opportunity. We have to know this stuff to have a qualified opportunity! We have to know this stuff to help the customer navigate their buying process to achieve their goals when they need to achieve them.
Second, we know things slip. The customer may shift priorities, they may lose their way in the buying process (hopefully we are minimizing that through our coaching), unanticipated barriers emerge. The plan the customer and we put in place falls apart.
But this isn’t new news, it happens all the time both in buying situations and in normal projects the customer undertakes. But if we and the customer continued to slip our deadlines, we would never achieve anything.
The buying/selling journey is a project. And to manage projects effectively we need to put strong project plans in place. In developing strong project plans, we typically identify milestones or stage gates, we look at the critical paths, we build some buffer into the plan, so that we are more likely to hit our goals.
But stuff happens, and we get behind schedule. There’s the temptation to slip the project completion date, but then that slip has huge consequences to the customer. They may miss a product launch commitment, they may miss customer commitments, they may not have the support systems in place to support a major change. They may be in violation of a law or compliance issues. Any slip has serious consequences to the customer and their ability to meet their goals/commitments.
We need to use the same tools and processes in helping our customers in their buying journeys. We need to help them keep that target completion or close date constant—after all, we’ve already identified the consequences to them for missing it. We need to help them rethink their buying process to keep them on target with achieving their goals.
Great project managers recognize this. As they see project plans slipping, they don’t slip the target completion, if they possibly can avoid it. What they do is adjust their project plan. They start at the target completion date, keeping that constant, and work backwards, changing the project plan to meet their goals.
Of course things will slip due to things outside the customer’s and our control. But our job, with the customers, is to minimize this, to help the customer manage it, to focus on the customer’s abilities to achieve their goals.
It really isn’t that tough, project managers do that all the time. It’s nothing new, though I suspect this type of thinking is new to most sales people.
Again, we are most effective when we:
- Establish a realistic target close date based on the customer need to buy.
- Working with the customer doing everything possible to keep it sacred.
“They Aren’t Using CRM!!!”
The first time a sales manager made this statement to me, in frustration, was about 20 years ago. Since then, it’s become the common complaint I hear from managers (If I had a nickel for every time…….)
It’s what happens next that explains a large part of the problem, I always ask, “Let’s sign onto your CRM system and take a look at what’s going on…..”
You can probably guess what happens. These managers who expect their people to use CRM struggle in using CRM. If they are complaining about the lack of utilization, one would expect they can show the problems within the CRM system. For example, looking at opportunities–explaining what they would expect to see and aren’t. Or accounts, or leads, or….
One would expect them to look at pipeline reports, utilization reports, other reports within the CRM system. But they struggle themselves. Through their clumsiness, it’s clear they aren’t using CRM themselves.
“I have my sales ops team get me all the reports I need from CRM…..” “I don’t need to use CRM, it’s for my team, they aren’t using it!”
It’s not wonder we aren’t getting the value we could and should from the tools we’ve invested in. If managers aren’t using these tools themselves, how can we expect our people to use them?
Yet we mandate CRM compliance….
Some years ago, I faced the same issue with my own sales team. We had invested millions in a CRM system and related tools. We provided training, we set expectations for how these tools could improve their effectiveness and productivity.
But we made the decision to use CRM optional, each sales person could opt in or opt out.
So how did we get people using CRM, how did we get them to recognize the value they might get out of using the tools?
It turned out to be really simple. I used the tools, I did mandate that my management team use the tools. Our request was simple, “Every time we do a review, we will do it in the tool! Every deal review will be done looking at the opportunity in the CRM system. Every account review will be done in the system, every pipeline review and forecast review will be done in the system.”
Of course people grumbled, they were pissed off. They, initially, claimed, “You are making us do additional administrative work!”
But we maintained our position. “When we talk to you about what you are doing, we will use the tools and the data to support our conversations. You don’t have to use them, you only have to use them when we talk to you.”
Pretty quickly, the light bulbs started going on in the minds of the sales people. As we did opportunity reviews, we used the tools to structure our conversations, we could see what had happened, who was involved, the status of the deal, even some of the key issues.
We didn’t have to spend a lot of time in deal reviews understanding what had happened, we would look for that in the CRM system. Instead, we focused on coaching, “What do we do next, with who? How can we improve our positioning? How can we create more value? What if ……”
And when we completed the review, the sales person would record next steps as tasks or meetings in the CRM system. Helping them remember and execute what we had agreed on in the review.
It was the same with account reviews, pipeline reviews. We conducted the discussions leveraging the data in the systems. The followup as and next steps were recorded in the system. We no longer had to remember those, all we had to do was look in the system each morning. The next steps, follow ups, action plans were in my calendar and to do list. When I talked to a customer, I recorded a few summary notes in the system, the next steps and sent a message to the sales people (using Chatter or similar capabilities in other tools).
Every once in a while, a sales person would bring up another opportunity. I’d try to find it in CRM, “I can’t find it…..” Sales people started to realize, if it isn’t in the system, it isn’t real.
Of course, at least initially, a lot of the people thought I was the biggest jerk they’d ever met. “Why is Dave forcing us to use the system? Why is he making us do this extra work? Doesn’t he care about our performance and productivity?” Some of you may be thinking the same thing.
But then we have to confront this fundamental question: Why do we invest in these in the first place? Why are we spending the money?
If we aren’t investing in them to improve the effectiveness and productivity of our sales people, then we are wasting our money and their time!
If we, managers and leaders, aren’t using these same tools, leveraging the data and showing how use of these tools help improve their productivity and effectiveness, as well as our own, then we can have no expectation of them using them, themselves.
Of course the tools are a pain. It seems the leading CRM systems had Marquis de Sade as the user interface designer. Some of the more modern tools are much better. Of course most of them don’t provide the robust reporting we need, or some of the opportunity, account management, or prospecting functionality we want. But there are great complementary tools in most of their AppExchanges. And a lot of the more modern systems are taking these on.
But when we look at “compliance,” the first thing we need to assess is “How well are we as managers and leaders complying? Are we using the tools ourselves? Are we demonstrating how our people can use the tools to improve their personal productivity and performance?”
The problem with CRM compliance starts with us!
Afterword: This isn’t really an article about CRM. It’s an article about all the tools we use, automated or otherwise. It’s about our training, it’s about our programs, it’s about our processes. If we, as managers, aren’t using them, then we should have no expectation that our people should use them. The problem with utilization starts with our own behaviors and the examples we set.
