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.
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.
On average about half of salespeople meet or exceed quota.
I wanted to provide my thoughts about how to manage your numbers:
1. Don’t be overly optimistic. Have an appropriate sense of urgency throughout the year.
As a first line manager I found salespeople 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% of quota in the first 9 months to sprint through the 4th quarter closing 67% of their 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.
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 take a glance in the rear view mirror to see where a seller is against quota.
- 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% he or she should have 3X or more of what is needed to be YTD in their 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.
Why Win Loss Analysis? When You Know More, You Win More
Did you know companies who study past deals have a 3-7x higher win rate? Win Loss Analysis may seem tactical. In reality the process delivers strategic insights which help you dramatically increase your win rate, gain competitive intel, understand how buyers see your products and be more precise in your marketing.
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 will usually 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.
5. Always look a sales cycle ahead.
Looking a sales cycle ahead throughout the year will also 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.
Remember: One of CustomerCentric Selling’s core concepts is:
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. 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.