Stop Believing the Close Date
During a training session with us, James was complaining about how much time he has to spend in preparing projections for the finance department on very early stage deals. ‘It always happens when I just start working on a sale. Finance asks for an estimate of its size and a forecast. Early on, I have no idea how big the sale will be!’
During a break in the training, James happened to ride the elevator with the finance manager who said, ‘I hear you’re working on a deal. I’d like to have a revenue forecast by 5 p.m. today.’ James explained, ‘I’m just working on the problem with them and only meeting with them for second time. I have no idea when it will close, let alone the forecast. I’ll let you know when we get farther along.’
The finance staffer looked at him and said nothing. Soon, however, James got an email from her saying, ‘Thanks for the conversation. I’ll expect that revenue forecast by 5 p.m.!’
We know you spend a great deal of time with your salespeople on two matters: the value of their deals in the pipeline and when they are going to close. Interestingly, we find many companies that become manic around these two pieces of information. The larger the company, the more the likelihood is that you’re drowning in management information (MI) that is supposed to help you nail down these two measures.
Unless you’re a very small firm, you should be relying on a customer relationship manager (CRM) to help manage your data. If it is kept up to date, it will contain accurate information that can be sorted into reports that will provide the company with the information it needs see what’s ahead.
But that’s a big ‘if’. CRMs are notoriously out of date, contain inaccurate information, and largely cannot produce reports that can be trusted. It’s because most salespeople don’t keep their record up to date or they simply make stuff up and put it in the system to keep their manager off their back.
As a result, you constantly ask your team for updates, reports, forecasts, and other workarounds because you don’t trust the data in the CRM. This cuts into your salespeople’s time for selling more business, which then puts further stress on hitting the target.
Then you push hard at the end of the target period to close deals out. Some do and some don’t, and then you’re left with lots of stories and reasons for the slippage. You’re beginning to think that you are engaged in a very big game of ‘let’s not really tell the truth.’
But the real truth is that a frenzied focus on deal amount and close date invites a lot of story-telling. Everybody involved makes up stuff about these two pieces of information:
Customers don’t always tell you the truth – about the size, timeframe, and likelihood of a deal happening.
Salespeople tend to be optimistic and like to report numbers that will please their boss.
Sales managers pass on the good news to their boss.
Finance tends to treat early-stage numbers as if they were hard fact when, in fact, they are mostly a guess.
Of course, you know better than to rely on an early deal amount and the close date. You know it’s just a guess. But if you’re being pressured by your manager to ‘get a number and a date and commit to it,’ you’re stuck in a losing game where the numbers come in on time and as projected only rarely.
What should you do?
It usually takes a significant chunk of time and some very skilled interventions for a company to change the interplay of salespeople, management, and the CRM so that forecasting is accurate. However, when a company takes it on and succeeds in doing it, the results are dramatic and profitable. Several things need to be addressed.
First, you need to identify the logical steps that customers need to go through so they make an intelligent buying decision. Beginning with a dive into the problem they want to solve and steadily progressing toward a solution that will work, each step increases the customer’s confidence and trust in you as the supplier. We call this process DQ Sales® because it focuses on building the customer’s decision intelligence.
Second, you need to train your salespeople how to sell in a manner that matches the customer buying journey noted above. The benefit to your salespeople is that they will have a clearly defined path to follow. Set up your CRM with the same logical steps of a customer-centric selling journey as identified above.
Third, sales managers need to train their salespeople to use the CRM as a proactive selling tool that will help them make more money, not try to oblige them to ‘update the CRM’ for management. Using it this way actually increases the accuracy of sale size and closure date because it is current and provides management with more reliable data. This is the best way to support your sales team to sell better, while also providing management with accurate forecasting information.
Fourth, this change must be synchronized from the top to the bottom of the organization, because senior management ultimately drives the reporting use of the CRM and regulates the pressure on deal size and close date.
If a company can successfully make this happen, some very good things begin to happen:
The CRM will be filled with accurate data that can be used reliably.
This data, informed by historical precedent, can do about 95% of the forecasting work! You get a more accurate picture of close date and deal size, based on what’s happened in the past, rather than relying on your salespeople’s best guess.
You can quit requiring your salespeople to do what they’re not good at, like forecasting and filling out forms, and instead, spend more time talking to customers.
Your system will help identify where people would benefit from greater training and sharpening of their skills.
If you think you are ready to take this on, start by experimenting with the following steps first. It will get you going, stir the pot a bit, and see if there’s an appetite for change in your company.
Meet with your team and, together, layout in detail the steps the customer needs to take to build their decision intelligence and end up buying your solution. The number of steps will rely on the complexity of the sale. You can include your prospecting steps in the beginning of the process if you choose.
Arrange the steps in a logical order, focusing first on fully understanding the problem and its cost, and then on the right solution and its ROI.
Have each salesperson assess where their customers are in comparison to the steps. Have them notice which steps have been skipped over or skated through.
Then have your salespeople figure out the next step with each customer, to complete each step along this path.
Refer to our books if you want more detailed information: Decision Intelligence Selling and Sell Well, Do Good.