posted on February 18, 2010
This has been a busy week, especially as it is the last month of the quarter for many of our clients. I have therefore decided not to discuss personal business plans, as originally planned. but instead to highlight a situation we are seeing amongst many of our clients - chasing badly qualified opportunities and trying to close them by giving away margin.
Let me explain, too many businesses appear have forgotten that it is not the sales person who closes the deal, it is the customer who decides they are ready to close. The sales person can only position the customer for a close, address all issues that may block the close and then ask the customer if they are ready to close. When the customer is ready to close they will close, it could happen quickly, or it could take time. The main influence a sales person has on driving to a speedy close is addressing the issues that the client must overcome to allow them to close.
So why is this of interest as we come to the end of the quarter? The issue we are seeing is that because the opportunities are poorly qualified sales people are treating all opportunities equally. They are investing the same amount of time in opportunities that cannot close this month as they are in those that could close this month. They are offering discounts where it is not necessary, either by entering price negotiation with someone who was already happy to buy, or by setting expectations of a price discount for those who will buy next quarter.
So what are we recommending:
- Qualifying all opportunities into, "will buy this month" or "will buy later".
- Understanding what issues need to be overcome to get the "buy this month" to be able to buy this month:
- Provide attractive offers that the sales rep can use to trade as part of the final negotiation. These are not discounts but value add offers
- Ensure that operational issues are addressed in time so that we can take the order and book the revenue. If it takes 10 days to complete the process of setting up a new account, doing the credit check, signing Terms and Conditions and shipping, then any deals after 20th December will not happen this year! - Qualify them as a "will buy later"
- Get operations on-side, how can you speed up the time from receipt of order to booking the revenue.
- Anyone who is "will buy later", manage your time so that you do not limit your ability to focus "on will buy now". Do not ignore them but manage them
- Sales management should agree the negotiation limits and stick to them. Remember that before you negotiate you should have sold the value. If all you do is reduce the price you have not sold the value.
This all common sense, but in the rush to hit the quarter we often rush around rather than thinking.
Finally, please avoid the trap of robbing Peter to pay Paul. Sometime it is better to miss this quarter to build next quarter and maintain margin. If you are giving margin away now it is usually impossible to claw it back later, so do so with your eyes open.
Good luck if you are closing out the quarter.