Sales Tips: Quarter-end Health Check
By John Holland, Chief Content Officer, CustomerCentric Selling®
A horrible way to start sales calls with new prospects is to ask: “How’s it going?”
It is a relevant question sellers ask themselves now that the first quarter has ended. This amounts to looking through the rear view mirror. Sellers and managers take this view on a daily basis but should realize it is a trailing indicator of what has already happened.
In my mind, if sellers are less than 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.
It’s important to project where sellers will be at the end of Q2. Many sellers and managers figure they need 2-3 times their quota in their pipelines to feel good about what the future holds. The challenge I see 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.
Within CCS® a significant milestone is negotiating a written Sequences Of Events (SOE) with members of buying committees. These documents contain the estimated dates of activities that would lead to issuing proposals in a timeframe agreed to by buying committees. SOE’s are typically done for large opportunities. Once in play there is a reasonable expectation of a 50% close rate.
Our guideline for sellers and managers is to:
- Divide each seller’s quota by 12 to establish the monthly revenue needed.
- Multiply the monthly quota by the number of months in a typical sales cycle to calculate a targeted pipeline.
A $2.4 million quota means $200K/month will keep a seller YTD. With a 3-month average sales cycle a seller needs to book $600K over that period. With a 50% win rate, a seller needs twice that number, or $1.2 million in opportunities with negotiated SOE’s at any given time. If there is any YTD shortfall it would be doubled and added to the $1.2 million dollar target.
This calculation should be done on a monthly basis and helps sales managers project one sales cycle ahead.
The pipeline numbers for salespeople can be rolled up to the district, region and national sales teams. An important aspect of this approach is that managers can grade opportunities based upon buyer actions. First, there must be written SOE’s in place and secondly managers can monitor activities being completed (or not) that will lead to a close date that has been projected.
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.