We’ve all seen this chart in a board meeting or in an email from the CEO or VP Sales.
Why do the majority of sales close in the final weeks of a quarter? Here are some of the most common excuses:
- The CFO needed to get board approval
- The key stakeholder needed us to come in for a f2f with their whole team
- Their legal team was on vacation and couldn’t get the contract over the line
- We didn’t have enough leads
- They knew if they waited we’d give them a discount
Is this the way the software industry has always operated? Ask any seasoned sales rep and they’ll probably tell you there is nothing you can do to change this. Its just the way it is.
And don’t think its just sales reps who do this. I’ve seen plenty of marketing teams fall behind on their lead gen and deliver the bulk of their leads in the final weeks of the quarter.
But it’s simply not true. Some of the best software companies in the world have cracked this problem. Let’s break it down.
There’s a real sawtooth pattern with a peak at the end of the quarter and then a drop off. Generally this means there is insufficient quality in the pipeline and not enough of it is sufficiently advanced going in to each quarter. There’s also not enough work being done now for next quarter. Because they are scraping the numbers or just missing them, the whole focus is on the end of the current quarter. So the pipeline gets wrung out to dry and everything that can get closed gets closed, and the next quarter starts empty and the sales team has to build pipeline to the next push in 90 days. Rinse and repeat.
What’s needed is a longer outlook so that there is enough attention also on Q+1 and Q+2. So depending on the stage of the company, the CEO or the sales managers need to look into their marketing and sales funnels and figure out where the breaking point is. Typically, it’s as I mentioned above – not enough opportunities far enough progressed going into the next quarter. So whether you need to be adding outbound sales reps, inbound lead generators, new incentive structures, better sales management, or a mixture of the above, this problem can be solved.Stop Closing All of Your Bookings at the End of the Quarter
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Sales folks are coin operated. If you incentivize them on quarterly sales, you’ll always see this pattern.
Same thing with homework. If you give a deadline and tracked hours worked, it would be mostly back-ended.
People will always wait until the last minute to get something done.
Paying a flat rate commission eliminates this temporarily but once you layer in quarterly bonuses, multipliers, and yearly goals – those all go out the window.
Ultimately this isn’t a sales problem, it’s a human problem.
Completely agree it is a human problem.
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