New research, based on analysis of a proprietary database comprised of billions of sales interactions, that calculates the true impact of procrastination on business-to-business sales, from InsideSales.com. The conclusions challenge a foundational tenet of conventional sales wisdom and calls for companies to rethink their deal closing strategies.
The study reveals that end-of-month selling behaviours common to most business-to-business sales organisations have a negative impact on overall sales win rates and deal sizes. Not only do these last-minute blitzes result in the loss of deals that might have otherwise eventually been won, but the deals that do close do so at lower rates and smaller sizes than those won earlier in the month, resulting in significant losses in revenue.
‘One of the most common practices in sales is the period-ending push, in which reps are pressured to make extra efforts to reach quotas,’ Martin Moran, international managing director of InsideSales.com, explains.
‘However, a closer look at the data shows us that this conventional way of selling is having a detrimental impact on businesses, costing them 15.8 per cent in missed revenue.’
Avoid Mondays and Fridays, close on Tuesdays
The final business day of the week is the worst for closing deals as reps tend to lose 11.6 per cent more opportunities on Friday than on Tuesday, which is the most profitable day of the week with a win rate of 63.8 per cent.
‘We believe Friday produces this effect because each week reps work toward progressing deals. When Friday arrives, reps tend to clean up their pipeline by clearing out stagnant deals to ensure better accuracy,’ says Moran.
‘In our experience, a more effective way to manage a sales cycle is to maintain deals daily and encourage reps to not create imaginary Friday deadlines to close deals, thus removing the temptation to close out too soon.’
Rethink the end-of-month strategy
While the end-of-month push yields closing rates nearly three times (2.62x) higher than normal, there is little cause for self-congratulatory celebrations.
According to the study, the end of the month also sees ten times more deals lost compared to earlier in the month. This phenomenon begins five days prior to the last day of the month, and continues until two days after.
‘Many will struggle to believe that this central tenant of sales strategy is deeply flawed and adversely impacts both the sales rep and their customer,’ says Moran.
‘But the data clearly shows that sellers forcing buyers into making snap decisions, poor pipeline maintenance, high pressure sales tactics and customers delaying committing to negotiate a reduced price have deeply detrimental impacts on sales organisations.’
Moran continues, ‘Gut instinct has no place in directing activities. Customers can be unpredictable at the best of times, so it’s essential that sales reps look at the data analysis to guide them in their decision-making. By correcting end-of-month strategies, companies can boost their annual revenues by 15.8 per cent. Without a complete understanding of pipeline management in relation to time-based patterns or strategies, organisations are losing opportunities and throwing millions away each year.’