Deal Slippage


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It’s the end of the month, end of the quarter, end of the year…..

I’m looking at the pipelines of several clients (sometimes, I think they regret giving me access to their CRM systems) and I see a flurry of activity. Yes some of it is deals coming in and being closed, but too much of it is slipping the target close date. Move it out a month, a quarter…..

I look at the history of some of the deals, one has moved 11 times in the past 11 months, you guessed it, every month the sales person slips the deal another 30 days. Others are almost as bad. These are all simply wishful thinking. my guess is few of these are real deals, mostly wishful thinking. Shame on the sales people for wasting their and their customer’s time with dreaming about rosy futures. Shame on sales management for letting these stay in the pipeline.

Others are slipping, there seems to be good rationale, after all, we aren’t in control, the customer is. Things happen and deals slip.

Deal slippage frustrates everyone in sales. It’s what makes forecasts inaccurate, it’s what causes us to miss our numbers, it drive uncertainty in everything we do.

We try all sorts of systems to minimize deal slippage, better guessing–maybe through better hedging. We look at analytics to try to help. We even talk to customers and get their input on when they think they might be ready to buy.

But deals still slip.

Perhaps it’s time that we consider an outrageous idea. What if we made the target close date sacred? What if we did everything we possibly could to, first, identify a reasonable close date, then constantly worked to avoid slipping that date?

Deal slippage bothers me, it makes me feel really bad—not because the forecast has been missed, not because of the impact on our numbers. I feel really bad about deal slippage because of the damage it does to our customers.

Every time we miss a target close date means the customer is losing. The problem they are trying to solve, the opportunity they are trying to address remains. The damage, whether lost revenue, rising expenses, bad quality, poor performance persists. It is something lost forever, never to be recovered.

One customer for a client needed to have a manufacturing line in place, producing products by a certain date to meet the Christmas shopping demand. If they missed that date, they would lose $100’s of millions in seasonal sales. Everything in that project was driven by having the manufacturing line in production by a certain date.

Another client’s customers needed to have solutions in place by a certain dates to comply with regulatory changes–otherwise they would have to shut down.

While it’s a little different, once a client was bickering over a few $100 in projected fees for a project. As a result, things slipped—at least until I reminded the client that for every month slip, his company was losing $40M in revenue. As you might guess, we closed the deal and started the project very quickly.

We can make target close dates sacred by making the timing of the results the customer expects to achieve sacred.

We need to start getting the customer to think, “When do you need to start seeing the outcomes you expect?” “When do you need to see results?” “What is the impact to your business if this slips?”

The reason we are engaged with a customer in a buying/selling relationship is to help the customer solve a problem and begin to achieve results. Once the customer agrees this is an important issue, that they can no longer accept the current situation, then we have to get them to declare, “This is when we need to start seeing the improvements we expect!”

This cements the situation in both the customer’s minds and ours. Once we know the date they need to start seeing results, we work backwards from that point?

Once they have a solution in place, how long does it take to produce results? Knowing this, working backwards from the “When do we need to start seeing results,” we can lock in the “go live” date for the solution.

How long does it take to implement the solution to go live? Now we walk backwards from the “go live” date to when we have to start implementation.

What’s the lead time from getting an order to shipping the product or starting to deliver the services we are committing to? Once we know this, we work backwards to the Target Close Date.

The customer is a part of this project planning process. Setting these dates or milestones is all driven by when they need to start seeing results.

If the Target Close Date, the date the customer makes a decision, slips, then everything else slips out as well. The result is the customer has lost something–revenue, profits, missed product launch, missed commitments to their customers……

We can continue the same thinking looking at the customer buying process. Working back from the Target Close Date, we can identify milestones for delivering final proposals, completing the evaluation of alternatives, locking in needs/requirement.

Many of you will recognize this as classic project planning. Setting goals, establishing milestones, identifying critical activities. All done by working backwards from the goal.

Project planners know things slip. Some tasks take longer than expected, some delays occur, some commitments are missed. Great project planners keep adjusting their plans and milestones–still keeping the project goal/end date sacred. They do everything possible to hit that date, because they know if they miss the date, it will cause the company to miss a critical opportunity. Yes, sometimes the target completion date slips, but great project planners do everything possible to minimize this.

Target Close Dates can be sacred. We can minimize deal slippage. The basis of this can’t be when we want to see the deal closed or our best guess of when we think the customer will make a decision.

It all starts by getting the customer to answer the question, “When do you need to start seeing results?”

Republished with author's permission from original post.

Dave Brock
Dave has spent his career developing high performance organizations. He worked in sales, marketing, and executive management capacities with IBM, Tektronix and Keithley Instruments. His consulting clients include companies in the semiconductor, aerospace, electronics, consumer products, computer, telecommunications, retailing, internet, software, professional and financial services industries.


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