It’s the last week of the month (and quarter) and you want to squeeze as many additional sales into the current cycle as possible. So what do you do? Pile on the incentives to close, slash the price, add bonuses for the sales reps. Does this sound familiar?
Unfortunately, it’s a regular activity and dangerous habit for sales teams big and small. What’s worse, it rarely produces long-term positive results. Why?
Your pipelines are already set
Unless you’re doing very short sales cycles (i.e. that can happen in a one-call close), the deals in your pipeline that can close this week are already established. Depending on how big the deal is, for example, your contract had better already be in procurement (which means the prospect has already said “yes”). So your ability to actually move more deals to the closed-won column in the next couple days are slim to begin with.
Your month-end promotions become too predictable
I’ve seen sales organizations slash the set-up fee the last week of the month…every month. Prospects who haven’t yet bought but have heard this line multiple times no longer treat it with a sense of urgency. When you offer the same promotion again and again (internally and externally) it quickly stops having any impact. It might even make you look desperate.
Your sales reps will “pocket” deals until the last week of the month
Why would I turn in a closed deal early in the month and earn less than if I’d waited until the last few days when you’re offering added bonuses? Smart reps will sit on those deals until the end when you regularly spike their compensation in an attempt to squeeze as many new sales out of the last week. This kills your intra-month pipeline accuracy and predictability, and teaches your reps bad behavior that decreases their time and ability to sell more.
You’ll force prospects to buy who aren’t actually ready
When you apply artificial pressure to your sales pipeline, you end up pushing prospects to make a decision and move forward when they’re not yet ready. And if they’re not ready (for a variety of reasons), they’re far more likely to not use the product, be unsatisfied with the experience and churn more quickly. Those sales may look good at the end of this month, but you’ll pay for some of them later.
The new sales month is guaranteed to start slow
Push your reps too far (including forcing some prospects to make an early go/no-go decision) and they’ll flush their short term pipelines of new business. That means prospects who are farther away from closing to start the month, and a lean first few days that will only put you in the hole once again.
The solution to juicing end-of-month sales actually starts at the beginning of the month. Put those occasional promotions and extra commission bonuses in the first week, and consider rewarding both closed business and pipeline-building activities and milestones. That will help put some good numbers on the board early, plus help your reps set up a higher volume of potential sales throughout the month by feeding the top and middle of their pipelines early.
. . . . but you make some good points. In fact, one of my clients pushed their salespeople to promote monthly specials, only to have them experience frustration and limited success. But the primary reason wasn’t on your list: the monthly discounts simply didn’t match budgeting cycles.
The client sold to foundations and non-profits, organizations that often formulate budgets through a board of directors who don’t meet every month. And it wasn’t a matter of “forcing” the prospect to spend–the money simply wasn’t there, so the specials had all the power of a wet noodle.
This fact was not lost on the senior salespeople at the company, who simply chose to ignore management and not push the specials. But the entry-level salespeople were pressured to use the tactic, and much time was wasted in the process. At the time, we recommended to the client’s management that they abandon monthly promotions altogether. We believed this issue also played a role in the high sales force churn the company experienced.
Agree with the last note on pushing your reps too far. So much of business is based around the cycles we’ve placed on time. Working within the context of a calendar is important.
Also like your point on rewarding the sales force for “pipeline-building activities and milestones.” I think too often companies ride their sales force with that classic Always Be Closing push. We have to remember they’re not just pack mules. Plus, a relationship with a prospect who wasn’t ready to buy but was forced is probably going to end up frustrating for both parties.
Would you say that unpredictability is an important part of any set of promotions? I think there are certain promotions (say, discounts) which clients have come to take as just a granted part of the yearly business cycle.
Hi Jacob,
Yes, unpredictability is key to effective sales promotions. As soon as they’re predictable, they lose their ability to drive urgency.