The End-of-Quarter Push to Close is… Losing You Money?
Good morning,
It’s the last month of Q1 for many of you, and that means it’s time to hear some version of the following from your leadership team:
“We’re entering the final stretch”
“Let’s to close out the quarter strong”
“Friendly reminder of we’re X% off from hitting our quarterly KPI”
I believe in sales targets, but the above seemingly harmless comments are misguided and costly. What’s so wrong with the “close at all costs” end-of-quarter push? Let’s dive in.
It’s not hard to understand why late quarter “pushes” are problematic. The great poet of the aughts, Jojo, summarized well: It's just too little too late.
Let’s step into the shoes of a hypothetical buyer who agreed to a call in late March with their sales rep. Fast forward to the call, the buyer is surprised to see the sales rep encouraging them to implement a technology / buy a product that they’re not exactly ready for. This buyer realizes this salesperson has pressures around timelines that aren't aligned with their own.
The hypothetical client here either…
…agrees to invest a smaller amount than they would have if the deal were nurtured in a more customer-centric manner (deal won in the short term, but deal size decreased in the long-term)
…buys a product/service they’re not ready for, increasing the risk of churn in the long run (deal won in the short term but the customer is lost in the long term)
…decides to go with a competitor in the long-run because of this pushy salesperson (deal and customer lost)
Last-ditch efforts do close more deals by a factor of 2.9x. But the cost is high. The number of deals lost forever due to other less-than-ethical sales rep behavior spikes by over 11x on the last day of the quarter. This is compared to mean loss rates for the rest of the final month (source). Sales reps may be pressured to close deals that aren’t ready at the end of the month/quarter/year. If you’re tempted (like I initially was) to chock up this lost pipeline discrepancy to “just poor pipeline hygiene,” that’s still awful as it makes mid-quarter strategizing impossible to leadership— which still costs companies dearly.
It’s not in leadership’s best interest to even imply that sales behavior should fundamentally shift at the end of the quarter. This is a bigger issue that needs to be addressed top-down. Instead of exclusively incentivizing end-of-quarter deal closure, executive leaders should consider incentivizing specific behaviors earlier in the quarter. For example, I ran a cash prize competition with my team around quality pipeline creation anchored in client business objectives in the first 45 days of the quarter. Lest you forget that customers don’t care about your sales quarter or arbitrary deal closure timelines. Quarters are an organizational construct that rarely align with your client’s problem-solving needs. The only timelines you should care about are your customers’. Work on building the skills needed to provide more value to your clients. Ignore the noise.
So what should you do while everyone else around you scrambles at the end of the quarter? Well, that’s The Action Item— read on 👇
Research warns sales people who push to hard to close sales on the last day of the month may lose as much as 11.4x more deals than average.
You may have the very reasonable ask: “This all sounds great, but what do I do if my manager who’s in charge of my pay, promotion, and work wellbeing expects me to have more urgency to close EoQ deals?” I recommend you say something along the lines of “Thanks for flagging. I’m sure you’ve got a lot on your plate now, but are you open to discussing my pipeline? My top priority is still delivering value to our customers and driving revenue to our business. I’d love to get your take on how I’m handling different deals in different stages.”
Here’s what something like my potential response accomplishes and says about you:
You’re respectful and empathetic
You're proactive
You’re open to bringing in management to deals
You’re confident your pipeline tells the story of deals you’ve put in motion and are nurturing/closing
You’ve documented the work you’ve been doing to move deals forward
You’re willing to prove via deals in pipeline that you’re customer centric
The majority of managers will say “Oh! Great to see you’re on top of it” and leave it at that.
Above all else, focus on quality sales motions (think: the actions you or your team take to deliver value to your clients). This will vary by organization, but can be in the form of useful insights, planning executive summits, bringing experts to client meetings as a strategic value add, etc.