What’s your plan to close out 2009?
For many companies, 2009 has been a tough year. While many people remember the crash of the dot-com bubble, some people seem to have forgotten, and even that crash didn’t impact the broader economy the way the housing and credit market implosion did.
So how are you going to close out 2009? (If you’re in retail, good luck. I’ll write more on this later, time permitting.) Many companies are trying to sell into a buyers’ market, with less support from marketing efforts than they enjoyed in the past, fewer reps, but the same pressure to deliver.
Many companies run as hard as they can at the opportunities in their pipeline. They stay up late, fly around the globe, and try to “close” as many of them as possible. Buyers know this, and know how to extract maximum concessions by causing maximum stress.
I’d like to promise you that by reading this blog post, you’ll make your numbers and not have any stress, but I can’t. However, here are some things to keep in mind that can help improve your close rate, close time, and reduce your concessions.
Note that the concession bit is often the last thing on the minds of your sales teams. It’s something that you deal with once you get to the “negotiation” phase of your pipeline. Chances are you’re already pushed into a corner at this point. But for every 1% discount you give that don’t have to, you’re giving up about 10% of your profit. For some companies in this economy, that’s going to put you out of business.
Without further ado, here are the tips;
- Look at the characteristics of companies that buy quickly and with minimum discounting. Assign reps to focus on accounts with these characteristics. Assign marketing to find more of them. All too often, sales teams beat their heads against the wall with prospects that aren’t a great fit. They spend too much time trying to sell vitamins instead of painkillers. This stretches out sales cycles and increases discounts. (In many cases, these discounts put the deal into the red, sometimes on both a gross and contribution margin basis.)
- Give your reps information on what your best reps are doing. Sales teams have gotten a lot better at using CRM systems to share best practices on prospecting, meeting, closing, and other important sales activities. But when it comes to deal pricing and negotiation, the buyer tends to enjoy a huge information advantage. Fight back by giving your sales team information on how similar deals were priced out their outcomes. Reps sometimes just need to know that it’s possible to sell at a 10% discount rather than a 12% discount (a change that might mean a 20% swing in profit).
- Have a Plan. Know what your goals are and what you need to do to hit them. Make sure the entire organization is on board to avoid last minute problems with price exceptions. Know when you’re doing to walk away.
- Have a Plan B. We’ve all seen situations at the end of the quarter when the carefully crafted sales plan from the beginning of the quarter gets torn up and the company enters “Wild West Mode.” Margins go down, and customers get trained to put you through the same process next quarter. To avoid some of this pain, set up contingency plans so that if certain conditions occur, you can change some of your sales and pricing parameters. For example, having a specific plan for responding to competitive price cuts not only reduces stress, it also reduces destructive price wars.
Best of luck with the rest of the year. Would love to hear how you’re implementing these practices, or others.