Quite the contrary. Salespeople must make their numbers every quarter and especially the fourth quarter, because the pressure's on to make up for an
Quite the contrary. Salespeople must make their numbers every quarter and especially the fourth quarter, because the pressure’s on to make up for any weak quarters you might have had earlier in the year.
Unfortunately, it can be hard to close business during the holidays because mid-level decision-makers (who often have a lot of seniority) tend to take vacation days lest they lose them at the end of the year. It’s consquently difficult to get a buying decision made.
Not to worry. If you’re behind, it’s not too late. If you target your sales efforts at the right buyers, you can close a lot of business. I have personally known salepeople who absolutely kill at the end of the fourth quarter.
How do they do it? First, they focus on customers that use fund accounting rather than cost accounting. Second, they focus on selling products that priced within the signature authority (or influence authority) of whomever is “working” over the period.
Let’s start with the accounting.
At the top level, most businesses use cost accounting, a technique that allows them to move budget money that’s not spent in the current year into the next year.
Example: if you make $1 million in 2019 and you spend $900,000 in 2019, you have $100,000 of profit to spend in 2020.
However, government agencies and functional organizations (like marketing and engineering) within large businesses typically use fund accounting, which usually means that money that’s unspent at the end of year disappears and, worse, may reduce the future budget.
Example: a marketing group is budgetted to spend $100,000 in 2019 but only spends $90,000. Not only can they not spend the leftover $10,000 in 2020, but their 2020 budget might be reduced to $90,000 (because, gee, they must not need that money). So, in a way, the marketing group is out $20,000 that it otherwise could have spent.
Organizations that use fund accounting are thus hot to buy anything by the end of the year. For instance, I once worked in a marketing group whose #1 fourth quarter goal was to spend all our budget. We bought all kinds of semi-useless crap, like thousands of coffee cups with our corporate logo on them.
While most organizations that use fund accounting aren’t perhaps that dysfunctional, there are plenty of customers who have money they’d prefer to spend on anything that might be useful and which (important) doesn’t require a lot consensus to buy.
For example: you’re probably not going to sell a $1 million software project during the holidays because a purchase of that size and complexity usually requires broad management consensus, which is going to be difficult to muster when many of the top stakeholders are on vacation. However, you might get the CTO to approve a $10,000 pilot project as a line item in their fourth quarter spending.
Finding such low-hanging fruit is easier if you have a deep bench of customers and prospects. But what do you do if your contact list lacks these valuable contacts? Well, you have two choices:
- Position for next year. You admit to yourself that you’re not going to make your numbers. Spend the remainder of the quarter prospecting and building relationships with your customers so that you don’t get caught short next year.
- Offer an end-of-year discount. This should be a last resort because discounts 1) downwardly reset the perceived value of your product, 2) create resentment among customers who missed the discount, and 3) sacrificing profit for revenue.
Personally, I’d go for the first option but, let’s be honest here, if you’re really under the gun to make those numbers: roll out the discounts.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.
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