How does your team of sales reps predict when their open opportunities will move to Closed-Won? Unfortunately for most sales reps, close dates are a matter of guesswork and are rarely accurate the first time around. Reps will typically end up changing close dates for opportunities at least a few times, pushing deals back weeks or even months – which makes accurate sales forecasting next to impossible.
So how can you truly know when to trust the close dates your reps enter? When your CEO asks you on the first day of the month what deals are going to close, you need to have a reliable answer ready. Here’s how to analyze the data, enforce more honest close dates and gain more accurate and reliable sales forecasts at the same time.
When Will This Deal Really Close?
Sales reps usually base their close dates on the word of a prospect who may have good intentions, but is not fully in control of the opportunity. The prospect might want to sign the deal today, but everything could be delayed by the company’s legal department, the CFO or any number of other internal approvals. But at the start of the month, sales reps have to take the prospect at their word and input that initial date into the CRM. Unfortunately, this means many sales reps are overly optimistic when choosing close dates in the coming month. Realistically, many of their opportunities will push to next month – probably at the very last minute.[image source_type=”attachment_id” source_value=”38253″ align=”center” width=”600″ height=”354″ quality=”100″]
Another problem is that the default close date in Salesforce.com and other CRMs is often set as the last day of the month. If every rep on your team predicts the majority of their opportunities will close on the last day of the month, this means your reps may just be accepting the default setting and assuming everything is going according to schedule. A quick way to see whether this is a problem on your team is to take a look at the current state of your pipeline for the month.
Your sales pipeline, ideally, should look like this screen above – with close dates evenly distributed and scattered across the month. However, If everything is instead clustered at the end of the month, you know those close dates can’t really be trusted. Your reps aren’t making real predictions at all about the close dates – they’re just accepting the status quo or crossing their fingers that deals will close by that date.
Enforcing Accurate Close Dates
Instead of guessing or taking the word of an unreliable prospect, reps can use historical sales data to get a more accurate idea of how long an opportunity will take to close. If they’re chasing a huge deal that’s much larger than the Average Sale Price (ASP) your company usually works with, they should look at how deals of that size have behaved historically. Typically, larger deals generally take longer to close, so the rep should not take the prospect’s word when they say the deal will close at the end of the month.
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Reps should also consider the length of their personal sales cycle – whether it takes on average 20, 30, or 40 days for them to historically close a deal. They can also take a deeper look at their data for each individual sales stage, considering how long opps generally take to move from one stage in the pipeline to another. Each rep should apply that knowledge to every opp in their pipeline for a much more accurate estimate of the close date. For example, if Helena’s deal is in the Technical Fit Stage today, she knows it should be about 10 or 15 days before it closes, according to her historical data. This will make it much easier for her to accurately predict the close date on that opportunity.[button size=”large” align=”center” full=”false” link=”https://offers.insightsquared.com/right-metrics.html?blog_source=organic&blog_medium=blog&blog_campaign=sales-metrics” linkTarget=”_blank” color=”blue”]Learn More about Tracking Sales Metrics»[/button]
A More Accurate Forecast
The reason that close dates are so essential is because those numbers tie directly into your monthly or quarterly sales forecasts. While many of the opportunities in your pipeline may eventually close, if you have no idea WHEN that will happen, you’re in trouble. If you’re relying on a few big deals to close at the end of the month, and they push, you’ve now missed your sales goal completely. It’s essential that you have a clearer idea of what deals will close this month, and what will instead contribute to your forecast for the coming months.
If you care at all about having an accurate sales forecast, you need a better way to set trusted and accurate close dates. Tell your team of reps that it’s not longer acceptable to close every deal on the 31st of the month. Push them to instead use data to more understand when deals will be more likely to close and you’ll see more accurate close dates across your team.
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