Bob Apollo recently wrote a great piece, “Where Did That Close Date Come From?” His discussion focused on improving forecast accuracy. It provoked me to extend the discussion.
Target close date and maintaining the accuracy of those close dates is important. Most of the time, the way sales people establish the target close date is one of the following ways:
- Wild ass guesses driven by wishful thinking.
- A date picked to keep their managers of their backs.
In reviewing deals or pipelines, one of the things I often look at is the history of changes in target close dates. One situation, recently, the deal had been active for 11 months–the target close date had changed 11 times, each time slipping 30 days. Clearly, the sales person had no idea what was happening and this deal was more likely wishful thinking than a real deal.
Having an accurate target close date is critical—certainly, we and our managers want accurate close dates since these drive revenue forecasts.
But the urgency of an accurate target close—or target decision date—is much more critical to the customer. The target decision date sets an expectation of when they begin to realize the value of what they are trying to achieve. Customers are buying to achieve something, the longer their buying cycle, the more they defer making a decision, the more they delay achieving the outcomes that are driving their need to buy.
Very early in the buying process, we provide a lot of leadership by asking things like, “When do you want to have a solution in place, in order to achieve the expected outcomes?” It’s very important for the customer to establish this–sometimes there are certain windows of opportunity, if the customer doesn’t hit that window of opportunity they may miss huge revenue or growth opportunities. Sometimes, slips in decision making impact product launch schedules, which in impact forecast revenue streams and possibly competitiveness. Sometimes, slipping target implementation dates have huge impacts on costs and reported earnings. Sometimes this date is driven by external factors–commitments they may have made to their customers, or compliance/legal issues. Missing these deadlines could have serious ramifications on the customer.
Whatever reason, generally the customer management has a certain expectation, or the buying team may have made commitments to management, about when they expect to see the results of their buying decision.
Making sure the customer has set a goal and understands the consequences of missing that goal is critical to them and us—it sets the tempo of everything they and we must do to have a solution in place, producing results when and as expected.
We have to start with understanding the issue of when they need to have the solution in place and producing results. That drives the target close/decision-making date. Sometimes, we have to backtrack from the date they need to have a solution in place, to the date the decision must be made. For example, there may be lead times, or there may be an implementation cycle that impacts when the solution can be in place and operational. With the customer, we have to understand these, backing them up to establishing the date by which they need to make a decision.
Having this understanding is important to the customer in helping them meet their goals by helping them develop a buying project plan that is driven by the results they want to achieve. It also helps us, as deals stall, we have customer driven reasons for helping the customer understand the importance of getting back on track. So often, when we “push” a customer to reach a decision, we are pushing for our reasons, not the customers’. Rightfully, they don’t appreciate this. But when we help them move forward and that reason is driven by helping them achieve their goals–we are doing them a service.
Answering the question Bob posed, “Where did that close date com from?” It always comes from the customer. We create the greatest value with our customers when we help them establish this, and help them manage to this.