During our customer engagements, we often find that the sales organization has a limited understanding of the concept of committed opportunities and how they can affect forecast accuracy and quota achievement. I believe it is worthwhile to revisit this concept and have a point of view for further debate and analysis.
Based on my experience working with many sales managers and sales reps in deal escalations, deal coaching and forecasting, one main concern is how we hold salespeople accountable at the end of the day. I know, many of you are thinking about Quota attainment. Defining a Quota is critical for sure, but one cannot stop there as it is still an after the fact metric that must be complemented with other indicators.
Most sales organizations have a quota defined per sales reps for their year commitment, but without landing quotas on a quarterly (or more frequent) basis can go against the accountability framework for a sales team. In addition, they have to also be aligned to the sales goal to avoid jeopardizing the final results. I am referring to landing a specific Quota per line of product and even for new, renewals and upsell businesses. One key tool for executives to come up with the final targets is by having a thorough territory and account plan process which help them set realistic and achievable quotas for their salespeople.
Committed as a leading Indicator
Once the Quotas are well defined and assigned to every rep, that is when we must talk about committed pipeline accountability. This concept relies on the due date - the date (in the CRM) when the deal is expected to be won - as estimated by the rep who owns the opportunity. The discipline of defining a committed pipeline combined with quota attainment will drive the concept of quarterly accountability, holding Sales Reps accountable to close the deals they committed prior to the of the fiscal quarter.
Why is managing to a due date so important? There are at least 2 behaviors that it can improve:
Pipeline visibility and predictability
It is very different to assign a quota of $10M for FY Q4 and have the Sales rep closing $10M in the Quarter from two deals that came out of the blue during the quarter vs having a Sales Reps closing $8M from 8 out 10 opportunities committed at the beginning of the period, with the later having full visibility of the sales process and predictability, vs the earlier with the risk of losing two big deals that without any visibility, the sales manager couldn't coach and help the rep.
Another common behavior has to do with slippages, i.e. bumping the opportunity from period to period after it was committed. We've seen that often, and because of the deal volume and size of the teams, the sales manager can't keep track. Inadvertently, a big number of the same opportunities are reviewed every week. Whether the rep has very little rigor around setting the due date in the first place or the opportunity is really not in the sales stage where he/she claims it is, the sales manager can drive accountability and rigor over time to improve forecast accuracy and ensure accurate pipeline coverage. Tools like Convercio can support the sales manager by calling out these behaviors.
As you can see, if you don't drive this committed pipeline model now, it would be hard to implement any additional sales process improvement. Sales Reps will keep moving the due date month to month and Sales managers will lack forecast accuracy and their ability to coach and win the deals needed. I would love to hear your opinion on how frequent this problem is, how did you solve it and any other additional value you can get out establishing that rigor.