Ken Krogue, founder and president of InsideSales.com, was recently featured in the Harvard Business Review.
The article featured a ground-breaking research study by InsideSales Labs, the research and best practice arm of InsideSales.com. The study highlights the constant struggle between when is optimal for the seller to have the prospect purchase (the optimal selling window) and when is optimal for the buyer to purchase (the optimal buying window). Typically, sales reps push prospects to buy in the current period due to compensation and company cycles grounded in time-based compelling events. Through multiple sales engagements, buyers have become educated on the tactics and strategies of the optimal selling window. These experiences, in combination with massive amounts of information, empowers the buyer to push for the optimal buying window that aligns with their time-based compelling events. This consumerization of the enterprise sale reaches a climax as buyers define their place in the sales process, forcing sellers to follow the optimal buying window.
Many executive management teams myopically focus on the increased deal flow of these trends and believe that these end-of-period efforts lead to valuable increases in the number of deals and associated sales revenue. Because of this, sales representatives are encouraged to procrastinate sales opportunities or pull deals forward, not understanding the full impact these behaviors have on company revenues. However, in expanding the data to look at end-of-period losses as well as deals, a different picture emerges—one that suggests a high cost for companies embedded in an end-of-period mentality.
Wanting to better understand the behaviors associated with the optimal selling and buying windows related to time-based patterns, InsideSales Labs analyzed data from deals both won and lost across nine quarters. InsideSales Labs focused on deal sizes (total dollar per contract) and win rates (deals won divided by deals won and lost) of 9.8 million sales opportunities from 151 companies using data from the InsideSales.com HD Forecast™ product. The analysis analysis revealed significant patterns related to weeks, months, and quarters:
Weekly Closing Strategies
- Sales reps tend to lose more opportunities on Fridays than any other day. Tuesday is the day reps have the best rate of closing deals. Tuesday’s win rate is 14.72% higher than Friday’s.
Monthly Closing Strategies
- At the end of the month, reps appear to be pushing deals that are not ready. There is a 2.90x increase in number of deals closed at the end of the month but an 11.43x increase in number of deals lost. o Reps are less effective at closing deals at the end of the month. Win rate decreases by 51.11% at the end of the month and deal size decreases by 34.50%.
- Inappropriate end of month sales behaviors cost companies millions. The decrease in deal size and win rate results in an estimated $98.02 million per year in lost revenue for the average company in our data set. This number represents a potential increase of 27.21% in revenue per company if properly addressed.
Quarterly Closing Strategies
- The “end-of-month effect” is exaggerated at the end of the quarter. There is a 1.08x increase in number deals closed at the end of the quarter but a 1.77x increase in number of deals lost when compared with other ends of month that don’t fall at the end of a quarter.
- Reps close at a more effective rate until the last week of the quarter. Win rate decreases by 12.26% at the end of the quarter compared with other ends of month. Deal sizes grow steadily toward the end of the quarter and are at their highest in week 12 then drop 11.51% in the last week of the quarter
To learn more about the study visit InsideSales.com Labs
Review the Harvard Business Review Article here: