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Gabe Larson, Director of the InsideSales.com Labs and host of the Sales Acceleration podcast, joins us for a special conversation about the end of the month. Gabe's team has just released new information about the best and worst practices of sales teams at the end of the month. Learn what to do and what not to do to make the most of the last few days of the quota period.
Learn how to succeed at the end of the month!
Mike Montague: Welcome to the How to Succeed Podcast, the show that helps you get to the top and stay there. This is How to Succeed at the End of the Month. The show is brought to you by Sandler Training, the worldwide leader in sales management and customer service training. For more information on Sandler Training including free white papers, webinars, and more, visit sandler.com. I'm your host, Mike Montague, and my guest this week is Gabe Larson from InsideSales.com. He is the director of the InsideSales lab, the research and best practice arm of InsideSales, and host of the Sales Acceleration Podcast. We're going to talk to him about how to succeed at the end of the month. Gabe, welcome to the show. Tell me a little bit about the end of the month and who should be paying attention today.
Gabe Larson: Yeah, Mike, appreciate you letting me jump on. We had some interesting research that when you and I were talking, I thought, "This might be interesting for the audience." The basic premise here is I've been doing sales for 15 years, not 50 years, 15 years. I've just had this interesting thing happen at the end of the month, at the end of the quarter, where truthfully, I probably a couple of times told customers, "Hey, if you wait a little bit longer, I could get you a better deal." I've probably pulled deals forward when they didn't belong in that month. I've probably pushed some deals out based on some of the things that I've done. I've pushed them probably inadvertently into the following month or into the following quarter. I've always wondered when sales reps do these types of things at the end of the month, is it bad, is it good, and what's really going on if we try to quantify it?
In my new role at InsideSales.com, I run our research as director of the lab's portion. We have some fun data, so we actually jumped into a fairly large dataset. We looked at 9.8 million sales opportunities a little over two years, and we were just trying to answer, what the heck is going on at the end of the month and end of the quarter? If you don't mind, maybe I'll just give you a couple of the highlights. Man, I was so glad because we were finally able to say, "Hey, this is what's going on. If you've felt a little odd as a salesperson or as a sales leader about end of month behaviors, you should because there's some funky stuff going on."
Mike Montague: Yeah, I think that makes a lot of sense. It's completely manufactured on the sales side because most buyers are not making end of the month decisions. They don't really care whether they buy on the 31st or the 1st. At the end of the year or something, they may have money to get off their books or want to push to next year's profit margin, but most of the time this is manufactured in our heads, right?
Gabe Larson: Yeah, it is something that as we dove a little bit deeper, the quantitative piece was pretty interesting. I'll get into that in just a minute. When we tried to figure out qualitatively what is going on, we're kind of kicking ourselves in the pants. This is a lot of unnecessary control that a leader is putting on a sales rep with compensation policies or trying to hit some of these "inadvertent" quotas at the end of the month that forces me to then do something that isn't natural to the buying process.
Mike Montague: Yeah, that makes a lot of sense. What were the interesting high points of the study?
Gabe Larson: Just a couple of the points. The first one was just the amount of data, to be able to look at almost 10 million opportunities. We're not talking about a couple of clients here. We looked at quite a bit of pieces. The three things that really stood us was number one: that on last day of the month, the deal size drops 35% in comparison with the rest of the month. Also, your ability to win, we define this as rate, which drops 51% the last day of the month. Those two, if you add those up, if you don't as a sales rep or a sales leader fall into the trap, and I'm specifically looking at that last day, if you manage that better, if you don't have your deal size drop 35%, if you don't have your win rate drop 51%, you can increase your revenue on average by 27%.
It's funny because it really comes to just that last day, Mike. It's like we just bend over. Everything falls apart. We just give up everything we have, our firstborn child, to bring in whatever we can. It's funny because sales leaders all the time complain, "Hey, I can't hit my numbers. I'm having a hard time meeting quota." Because we pull these deals in inadvertently, we have to drop so much of our price and our ability to close. Our revenue, we're missing out on so much revenue because of these kind of inadvertent things that we're forcing our reps to be probably unnecessarily.
Mike Montague: What do you think is causing the win rate drop? Is that because competitors are discounting as well, or is it because we're doing weird things and putting too much pressure on ourselves?
Gabe Larson: It's funny because there's this little bit of euphoric effect that happens on the last day of the month where actually the number of deals increases by three times. As a sales leader, you're like, "What are you talking about, Gabe? The last day of the month we bring in the bacon. This is when we bring in all the deals." Truthfully, they do. They bring in three times more deals on that last day than they do the rest of the month. However, we love 11 times more deals, so you get this win rate that's crazy.
Now, a couple of things going on there. One is a lot of reps just cleaning their pipe out at the end of the month. It's just, "I tried to get this. It's the end of the month or end of the quarter, and I'm cleaning stuff up." Certainly, some of that is going on, but I'm telling you it's not 11 times. You've got a couple of other things going on. One is that there is this concept of unnecessary push and pull. That idea that says I push a customer to a place where I force them to make a decision when they're not ready, the deal ends up being lost, and that customer gets a little bit frustrated and moves on or slows their buying cycle, and then picks it up with someone else or some other time. That definitely is happening. Certainly, then you've got the customer concept where it is just, look, competitor came in, the deal needs to be lost, and we lose that.
We see three or four different behaviors actually happening, potentially five. Some of them are natural, just a natural sales cycle. Some of them though are that unnatural, and that's where we've got to start to think about if we're serious about hitting annual quotas, is it worth losing out on 27% of potential revenue because of these end of month behaviors throughout the entire year.
Mike Montague: That's awesome. Let's switch and talk about what to do here. What are some ideal attitudes that a salesperson or a sales manager should have going into the end of the month?
Gabe Larson: The first thing is just education. Like I said, I think for salespeople like myself, we've felt something like this. We've known that it's maybe a little odd what we're doing, but I don't know if we've ever been able to quantify it. I think there's just an awareness that needs to start happening on the sales leadership side as well as the sales rep side. Let me just do the double click real quick. On the sales rep side, you need to know that you're potentially missing out on a lot of revenue. I'm not saying this happens all the time, Mike, but I know it does happen sometimes. I've been on calls here at InsideSales.com where I've heard it happen where a rep says, "Hey, if you wait a little while, or if you give me a couple of weeks or let's wait until my quarter and I can get you a better deal." We've got to change that attitude.
Then on the sales leadership side, it's that same idea. Don't go and complain to your executive team that you can't hit revenue if you're in that crunch moment going to the rep and saying, "Hey, I'll let you drop your price 30%, 40%, 50%." The average was 35% drop. You've got to have that conversation with that executive that says, "We have got to find a balance of pushing and pulling deals. We've just got to come to a better consensus." I feel like the first piece is just an awareness that this is potentially a big deal. That awareness, I think, can shape the attitude of both the sales rep and sales leader.
Mike Montague: Yeah, I think that's awesome. I also heard you mention earlier about closing the sale or closing the file, and people closing this out at the end of the month. That seems like a pretty arbitrary time to do. If I was thinking about Sandler best practices, we definitely encourage you to get these things out of our pipeline if they're not going to be moving through or if they are going to be moving through. Picking the 30th or 31st is an arbitrary day. Why didn't you clean that out on the 5th so that you could've prospected for new stuff and not worry about it, right?
Gabe Larson: That's right. I think that gets into some of the tactics. It's like how do you as a rep start to think about tactically changing this so that you can maximize revenue? To your point, I think one of them is sometimes we are just holding onto deals to long. At that end of the quarter, it's the weekend, we say, "You know what? We're going to go ahead and clean it out, and we'll close out a bunch of those deals," and so we try to do the pipeline clean. That just wastes our time and energy through the month. I do think just having a cleaner pipeline would be a great way to start just trying to figure this situation out.
Mike Montague: Do any other behaviors come to mind from the study? Are there other things that salespeople should be doing throughout the month to have a better end of the month?
Gabe Larson: There are some interesting tactics that I think we need to do to avoid this problem. We had this happen not too long ago. When we looked at the data set, almost 30% of the time the end month or end of the quarter fell on a weekend. We interviewed some teams, and a lot of times a sales leader will say, "Hey, we've got to give it our go. We've got to give it our all. Why don't people come in on Saturday and Sunday? We'll get pizza and stuff, and we'll see if we can't finish out the month or quarter as strong as possible."
I've got to tell you, don't do it. Don't work on the weekend. It turned out to be a complete disaster. Just as a highlight, the win rate actually dropped 73%. It's 73% higher on weekdays than it is on weekends when it comes to those end of month or end of quarter periods. That deal size drops way more. The deal size is 83% higher on weekdays than it is on weekends. That's one thing to avoid is customers just don't appreciate it. If you're going to force them to close the deal on the weekend and it's the last day of the month, I'll tell you right now, you are going to lose money on that deal. Avoid that. That would be one thing to do.
Mike Montague: Yeah, that makes a ton of sense.
Gabe Larson: Some of the other things that I think is probably a little more practical, and this probably fits some into the Sandler mindset. We've got to eliminate, and you mentioned this when we started the conversation, we call this time-based compelling event concept where it's a made up time-based compelling event. One person called me, they shot me a LinkedIn note and said, "What if we changed our timeframe, our end of the quarter, our end of the month? Wouldn't that change the behavior?" No, any time there's an inadvertent or fake time-based closing event, you're going to see these types of behaviors. We've got to move away from a time-based closing strategy to a value-based closing strategy. That's probably a little bit of a buzzword, but look, if I'm selling on value, then I don't have to say things. The customer doesn't at the end of the month say, "Hey, I'm going to wait until Sunday night to close this deal, Mr. Vendor, because I'm just going to get the best price." If we've established value in the customer and done more of that teaching model, I think you'll avoid some of this just in a more natural. I think that's one thing we've been pushing.
The second thing that's just a little bit more of a tactical idea is if you've got a compensation plan that is based on just money in and you're allowing people to cut margins by 30% to 40% on deals, then you've got rethink your comp plan. You probably want to look maybe a little more at a margin-based comp plan rather than just money in so that reps and truthfully leaders don't have that ability to just cut prices by 35%, 40%, 50% just to bring some "money in" to add to that overall pot. Those are two things I know we've seen companies start to talk about after the study came out maybe we should be a little bit more conscientious about doing.
Mike Montague: Those are really good. I think both of them fit into what we would teach around creating a timeline. If there's going to be a time-based event, make it be the prospects, that they have a goal they want to accomplish. If you can tie to their goal and their timeline, it has nothing to do with when the month ends or starts.
Gabe Larson: I love that. I joked with one sales leader, I said, "It's probably better that your team just doesn't come in on that last day of the month."
Mike Montague: Seriously.
Gabe Larson: That's about what's going on here.
Mike Montague: I think that's a great idea. Go to the beach or go golf and save yourself the profit margins.
Gabe Larson: Again, the funny thing is the conversation continued. I won't peep this one too much, but as the conversation continued, he said, "It is an interesting concept because it's such a mindset shift. If we can't come in that last day, that means we have to do things differently." He said, "We may actually consider that one. We'll see."
Mike Montague: That's funny. I loved your other one too about changing the compensation plans because I've been thinking about those a lot recently. If you tie those to maybe revenue marks as bonuses or something and, like you said, profit marks rather than time-based things at the end of a month, a pay period, or a quarter, then those will avoid these type of arbitrary things, too. It'll push them to get to a half million or a million in sales and not push them to get to the 31st.
Gabe Larson: Yeah, yeah, that's, I think, been really effective when I've seen companies who already have that in place, and they don't seem to have on the deal side that much of a problem. Not everybody's doing this. Again, we've been focusing on month, but as you look at the end of the year and end of the quarter, so if you're not on a monthly quota, again, the same exact patterns happen at the end of the year and end of the quarter. Be cognizant of that. We found a handful of organizations that, again, it's totally inadvertent, and it's all well in intention, but they'll run these "spiffs" or end of year promos or end of quarter promos. Because of the incentive strategy, they're the ones who were even pushing the reps to do this. We said, "Hey, let's see if we can't change those incentive strategies for something that aligns, again, not with that end of the month but something that's more in the middle of the month."
We've now also inadvertently talked customers, and there are a handful of them that say, "I'm onto it, and we're going to push you guys to that place." We've got to change that dynamic. I think some of the stuff we talked about before with value, trying to align with their timeline will help rid them of that. Do know that there are customers who, they're in the know, they know what's going on as well.
Mike Montague: I think we all have. I'm one that's on the other side. It absolutely infuriates me if somebody says, "The price goes up on Monday," or, "I just need this one deal, and I get to go to Tahiti." I don't care. I'm buying an air conditioner for my house. I don't care what your quotas or spiffs are. I will push against it any time I hear one of those impending event closes.
Gabe Larson: I'm so glad you brought that up. Those are some of the lines you hear. It's like, "I just need this deal. If I can get this one more deal, I can go to club." Again, it makes it about you. You can see how we keep pushing it inadvertently towards this end of month goal that, again, it's made up. It's basically in a lot of ways not real for the customer.
Mike Montague: We are talking with Gabe Larson from InsideSales. I want to find out a little bit more about you, Gabe. How do you define success for yourself?
Gabe Larson: It used to be all about money. I used to be a little bit of a money monger, but I've been trying to align a little more about personal mission and growth. At the end of the day, I'm getting back into my time management best practices. I've got my checklist here that I come up with, my six items. I've been trying to take more baby steps. If I can accomplish what I want in the morning, and I only spend five minutes, I try to do it at about 7:50 or 8:50 in the morning, but if I can put down my six most important items, and I'm dedicated enough to get those done day by day. I've been trying to do a day-by-day, do I accomplish something, what I felt like was most important? If I do, I've been saying, "You know what? I'm going to go more baby steps in my growth and my success measurement."
Mike Montague: Yeah, I like that. What was the biggest lesson learned or hurdle you had to get over in your career?
Gabe Larson: The thing for me is probably I've got this extreme competitiveness. I don't know if you've taken some of these personality type tests. Often, I'll lead out with I'm an extreme competitor. I don't think I'm egotistic, but I am extremely competitive. Often, I've either done stuff myself, felt like I've always had to do stuff myself, felt like other people weren't going to carry their load or I had to do their job. Sometimes I've not been a team player. Man, I find one of the things of great leaders is they know who they are and they know who they're not. Great teams have to have those balance of capabilities and competencies. Great leaders, they know who they are, and then they gather people around them to help them fill the weaknesses so that they can accomplish great things.
Mike Montague: Sure, I think that makes a lot of sense. I find it interesting how my third question here ties into the second usually. Do you have a superpower or a skill that you lean on when you need to be successful, or do you have a go-to move for yourself? How did you get that?
Gabe Larson: I've often thought my superpower, one of my big strengths is my desire to learn. It's funny it manifests itself in different ways. Truthfully, I almost feel like this was one of those things that I don't want to say I was born with, but sometimes I think you try to say, "Hey, can I learn these different things?" But I've been focusing more on who am I? What am I naturally good at? How do I expound on that? How do I make those bigger? That strengths-based approach, if you will, rather than going external, saying, "Hey, what do I do next? How do I do more of that?" When I go out on a consulting engagement, I used to think it was the money, but it's actually the learning about them and what they do that is fascinating to me. I've tried to be just more cognizant about taking something that I think was a little more natural to me and being a little bit more cognizant of the way that I use it my day to day life.
Mike Montague: I know you've done a little Sandler Training over there. Do you have a favorite Sandler rule?
Gabe Larson: Yeah, I was just talking to you a little bit about time management. Man, I just believe as a sales rep, it's around prospecting. There are so many activities we could do, and we could get lost in, but if you don't put it in your calendar and you don't dedicate time to it, you're just not going to get around to it. I'm a believer you've got to do some prospecting every single day. I love the Sandler rule that you might not like prospecting, but it doesn't mean you don't have to do it. You do. You've got just to do it, do it, do it because it's just part of who we are as salespeople.
Mike Montague: Let's wrap it up for everybody. Based on how to succeed at the end of the month, what's one key attitude you would like people to have?
Gabe Larson: Let's just become aware that this is a problem.
Mike Montague: One key behavior to do.
Gabe Larson: Let's move, again, from the idea of time-based compelling to value-based selling events. I think this is the key if we're going to be serious about not falling into this trap.
Mike Montague: The best technique to use.
Gabe Larson: I think if I go real tactical, I'm going to take your line. I think if you build that close plan, if you build that out, then you don't have to focus on, let's call it a negative time-based compelling event. You can find one that aligns with them, their timeline, their needs, and then overall their success.
Mike Montague: Gabe, anything else you want to add or tell people where they can find you?
Gabe Larson: No. I guess just in closing, interesting data. Feel free to check out the study. You can contact me on LinkedIn, or you can check out InsideSales.com/research. Let's continue the conversation. I hope people could digest it and start talking about it.
Mike Montague: Gabe, thanks for being on the show. Again, you can find out more on Gabe's work at InsideSales.com. For more on Sandler Training, you can follow us at Sandler Training on LinkedIn, Facebook, and Twitter, or get your free resources at sandler.com. As always, you can subscribe and leave us a review on iTunes and Google Play. Thank you for listening. Remember, whatever you are, be a good one. The How to Succeed Podcast is brought to you by Sandler Training, the worldwide leader in sales management and customer service training for individuals all the way up to Fortune 500 companies, with over 250 locations. For more information on Sandler Training, visit sandler.com
Learn more about Gabe Larson and InsideSales at www.InsideSales.com
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