The "done deal" that ended up screwing your quarter (because it was never a deal, to begin with)
We've all been there.?
When the champagne pops and the team gather around for applause.?
When you can feel the excitement in the room (big bucks are about to pour in!)
When the collective relief is evident—you reached the quota—and the team can finally take a breather.
Or so you thought.?
Until you realise you can't get a hold of the client.?
And you see that they haven't transferred the money.
Slowly, it starts to sink in; the deal was never a deal, to begin with.
Only the paranoid survive
A couple of years ago, we had a relatively new sales rep working on a larger case. This person was confident that he would close the deal. He even became annoyed when a senior salesperson called out the risks. In his eyes, the deal was already sealed, and we made the big mistake by trusting his judgement.?
When the end of the quarter crept up on us, there was no sight of any money. It turned out that the sales rep had involved the wrong person in the process. And the actual decision-maker wasn't keen on making any purchases from us at all.
Stay on top of sales reps without a 100% track record
If the sales executive doesn't have a 100% track record, it's your job as a manager to ensure that the deal comes in.?
The truth is that salespeople are stressed. Sometimes they make the wrong decisions. Their lack of experience, or even plain ignorance, can cause them to miss evident risks.?
Most salespeople need thorough guidance to excel in their work. It takes time to master selling and risk evaluation. That's why it's a necessity for you to dig into details, without micromanaging. You're ultimately responsible for smashing that last 30% of the target. If they haven't yet shown that they can consistently reach their budget - I'd stay on top of it.?
So, how can you determine whether something smells fishy in the pipeline?
How to know when you can't count on a deal
Become wary when a deal deviates from what you've done in the past. In the financial world, "past performance is not indicative of future results". In sales, however, it's more or less the opposite. Past performance strongly indicates future performance when making deals, especially for individual sales reps.?
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Here are 6 warning signs to look out for:
Warning sign #1: The deal size is bigger than usual
If you're trying to close a €500.000 deal, and your all-time high so far has been €100.000, it's time to become sceptical. If the deal is closed, that's great, but I wouldn't rely on it when forecasting. The odds aren’t that good.
Warning sign #2: The client demography is radically different
Be careful if you have a client in the pipeline that's nothing like your customers. These deals will most likely fall short in the late stages of the sales process. The risk is substantially higher as soon as it's your first time doing something.
Warning sign #3: The sales rep doesn't have a track record of that type of specific deal
Don't let a sales rep convince you they'll close a deal if they have no track record of winning similar ones. They underestimate risks and often assume that different types of deals will be similar.
Warning sign #4: The sales cycle is much longer or shorter than usual
If your average sales cycle takes two months, and your sales executive has been talking to a customer for twelve, it's time to break the news. They won't buy. At least, according to the stats. That also goes the other way around. If a sales rep claims they'll close a deal within two weeks instead of two months, they're probably being too optimistic.
Warning sign #5: The sales rep hasn't followed the process
If you typically, in similar deals, talk to the CEO and haven't in this deal, your chances are low. At Upsales, nine out of ten deals we close have a senior decision-maker involved. For B2B sales, it's a decisive factor you shouldn't overlook. Talking to the wrong person is the most common reason B2B deals fall through.
We identified the most critical steps in our process to increase the win rate. I suggest you also dig deep into your data and do the same.?
The Upsales checklist for winning a deal:
Warning sign #6: The client is dreaming about a Ferrari but can't afford it
In other cases, the potential customer doesn't have the money to pay for your product or service. Many new sales executives don't spot this in time. That's why you should make it a habit in the sales team to look at: how long the company has existed, its revenue, or if they have access to venture capital. The math needs to make sense. Otherwise, you might be dealing with a Ferarri store window shopper with big dreams and no money.
The best way to close the deal anyway
If you find deals that aren't rock-solid, your best way of moving forward is to challenge them directly. Call the customer, and bring up the red flags. Don't let the sales rep tell you it's under control.?
If you don't get an answer you're happy with, remove the deal from your forecasts. It's better to have a pessimistic view and fill the pipeline with more opportunities. You can hope for it, sure, but you shouldn't be dependent on it. Then you'll end up with more "done deals" that end up screwing your quarter.?
/ Daniel Wikberg
CEO & Founder