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This. When I read the article, I was actually surprised that he didn't want his sales team to generate a smaller overall revenue, distributed over the month -

This. When I read the article, I was actually surprised that he didn't want his sales team to generate a smaller overall revenue, distributed over the month - I assumed that the distribution would drive down costs and lead to greater profit. One thing that I think would have worked better is ask his sales team "why do most of our sales come at the end of a quarter?"

eru 15y ago
> One thing that I think would have worked better is ask his sales team "why do most of our sales come at the end of a quarter?" Yes, why? It seems to be that case in lots of organizations. My current theory has to do with negotiation positions: Salespeople want bonuses, they get bonuses per quarter. As the quarter ends, the customer can drive harder for bargains as salespeople get more desperate to make a sale. Consumer just exploit that. Anybody with a better theory, or some reasons why my theory would be right or wrong? If my theory was right and the primary cause, then remodelling salespeople's incentive to be independent of quarterly boundaries should remove the hockey stick.
- mason55 15y ago
  There are a few reasons but they are all related to the quarterly numbers. Whether it's salespeople who get a bonus or the board pushing for a quarterly revenue number, sales will make the biggest concessions at the end of the quarter to try to close the deal. Customers are aware of this and so they push closing out to the end to take advantage of it. Ways around this might be to look at some kind of rolling 3-month average when examining revenues/sales or comparing sales people to each other (although depending on the sales volume this might suck statistically). You could also do sales bonuses as a combination of numbers + manual review. Maybe eliminate bonuses altogether and go straight commission so that the salespeople's incentive is to close the biggest deal irregardless of when. This of course is predicated on the board not pushing for big quarterly numbers; if that is the case then they are possibly the ones being the "bad managers" (minus extenuating circumstances like shopping around for a buyout).
- Timothee 15y ago
  I'd say that not only bonuses work per quarters but budgets are generally allocated in quarters or semesters as well. Typically, budgets allocated for one period need to be used in that period, otherwise it's "lost" and you don't get as much the next period. So, on one hand, sales people want to close as many sales as possible before the end of a quarter and, on the other, buyers are also pushed to spend the money towards the end of the quarter.
deleted 15y ago
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eru 15y ago

> One thing that I think would have worked better is ask his sales team "why do most of our sales come at the end of a quarter?" Yes, why? It seems to be that case in lots of organizations. My current theory has to do with negotiation positions: Salespeople want bonuses, they get bonuses per quarter. As the quarter ends, the customer can drive harder for bargains as salespeople get more desperate to make a sale. Consumer just exploit that. Anybody with a better theory, or some reasons why my theory would be right or wrong? If my theory was right and the primary cause, then remodelling salespeople's incentive to be independent of quarterly boundaries should remove the hockey stick.

mason55 15y ago
There are a few reasons but they are all related to the quarterly numbers. Whether it's salespeople who get a bonus or the board pushing for a quarterly revenue number, sales will make the biggest concessions at the end of the quarter to try to close the deal. Customers are aware of this and so they push closing out to the end to take advantage of it. Ways around this might be to look at some kind of rolling 3-month average when examining revenues/sales or comparing sales people to each other (although depending on the sales volume this might suck statistically). You could also do sales bonuses as a combination of numbers + manual review. Maybe eliminate bonuses altogether and go straight commission so that the salespeople's incentive is to close the biggest deal irregardless of when. This of course is predicated on the board not pushing for big quarterly numbers; if that is the case then they are possibly the ones being the "bad managers" (minus extenuating circumstances like shopping around for a buyout).
Timothee 15y ago
I'd say that not only bonuses work per quarters but budgets are generally allocated in quarters or semesters as well. Typically, budgets allocated for one period need to be used in that period, otherwise it's "lost" and you don't get as much the next period. So, on one hand, sales people want to close as many sales as possible before the end of a quarter and, on the other, buyers are also pushed to spend the money towards the end of the quarter.

deleted 15y ago

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