Looking at the Facebook updates and Tweets from some of my friends who “tote a bag” and are in the enterprise sales game, I see many of them are flying over just about all the 48 contiguous states in these last weeks of the year. They’re hopping daily to new destinations chasing the last big deals out there for their 2012 quotas. The enterprise B2B space is quite comfortable for many early stage investors, but once a company has burst out of its startup cocoon and has to deliver results quarter after quarter, it’s a high-pressure world. This is especially true when the product has to be “sold” and doesn’t just fly off the shelf on its own.
The trend toward SaaS pricing has smoothed revenue streams, but you can be sure someone in the chain of command is keeping a close watch on new customer signups to make sure that those streams will grow as planned. At the same time as this mighty focus on year-end performance, most companies are also budgeting for 2013 and are dealing with all the usual annual employee reviews, bonuses, and raises. It’s already essential for quotas to be assigned for next year and budgets to be set in place. And it’s the most common time for open enrollment in benefit plans and for making changes to be effective on January 1.
You may remember fondly the Holiday break between semesters in college, the time when for the most part you were completely off duty and could just relax. Forget those days when you have launched a startup and have transitioned to live operations. We sold Peachtree Software to Management Science America (MSA), at the time the largest software company on the planet and the leader in mainframe accounting products. (That was even before the term “ERP” came into vogue.) MSA was very much a sales-driven company, starting at the top with its leaders like John Imlay and Don House, and proudly so. Like many retailers make their annual profits on Black Friday, MSA seemed to make all its profit during the week between Christmas and New Year’s. Nobody went to the beach during those precious days. They went to Milwaukee, Boise, Syracuse, or anywhere else they could find a customer ready to sign a big license deal. The Holidays were not exactly fun.
What was magic then and is still magic about year-end? For many companies it’s a fiscal year end. For all reporting public companies it’s a quarter end as well. The actual numbers will affect the stock price on the one hand and, perhaps of more immediate interest, your direct compensation as a sales person or manager. On the customer side of the table, plenty of units in big enterprises have budgets to use or lose as December 31 approaches, and their managers with purchasing authority are eager to spend. No one wants to leave money on the table and risk having his or her budget reduced the following year. So, a lot of dilly-dallying about capital expenditures suddenly is replaced by an extreme sense of urgency.
This year the uncertainty in Washington only adds to the pressure. I don’t think your corporate customers will be jockeying the timing of purchases to capture better tax benefits, but they may develop some unusual year-end reluctance based on the sheer uncertainty of how or whether Washington will deal with the Fiscal Cliff. An increased tax deduction of about $300 per month for someone making $65-100K is a pretty nice car payment, and you can be sure that will affect consumer behavior. Large corporations that depend on consumer confidence are all paying close attention to this.
Many companies have succumbed to the pressures of making quotas during this Season by cooking the books. I’ve never been associated with a guilty one, but technology companies have many ways to get overly creative with their accounting. You’re probably reading the ongoing saga on HP and Autonomy, where the latter was apparently doing deals like “I’ll buy 50,000 chickens from your farm if you’ll buy my software.” I’m not sure who got the chickens. And, it has always been pretty easy to “pencil-whip” the results (golfing term), where you bump your revenue by diddling with recognition policies. Some companies have literally booked sales on the basis of moving inventory from one end of the warehouse to the other (perhaps closer to the customer). Professor Charles Mulford at Georgia Tech is the published authority on such shenanigans, and I refer you to his books if you are looking for last-minute quota-busting ideas.
And, on the heels of all this year-end frenzy, there’s a new year to be launched properly. I remember that Imlay and House at MSA in January toured all the sales offices around the country for annual kickoff events, and they held a large one at the home office in Atlanta. When you’re running a supercharged tech company, you can’t let your sales team bask in the glory of their Q4 bonus checks, you’ve got to motivate them to get out and make 2013 happen. There’s very little down time in the sales profession. One of their best motivators I recall was an annual steak and beans dinner for the sales team. Yes, the quota achievers enjoyed steak, the rest beans. I think eventually some wave of compassion led to doing away with this honored tradition, which was a bit like hazing in some ways.
So, if this article speaks to you, quit reading and get out in front of customers. Dress up your year while there's still time.
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