The December Sales Problem

The end of any quarter is deal-making time, but December is the best of them all.  I was talking to a salesperson the other day whose opinion was, “nothing happens in December”  Ah, how UNTRUE!  In fact, when other people slow down, its the chance to make a big deal.  But… there is a problem with December that puts sales people against sales managers and while both are aware of it, it certainly creates problems for all sides.

The problem is this: most sales plans re-set at the beginning of the year.  January is a fresh start.  Close a deal in December, and the impact of that sale typically gets wiped out in only a few weeks.  If you are already above quota, you get the sale at your accellerator, but if you push the deal until January, you have a running start towards next year’s accelerator.  If you are behind quota, you aren’t going to get it at the best commission rate anyway, so might as well wait until next year so you won’t miss quota two years in a row – and you will show good progress for next year.

The bottom line is… for a sales person, December is a not a good month to close anything.  Holding the sale until January is a much better option.  Unfortunately, with sales managers and companies trying to get the best financial picture for the year, this proves to be an interesting dilemma. 

The initial reaction of some companies is to put negative incentives in place for the salespeople, to encourage December sales.  Sales that are on the 1 yard line sometimes will get negative treatment in January, to punish salespeople that don’t get that sale in December that the company feel they should have (which may or may not be due to the above problem). 

I find, in building compensation plans, motivation always works better than punishment.  Regardless of what has happened in the past, if you want a salesperson to sell, put the carrot in front of them.  The better solution for companies that want significant numbers in December, is to reward extra.  Some ideas:

  • Bring all salespeople to the top commission rate regardless of level
  • Sales contest for December outside of quota
  • Pay commissions on December sales – and provide 1/2 quota credit for next year (not a double commission – but for every dollar sold in December give $0.50 quota relief for next year so its easier to reach quota in the next year)

I always think that you can get amazing things from salespeople if you put the right incentive in front of them. 

Now, the other side of the coin is this:  If you are a salesperson who is behind, and you are looking for a chance to shine – and perhaps earn some silver bullets for the next year… get out there and close that December deal – there are dollars to grab.  It will show a real effort, and earn major points for putting the company above your own personal gain.

Anyone else have any interesting ways to solve the December sales problem?