• Forecasting

Do Your Sales Reps Know What a “Commit” Really Means?

Michael Lowe

Michael Lowe
Director, Content Marketing, Clari

Do Your Sales Reps Know What a “Commit” Really Means?

Your sales rep thinks that a prospect is committed to buy. But is that really the case?

Typically, assigning a sales opportunity to a “commit” stage means that your sales rep has verbal confirmation that a deal will close. The problem is, not all reps use the same criteria when forecasting what will make it across the finish line this quarter. And, if you’re not speaking the same language, it can lead to end-of-quarter surprises. According to research from SiriusDecisions, just 21% of companies come within 10% of their sales forecasts, which is an indicator that end-of-quarter surprises are the norm vs. the exception.

In order to build more confidence in your team’s ability to deliver against its commits, take a look at the variance between where your sales teams expect to end up and where their numbers actually are at the end of the quarter. You’ll find that by identifying the problem spots, you’ll be able to better define what you’re looking for in a “commit” — and can teach your sales reps to speak your language.

Track Each Rep’s Forecasting Accuracy

In order to see why your numbers may be going off the rails, drill down at a granular level to view how each individual sales rep is categorizing their opportunities, particularly when viewed in relation to other reps’ sales forecasts. Does one rep have a habit of categorizing their deals in pipe as “hard commit” three weeks into the quarter, when everyone else is holding on making that call until the 6 week mark?

On the flip side, you may notice that a sales rep has a habit of sandbagging a bit on their commits, then heroically winning deals in the final hours of the quarter that weren’t on your radar a few weeks ago.

Define Your “Commit” Criteria for Your Entire Sales Organization

In order to get all your reps on the same page, you’ll need to clearly define what a “commit” means to you.

The generally agreed-on definition of a sales commit is that a deal can be safely expected to close in the expected quarter. In other words, your sales rep is highly confident that not only will their targeted opportunity close when they expect, but also it will close at the targeted value.

The commit definition dictates that truly committed sales should be closing as expected 90% of the time. And the only thing stopping that from occurring is unpredictable and exceptional events. Even the 10% that aren’t closing as predicted should only be experiencing a short delay, not a loss of a sale, if they were committed.

Here are a few questions you should be asking about existing pipeline deals before moving them to a “commit” stage:

  • Does your primary contact or champion have the authority to make the purchase decision?
  • If not, has your contact already gotten sign-off from that person?
  • Has the contact confirmed a timeline for getting started?
  • Does the contact understand the purchase process?
  • Does the prospect organization have a compelling reason to act now?

Ultimately, the key to more consistently hitting your commits as a sales organization is ensuring that your sales reps are doing the critical upfront discovery work to gain confidence that their prospects not only want to buy from them but also that they have the budget and the authority to make a buying decision, as well as have a compelling reason to close the deal within the quarter. If all of these criteria are met, a “commit” is likely a safe bet.

While we're at it... more sales terms to define!

To ensure all members of your sales team are on the same page and your sales forecasts are as accurate as possible, you’ll want to give other important sales terms the same treatment that you gave to the term “commit” — that is, crystal-clear definitions.

Here are some additional terms you’ll want to define:

  • Sales opportunity
  • Upside sales
  • Sales forecasting
  • Pipeline
  • Sales stages
  • Sales contact
  • Sales lead
  • Sales linearity
  • Forecast accuracy
  • Revenue operations
  • Sales activity data
  • QBR

Sales opportunity definition. Sales opportunities are potential deals; they are also sometimes referred to as SQLs (Sales Qualified Leads). In other words, your sales reps have begun to vet the potential customer and believe there is a realistic possibility to close a deal, without relying on a miracle. Sales opportunities are usually broken down into categories based on how likely they are to close, which are updated as reps learn more about them and move them down the funnel. For instance, committed deals and upside deals (see below) are two different classifications for sales opportunities.

Upside sales definition. Upside sales are sometimes called longshot or deals with a possibility of closing within the quarter, but not yet committed. So, while there is some realistic possibility of closing the deal, it’s not yet a sure thing. In some cases, upside sales are also deals that are projected to close in the next quarter, but your rep has a credible plan to pull them in and close early.

To forecast upside, you generally only account for a small percentage of upside opportunities actually closing, or use your upside sales forecast along your commit and a worst-case forecast to give your team multiple data points on where you might land. Of course, there are ways to improve your sales forecast accuracy by taking some of these best practices into consideration..

Sales forecasting definition. Sales forecasting is a prediction of how many of your sales opportunities will close or the number of products will be sold in a given period (usually a quarter). A sales forecast typically uses quantitative, qualitative, and historical data (such as past trends) to predict how many deals you can expect to close, as well as the amount of revenue from those deals.

Pipeline definition. Pipeline is a sales forecasting metric that represents potential sales opportunities in the future. For instance, the term “pipeline opportunities” often refers to deals that have a realistic chance of closing, but not until sometime after the current quarter. Pipeline coverage is the amount of total open opportunities available compared to your quota.

Sales stages definition. Sales stages refer to the standard or common stages of the sales process that most prospects move through when they progress from being a sales lead to making a final purchasing decision and then into renewals when the time comes. Typical sales pipeline stages can vary based on business and industry, but they may include phases such as prospecting, qualification, consideration, decision and close.

Sales lead definition. Sales lead refers to a potential customer who has shown some sort of interest in what you’re selling. A sales lead can be a business or an individual. But, the definition of a sales lead is a business or person who has expressed not only awareness but also interest in your business, service or product.

Sales contact definition. A sales contact can mean two different, but similar things depending on context. The sales contact can simply be the person at the company who your rep is in touch with and relying on to champion, progress and close the deal. In the context of CRM, if an opportunity is not qualified yet, they are considered a lead. Once they become qualified, they turn into a contact. Ultimately, this will be determined by your sales process and definitions.

Sales linearity definition. Sales linearity is when deals close in a predictable, stable pattern throughout your a specified period, usually a quarter. Rather than your reps’ deals all closing in bulk at the end of the quarter, they close on a steady week-to-week or month-to-month basis. Sales linearity helps teams avoid the end-of-quarter scramble to meet quota, which leads to heavy discounting, operational inefficiency and high stress for finance, legal and ops.

Sales forecast accuracy definition. Sales forecast accuracy refers to how close you actually come to hitting your forecast at the end of the quarter. For instance, if you predicted your team would close 100 deals worth $25 million in total by the end of the quarter, and they only closed 15 deals worth $3 million, then your sales forecast was not very accurate. The closer your revenue comes to your forecast, the higher your accuracy.

CRM definition. CRM stands for Customer Relationship Management software. They’re essential for business and provide a system of record to control transaction and account information. However, CRM has its limitations and was not designed to help you navigate the modern revenue process.

Revenue operations definition. Revenue operations is the entire go-to-market team — marketing, sales, customer success and operations — working together to hit revenue goals. Revenue operations (RevOps) can also refer to the strategic convergence of sales, marketing and customer success in order to drive full-funnel accountability of revenue generation. Interested in learning more? Our CEO Andy Byrne wrote a treatise on Why Revenue Operations Matters.

Sales activity data definition. Sales activity data is the collection of all the actions sales and marketing teams make throughout the course of a sales process. This data also typically includes any and all contact and engagement with sales prospects — both your reps’ activity as well as the contacts’ interactions. It can include data from a wide variety of touchpoints, including emails, meetings, phone calls, website visits, direct mailings and more. Typically reps are required to manually enter this data into CRM, though solutions for automating this tedious and time-consuming process are available.

Quarterly Business Review (QBR) definition. Quarterly Business Reviews are quarterly meetings where your entire sales team gets together to review progress and performance. Typically this includes looking at important sales forecasting metrics, analyzing the numbers, reviewing what went right and what could have been done better, and discussing how to improve for next quarter.

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