What CFOs Need to Know About Sales Encroachment

David McCulley
Co-Founder, EVP of PreSales

Without a grasp on which evaluations are delayed and unhealthy, deals will be lost. However, with tools like PreSales XM  you can optimize your stages, and build a sustainable, repeatable sales machine.

What CFOs Need to Know About Sales Encroachment

In enterprise sales, there are things that happen as a deal progresses that cause it to stall or move sideways. Invariably, a close date is set based on an opportunity, and the deal is expected to close at a specified time but during the technical evaluation, the deal gets extended and impacts or pushes the opportunity close date. 

This infringement on the close date is what we refer to as deal encroachment. Understand that if an expected close date is in August and the evaluation is extended by 30 days, the September close date and the quarter are at risk and very likely to slip. 

Deal encroachment is insidious and often goes unnoticed until it's too late. With a lack of data-driven insights, managers are unable to identify issues in real-time and revenue leaders lack the needed visibility to manage and mitigate against risk.  

Consequently, without a clear picture of what's going on in the evaluation stage, you end up with chaos and unwanted surprises at the end of the quarter.

Missing Forecasts 

A missed forecast can have far-reaching consequences, and nothing aggravates senior leadership more than expecting the forecasted numbers to come in, only to learn in the eleventh hour that a deal has slipped.  

Everyone  in the company, from sales reps to managers and leaders, understands the importance of accurate forecasts. If that’s the case, then why are inaccurate forecasts so common? 

According to Gartner, "One of the main contributors of inaccurate forecasts is poor data quality. In fact, only 47% of respondents believe their organizations had high-quality data. Meanwhile, 13% report their organizations' overall data quality is, in fact, poor."

This lack of data-driven insight is sometimes demonstrated when speaking with leaders about critical metrics in the technical evaluation process. For example, when leaders are asked about an average length of a POC, a typical answer is almost always 30 days. However, when you look deeper into the process, evaluations are regularly extended, and the "real average" may be closer to 45 or 60 days; this shows a lack of discipline and a management process that needs to be optimized. 

Optimize Your Opportunity Management Process

Your sales process needs to be crystal clear and optimized left to right, all the way through, so every step is well-defined; this includes technical evaluations, the qualification criteria and discovery discipline. You want to filter out unqualified opportunities and only do technical evaluations with the right deals. 

You Need Complete Visibility 

Not only must you have an imposed system that is disciplined and optimized, but you must also have complete visibility throughout the sales process, not just at the end of the quarter in a pipeline forecast review meeting with CRO. 

Complete visibility will give you insight and allow you to answer questions in real-time like: 

  • What is our technical win rate?
  • What's the ratio of deals coming from identified opportunities into technical evaluation? 
  • What's our conversion rate?
  • Are we effectively communicating with all parties involved in this opportunity? 

Visibility allows you to inspect anything along the spectrum and develop a real pattern of metrics that can become standards.

Build A Machine You Can Trust with Provarity 

Often missed forecasts are indicative of an inconsistent and inefficient technical evaluation process. And without a grasp on which evaluations are delayed and unhealthy, deals will be lost, and sales opportunities will continuously be pushed into future quarters.  

Ultimately, CFOs need a better opportunity management process that includes rigor and discipline from early deal identification through qualification, discovery, technical evaluation and the validation that comes to closure.

Once you have an optimized opportunity management process modeled to how your best reps and SEs manage the process, you know you have the right levels of rigor and discipline, the information in the system is accurate, and everyone is adhering to the process; you have built a machine you can trust. 

While all of this may seem like common sense, it is profoundly difficult to "build the machine" in the absence of the right tools. Your CRM on its own is not enough.  

However, with tools like PreSales XM that boost the capabilities of your CRM, you can optimize all of your stages, particularly the chaotic technical evaluation process and build a sustainable, repeatable sales machine.