Why close dates are bad for your sales pipeline health

Close dates. As a B2B solution seller, I, like many others in similar roles, have spent so much time over my career obsessing over this seemingly simple data point. I mean, it’s pretty normal right? The focus of our work is finding, developing, and closing sales opportunities, and the close date is a vital piece of information that is captured, updated, and reported on ad nauseam.

So what’s the problem? Well, I see it like this: the vast majority of close dates, for the vast majority of the time, are just estimates – at least until such point as we have an agreed close plan with the prospect – and even then they can be blown out of the water by unforeseen events. We try to predict with great certainty an event that will happen at some point, often many months, into the future, about something over which we may have only limited control. But, as soon as close dates are defined, they tend to get treated as some kind of divine truth. They get reported up the management chain, built into individual and collective forecasts, and then business decisions are made on them.

Accurate forecasting is probably one of the holy grails of sales management, precisely because forecasts are used to make often significant business decisions, upon which jobs and careers may ride. So getting them right matters. And getting them right means they have to be made using reliable data. Hence the importance of reliable close dates on sales opportunities.

The tendency is to place less-well qualified opportunities further out in the timeline, and while we genuinely intend to review these and refine the close date as we discover and qualify more, often, perhaps due to lack of prospect engagement, they get left there – until we scrub the pipeline. This can often result in what are sometimes called the “chronic rollers” – those deals that keep slipping from one quarter to the next, without ever making real progress.

The monthly or quarterly pipeline scrub will be a familiar task to most sellers, but not a favorite one – as most sales people I know are not great fans of admin work. And what happens when the admin work slips, in favor of more value-adding activities? As time keeps flowing inexorably, those less well-qualified opportunities creep ever closer to today, creating an unrealistic and inflated pipeline, and an inaccurate forecast.

A simple solution to this would be to do away with close dates altogether, until we have a degree of certainty over when a deal is actually likely to close, based on real information backed up by the prospect’s actions. But I can see many will rail against this and call me a heretic! “We’ve gone from inaccurate forecasts to no forecasts at all!” (Not true – we would have abandoned unreliable forecasts full of “padding” in favor of forecasts that only contained properly qualified opportunities with genuinely engaged prospects).

Another solution would be to accept the fact that close dates are just estimates that will get refined with increasing levels of precision as we get nearer to a prospect’s buying decision (e.g. next year/next quarter/next month/next week). The more we understand, and the less risks that are present, the more precise we can be.

I believe a better solution is to replace close dates with “Number of Days to Close”. So, depending on your sales cycle and typical duration, an early stage deal may have this set to, say, 180 days – and it would remain there until such time as you learned something tangible (i.e. the prospect has selected your solution, or started contract negotiations) that meant you could update it with some degree of accuracy and certainty. So the deal would always be 6 months out until you decided to change that –  based on knowledge of actions taken by the prospect.

This would benefit the sales team in two ways: firstly it would remove the need for sellers to constantly/regularly do tedious admin work to keep their pipeline up to date, and secondly, it would ensure that forecasts never become artificially inflated, simply because of the passing of time.

This solution would also be a relatively simple one to program into CRM systems, which would allow sellers to define the “Days to Close” value, automatically calculate the “Estimated Close Date”, and replace this with the “Actual Close Date” once the deal is closed won.

What’s not to like? Or is this just too radical for most sales organisations?