Start by bending it

One way to perhaps ‘break the hockey stick’, is to put a kink in it. By this I mean to shift the start point of the curve – to make it happen earlier in the quarter.
By incentivising the sales team to get results earlier – and tapering those incentives as the true end-of-quarter approaches, it is possible to access the creativity of sales people to make win-win deals with their customers – deals that happen out-of-cycle. Of course, it is necessary that the new incentive-driven timing of sales closure is moved around over time so as to prevent the establishment of a new ‘1/4 cycle’ – by varying this inflection point one can effectively destroy the hockey stick by repetitive stress fracture.
An important point to make here is that effective incentives are not restricted to money – in fact many sales people respond better to other forms (recognition is a STRONG desire of most sales-folk).

Breaking the hockey stick

Have you trained your customers in “the hockey stick”? Probably.

Do they beat you with it each and every quarter? Almost certainly.

In our quarter-driven world, with its emphasis on quarterly sales targets and reporting – designed primarily to feed stock analysts, we have created a monster. The desperate measures that many companies undertake in the last few days of each quarter in order to ‘make their numbers’ have trained the customer to ‘expect a big discount’ – with the predictable result that customers now wait until that time to place their orders so as to take that discount.

So, not only have we trained customers to expect a discount – i.e. to reduce our margin; we’ve also trained them: to expose us to massive personal stress; to place unduly heavy cyclical stress on our supply chain, and for that matter on their own organisation as they try to work their procurement processes into this unnatural cycle.

Curiously, some sales managers are actually OK with this state of affairs – they see the hockey stick as an ‘incentive’ to their sales staff – and they see the ‘certainty’ of (heavily) discounted business in the last 24 hours as a compensation for the beating they took!

Whilst a utopian view might be that we should just get rid of quarterly reporting (a top idea in my opinion, but one which is unlikely to gain any traction with the majority of people – what would the analysts do?) it is clear that we should strive to decouple customer purchasing from this cycle by other means.