Deal slippage is a common issue for sales teams that can affect goals and profitability. But what is deal slippage exactly, and how can you prevent it?
In this article, we explore the causes of deal slippage and provide strategies for avoiding or minimizing its effects.
- Deal slippage is when a sales opportunity expected to close in a specific period gets delayed to the next quarter, postponed indefinitely, or canceled.
- Pipeline leakage refers to the loss of potential deals from the sales pipeline at any stage of the sales process.
- Common causes of slippage are customer indecisiveness, mismatched priorities, lack of full buy-in, unforeseen circumstances, and miscommunication.
- Strategies for avoiding deal slips include knowing your market, setting clear customer expectations, nurturing relationships, identifying red flags early on, and streamlining sales processes with proper tools.
- What Does Deal Slippage Mean?
- Understanding Slip Rate
- Why Does Deal Slippage Occur?
- How to Reduce Deal Slippage
- How to Use Sales Pipeline Metrics to Prevent Deal Slips
What Does Deal Slippage Mean?
Deal slippage is when a sales opportunity expected to close in a specific period gets delayed or postponed indefinitely. Essentially, it is when a deal “slips” from the expected timeline. Slippage harms sales organizations by impacting forecast accuracy and sales pipeline management, decreasing the morale and motivation of the sales team, and increasing the risk of competition stealing the deal.
Deal Slippage vs. Pipeline Leakage
Here’s how deal slippage and pipeline leakage differ:
- Deal slippage is when an already committed sales deal is postponed past its close date to the next quarter, year, or indefinitely.
- Pipeline leakage refers to the loss of potential deals from the sales pipeline before they can be closed. This can happen at any stage of the sales process, from lead generation to closing a deal.
Pipeline leakage can occur due to various reasons, such as poorly qualified leads, ineffective sales strategies, or lack of follow-up with potential customers. Pipeline leakage can result in lost revenue opportunities, lower conversion rates, and decreased sales performance.
Understanding Slip Rate
No matter how carefully you prepare your sales forecast, there will always be a certain number of deals that fail to close within the predicted period. This percentage of lost deals is called slip rate. Keep in mind that slip rate only includes committed deals, which means they were expected to close in the predicted period. Deals in the negotiating stage are not included in the calculation.
Why Is Slip Rate Important?
Slip rate is a crucial metric for sales leaders and reps because it impacts revenue, plan, and credibility.
If your slip rate is high, it means your forecasting accuracy is low, and you may not be achieving your targets. Additionally, a high slip rate can weaken your credibility as a sales professional or business owner, showing that you fail to deliver on your promises. On the other hand, a low slip rate indicates you’re meeting or exceeding your targets, which boosts your confidence and credibility.
How to Measure Slip Rate
Calculating slip rate is relatively simple. Here’s how you do it:
Determine the total number of committed deals during the forecasted period. Then, identify how many deals failed to close within the predicted period. Finally, divide the number of deals that slipped by the total number of committed deals and multiply it by 100 to get the slip rate percentage.
For example, if you forecasted to close 100 deals in a given month, but only 80 of them closed in that period, your slip rate for that month would be 20%.
Why Does Deal Slippage Occur?
The sales funnel is a complex one, and many factors can lead to deals slipping through the cracks. Dealing with slippage can be frustrating for sales teams, as it represents lost revenue, flaws in forecast accuracy, and wasted time.
To ensure deals don’t slip away at the last minute, it’s important to understand the main causes of slippage so you can take steps to prevent it from happening in the future. Below, we discuss some of the most common causes of slippage and how you can help your sales reps meet the scheduled close date more often.
One of the most common causes of slippage is customer indecisiveness. Buyers may be unsure about their decision to purchase and need more time to consider their options. This can lead to them dragging out the decision-making process and eventually backing out at the last minute.
To combat this issue, sales teams should focus on building customer relationships and streamlining the decision-making process by giving them all the necessary information upfront. Additionally, setting deadlines for decisions can also help encourage buyers to commit sooner rather than later.
Additionally, when a customer is indecisive, they may be more likely to seek additional information or opinions from friends, family, or online reviews. This can expose them to more options and increase the likelihood of considering a competitor’s offer.
Mismatched priorities can lead to slippage when the priorities of the sales team and the customer do not align. For example, a salesperson may prioritize closing a deal quickly to meet their sales target, while the customer’s priority may be to evaluate other options or prioritize other initiatives.
This mismatch in priorities can cause delays in the sales process, and, if left unresolved, can lead to the deal slipping away altogether. The customer may become frustrated with the sales process if they feel pressured to make a decision before they are ready or if they feel that their needs are not being addressed.
Furthermore, if the sales team is unaware of the customer’s priorities, they may not allocate the necessary resources or attention to the deal, leading to delays and missed opportunities. For example, suppose a customer prioritizes a particular feature or service, and the sales team doesn’t know this. In that case, they may not focus enough on addressing that feature or service in their sales pitch, leading to a deal slipping away.
Lack of Full Buy-In
Another cause of deal slippage on a sales team is not getting full buy-in from all stakeholders. When one or more members of the decision-making group are not fully committed to the purchase, they can cause delays, additional questions, and even outright refusal at the last minute.
This can be incredibly frustrating for sales teams, as it means lost revenue and wasted time. Sales reps should learn the names of all stakeholders and ensure they’re invited to all meetings, included in emails, and added to conference calls to keep everyone on the same page.
It’s also important to ensure everyone has access to the same information regarding the deal. Making sure that key documents such as contracts, terms and conditions, and product specifications are available to everyone can help avoid confusion down the line and ensure everyone is making informed decisions.
When deals slip, it can be due to unforeseen circumstances that arise during negotiations. Unexpected events, such as changes in customer budgets or personnel shifts in organizations, can derail deals that seemed like a sure thing.
To prevent this from happening, sales teams should continually monitor and stay up-to-date on customer developments and be prepared to quickly adjust their strategies based on new information. Additionally, having contingencies in place in case of unforeseen events can help keep deals on track.
Finally, deals slip when miscommunication occurs between the sales team and the customer. If the customer is unclear about what they want or the terms of the agreement, it can lead to confusion and potentially cause them to back out at the last minute.
To avoid this situation, it’s important for sales teams to maintain clear communication with customers throughout all stages of negotiation. Additionally, providing customers with detailed documentation outlining expectations, pricing structures, and other specific information can help ensure everyone is on the same page.
How to Reduce Deal Slippage
Deal slippages can have negative financial repercussions on your business, so it is crucial to understand why they occur and how you can prevent them from happening. Below, we will discuss some proven strategies to avoid slippage in sales.
Understand Your Customers’ Needs
The first strategy to avoid deal slippage is to gather information about your target customers and the market demand. Identify the specific needs of your customers and tailor your sales pitch to address their needs.
A significant cause of slippage is when the prospect doesn’t see how your product or service solves their problems. Demonstrating how your product or service will fulfill their needs and solve their problems will help convince them to proceed with the deal.
Be Clear With Expectations
Discuss timelines, costs, and expected outcomes with prospective clients. Setting clear expectations and deadlines not only prevents slippage but also ensures that both parties remain on the same page throughout the process. Outline the exact stages of the sales process to minimize confusion, reduce friction and eliminate surprises.
Maintaining positive relationships with customers is a vital strategy for avoiding slippage. Communication is key to successful sales — keeping clients informed and demonstrating your willingness to help from the first phone call to after the deal is done are excellent examples. By building a rapport with your prospective customers, even after the deal is closed, you benefit from their referrals, upsells, and repeat business.
Identify Red Flags Early
Attempting to close a deal that is not going to work out is futile and can consume valuable resources. That’s why it’s imperative to address potential problems early on. Ask yourself the following: Is the customer’s budget sufficient for your product or service? Are you dealing with the decision-makers, or is there someone else that needs to be involved in the negotiation process?
By identifying red flags early, you won’t waste time or energy on deals that have a higher likelihood of failure.
Streamline the Sales Process With Proper Tools
Inefficient sales processes, documentation, and handling waste a lot of time and energy that could be channeled into securing new deals. Invest in sales tools such as a customer relationship management (CRM) system, sales automation software, or any other solution that streamlines your sales process.
Integrating these tools into your sales process helps eliminate redundant practices and allows your team to focus on building relationships and engaging with customers actively.
How to Use Sales Pipeline Metrics to Prevent Deal Slips
The sales pipeline is the lifeline of every business. It’s the process by which potential customers move from complete strangers to paying customers. However, even the best sales strategies can fail if you don’t pay attention to your sales pipeline metrics.
Below, we discuss how to monitor sales pipeline metrics to prevent slippage.
Predictive analytics is a powerful tool for sales pipeline management. It can help sales professionals and business owners anticipate customer needs, track sales trends, and determine a realistic sales forecast. With predictive analytics, you can identify customer behaviors and patterns that indicate a potential deal loss in your sales pipeline. This will help you take proactive steps to prevent slippage.
The sales funnel is a visual representation of the sales pipeline. It’s a useful tool for monitoring sales pipeline metrics because it shows a prospect’s progress through the sales cycle. By tracking the activities and behaviors of customers as they move through the funnel, you can identify where bottlenecks occur and take action to prevent slippage in your sales pipeline.
Sales velocity is a metric that measures the speed at which a deal moves through the sales pipeline. By tracking sales velocity, you can identify bottlenecks, track the effectiveness of your sales team, and predict future revenue in your sales pipeline. If you notice a drop in sales velocity, it’s a warning sign that things aren’t progressing well in your sales pipeline.
Conversion rates measure the percentage of prospects that turn into paying customers. By tracking conversion rates, sales leaders can identify potential areas for improvement in your sales pipeline. Low conversion rates are a warning sign that deals are slipping through the cracks, so it’s important to identify and remediate the underlying cause.
The size of a deal is an important metric for predicting revenue and identifying potential problems. If your average deal sizes are decreasing, it could indicate increased competition, problems with your sales process or salespeople, or a shift in your target market. You can take steps to address these sales pipeline issues by tracking average deal size.
Frequently Asked Questions
What Is Deal Slippage?
Deal slippage is when a previously agreed-upon sale or transaction is postponed past the close date or delayed indefinitely due to changing circumstances. It often occurs when a buyer does not fulfill the purchase agreement conditions set at the time of acceptance or when sales expectations are not met. Reasons for this include lack of alignment between the buyer and seller, unforeseen events, internal organizational issues, competition, and complexity of the sales process. Sales teams need to identify the causes and take steps to mitigate them, such as improving communication, re-evaluating sales processes, or strengthening relationships with stakeholders.
How Do You Manage Deal Slippage?
Managing slippage involves identifying the underlying causes, such as misalignment with the buyer, unforeseen events, or internal organizational issues, and addressing each one. This may include improving communication, re-evaluating sales processes, or strengthening stakeholder relationships. It’s also crucial to regularly monitor the sales pipeline and take corrective actions as needed to ensure deals close as expected.
What Is Slippage in Advertising?
In the context of advertising, slippage refers to the difference between the number of ad impressions purchased by an advertiser and the number of impressions delivered. Slippage can occur for a variety of reasons, such as technical glitches, ad-blocking software, or invalid traffic. For example, if an advertiser purchases 10,000 ad impressions, but only 9,000 impressions are delivered due to technical issues, the advertiser has experienced 1,000 impressions of slippage.
Slippage can have a significant impact on an advertiser’s campaign performance, as it can reduce the reach and effectiveness of their ads. To mitigate slippage, advertisers may work with third-party verification providers to ensure their ads are delivered as expected, and their campaign goals are met.
Close More Deals
Deal slippage can be a significant hurdle for any business and significantly impact your bottom line. But now that we’ve answered the question “What is deal slippage?” you can incorporate these tips into your sales strategy to minimize slippage and improve your win-loss ratio.
Understanding your market, setting clear expectations, nurturing relationships, identifying red flags, and streamlining the sales pipeline will help you avoid this issue and maximize your sales success. Remember, engaging with customers genuinely and delivering value is imperative to avoid slippage and achieve your sales goals.
Gabriel Ramirez is a seasoned sales professional whose dedication to developing effective messaging has set him apart in the industry. His unique background as a father of four has given him a deep understanding of what motivates people and how to connect with them on a personal level to get a deal done. Gabriel also enjoys reading books on personal development and spending time with his family.