Remember this old sales term: “the bluebird”? We loved a bluebird. We dreamt of a bluebird. We sometimes prayed for the bluebird. And, when we landed one, we worshiped at the altar of the bluebird. What is a bluebird? In short, it’s deal that you did not expect. It’s a deal that you could not predict. A deal that was not in your sales pipeline. Today, bluebirds are an endangered species, if not completely dead.
In my 30 years of experience, bluebirds have never been commonplace. They have always been rare. In the technology sales of days gone by, deal sizes were $1M+, sales cycle length was 180 days plus, and field sales was the predominate selling model. In those days, we could look at our pipeline on day one of the quarter and know almost all of our attainment came from that pipe. In the past, we generated a forecast based on some percentage of current pipe, plus the bluebird guesstimate.
But sales models, deal sizes and sales cycle length have changed drastically in the last decade. This has a profound effect on how sales leaders must manage the business. When I started in the business, we were almost all field sales. Our customers who bought technology were medium to larger sized businesses. Then we saw the emergence of insides sales as a key sales model. And, more recently, the emergence of low-touch sales where the Internet and ecommerce are the drivers–with no (or very little) sales assist. Initial deal sizes have fallen as we sell to smaller companies and as big companies try a solution out before doing company-wide deployments.
Today, we are in the era of “land and expand” sales model. And, the good news in all this, is that sales cycles have shortened. Smaller companies buy faster and larger companies buy “land” solution faster because there is less financial risk. And upsell deals, the expand part of the new model, also appear in pipeline quicker and tend to close faster. We are now seeing sales models and companies where 50% of attainment comes from deals that are not in our pipeline on day one of the quarter. We have started to call that business “run rate” business. Run rate killed the bluebird.
But how do we manage and forecast when run rate business is a factor? We certainly can’t do it the old-fashioned way by looking at pipeline. Because by definition, run rate business is not in the pipeline. And, the deals tend to be smaller, and there are hundreds or thousands of line items, not tens of line items. We ask, should we just do a beginning of quarter estimate based on past performance and plug it into the forecast? If we do that, how do we forecast during the quarter? How much run rate business can we expect with 60 days to go of 30 or 17? Guesstimates based on past performance are going to be tough, especially since our business changes so rapidly these days.
So, what’s the answer to the death of the bluebird and the emergence of an increasingly large run rate business? Data, data science, advanced math and artificial intelligence. In short, we must use algorithms to figure this out. And the algorithms must be machine learning algorithms so that they evolve in real time as the business changes.
Every aspect of our lives is being changed by AI, so we in sales need to use it to deal with the death of our old friend, the bluebird.