Forecasting…

I was helping update an assessment process for new sales managers recently.  One of the topics was “forecasting”.  In the world of business-to-business, new business selling, sales forecasting is one of my favorite topics.  Not in a “favored” way; more of an “amusing/cynical” way.

Having been an individual sales rep as well as roles in sales management, sales operations, and sales leadership, I’ve played this forecasting “game” from various positions.

I call it a game, because after all these years I believe the four, foundational pillars of delivering on what sales reps have forecasted are:

• Blind faith – we simply believe we’ll win, until we’re told we didn’t
• A wide “funnel” – if one deal pushes, we can still make our number with others
• Sand bagging – not every month, but we all need an occasional breather
• And luck   

Other than the wide funnel (which can be inspected) leadership doesn’t warm to these other pillars.  They believe there should be an algorithm; or artificial intelligence can be employed; or there’s some other scientific solution for forecast accuracy.

I’m reminded of Mike Hoffman’s comments made in this March 2019 SBI article (link) discussing private equity owned companies and the lack of forecast accuracy:

Weighted forecasts are deceiving – What’s the difference between 45% and 50%? Have you ever won 45% of deal?

SBI published a related article that same month (Link) posing this question:

Is it the sales plan or the sale people? 

Some companies fire sales reps that miss their forecast.  I suppose they believe fear improves forecast accuracy.  “Who’s to blame?” is part of the sales forecasting game, and it’s hard to blame bad luck! 

Blaming the people or the plan are two options I suppose.  For me, blame comes after-the-fact.  I advocate a more rigorous approach, before-the-fact.  It may not alter the outcome, but at least I go down fighting.

I’m speaking of each sales rep reviewing the very next step to be taken on every forecasted deal in their pipeline, every day.  Daily? Every deal?   Yes.  Plus, every sales manager viewing every deal forecasted from a “what’s wrong with this deal” perspective. Finally, leadership inspecting deals in CRM for (A) Who will sign the contract?  (B) Has anyone met with said Who to confirm that expectation?  And (C) what is the date, time, and location the highly anticipated signing ceremony will occur?

I know no one wants to miss their forecast.  I also know missing forecast happens in the real world frequently.  When I realize I’m going to miss my forecast – then what?  Do I succumb to what’s known in the trade as “happy ears” and pretend I’ll make it?  Do I succumb to fear and make stuff up? (Which is easy to do today because managers get “happy ears” too.)

What should sales managers and company executives expect from their sales reps?  First, the truth.  When it comes to sales forecasting, the only thing worse than bad news is to be surprised by it.

Truth exists; only falsehood has to be invented.

Georges Braque

Second, to learn from it:

The truth, however, is that virtually all well-established strategy models work well in some situations and cause failure in others, so the real skill is less in knowing the strategy than in sorting out the situations to which it actually applies.

                                 

Unknown Sage

We all know sales forecasting is a key business process.  If we free ourselves from the fear of missing, the four forecasting pillars become amusing in a cynical sort of way, true?

GAP

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