Skip to content
Aug 19 14

Stop Wasting Time On Forecasts!

by Dave Brock

Over the past several weeks, I’ve spent a lot of time talking and corresponding with lots of people on forecasts.  An article I wrote several years ago, The Most Used, Useless Metric In Sales has been republished in several venues–creating some discussion.  With clients, with people in email (Adam, thanks for reminding me), and others, there have been lots of discussions about forecasting.

To be honest, I think we spend way too much time on forecasts.  To my way of thinking, the forecasting discussion a manager has with the team shouldn’t last much longer than an hour each month–if that.  But toward the end of each month, then again, at the end of the quarter, the intensity increases and person weeks are invested in finalizing the quarterly forecast.

It’s not that forecasts aren’t important, it’s just that we spend way too much time in the forecasting process.  A large part of the time drain is simply because we are dealing with poor quality, inconsistent date about deals–which deals do we expect to come in, when, what’s our confidence in these deals, is it a “pinky commit,” a “blood commit,” will we bet our unborn children on the accuracy of the forecast.  If we start with bad data, then we produce faulty forecasts, or we have to invest huge amount of time in getting the right data to have an accurate forecast.

Great forecasts start with several things:

  1. A sales process that each person uses rigorously in executing their deal strategies.
  2. A high integrity pipeline that accurately reflects where all the deals are in the buying process.
  3. Some level of buyer verification (ideally the Buyer Verified Forecast).

Let me dive into each in a little more detail.

A Sales Process That Everyone Uses:  The sales process is the foundation to our ability to develop and execute winning deal strategies.  A great sales process is based on our best practices in winning deals.  A great sales process must do 3 things:  Maximize our probability of winning, Reduce our sales cycle, Maximize our deal value/margin.  If your sales process doesn’t do this, it’s time to go back to the drawing board.

The sales process enables us to align with the customer buying process.  It allows us to know the critical next steps we have to take with the customer.  It tells us where we’ve come from, where we are in the cycle, and the critical next steps.  Without a sales process, we are wandering aimlessly, wasting the customer’s time, not creating value in every exchange, and not maximizing our ability to win.  In projecting our ability to win a deal, we’d probably be better off rolling dice or flipping a coin.  We are simply clueless, because we have no basis upon which to project when or if a deal will close, and the likelihood of us winning the deal.

High Integrity Pipeline:  The pipeline is the collection of all deals a sales person is working on.  Rolled up, it is the collection of all deals every sales person in the organization is working on.  It summarizes where every deal is in the sales process, it’s projected close date, and the projected value of the deal.  A high integrity pipeline shows great alignment between the target close date and where we are in the sales process.

We sales consultants have a deep dark secret.  A lot of the so called “magic” we create is just cleaning the garbage out of the pipeline.  I don’t know why sales people and managers aren’t paying attention, but it’s so easy to see.  I don’t know how many pipelines I see where:

  1. A large number of deals have projected close dates that have long passed.  Recently, I looked at a pipeline that was supposed to have been cleaned.  15% of the deals in the pipeline had close dates in the past, some dates were 6 months in the past.  Is the sales person paying attention when they are updating their pipelines?  Are the deals real?  Have they been forgotten?  Why doesn’t management catch it.  It’s easy to find.  All  you have to know is today’s date, everything that has a close date before today’s date is suspect.
  2. Then there are the deals where the position in the sales cycle versus the target close date don’t make sense.  Not long ago, I was looking at a pipeline for deals projected to close in the month–two weeks to go.  The client had a 90-120 day sales cycle, and a large number of deals projected to close in the next two weeks were still in the qualifying stage.  Sure, every once in a while, you get a deal that goes very quickly, but that’s rare.  When, in this case, roughly 20% of the deal projected to close within 2 weeks were still in qualifying or discovery, I thought, “How are they going to compress the remaining 90-120 days and related selling/buying activities into fewer than 10 business days?
  3. Or you see the deals that died long ago, that no one has bothered to wash out of the pipeline–some that are projected to close any day now.  A few years ago, I was reviewing a pipeline.  The client had a 180-210 day sales cycle.  5 deals in the pipeline had been in process for over 1000 days.  One was projected to close in the next 60 days.  But when you looked at the CRM records, the last time a sales person had made a call on the account and decision makers was 700 days ago or more.  Yet those 5 deals were still “alive” and cluttering the pipeline.  In the review, I questioned the sales person who claimed one of those deals would close in the next 60 days.  He claimed it was real and it would close within 60 days  (none of his CRM records showed  an update on the deal in the past 500 days.).  I asked him to leave the meeting, call the customer to verify the project was on target, then come back and report to me.  He came back in about 30 minutes later, I could tell what was going to happen by the look on his face.  His “customer,” had left the company over a year ago.  The deal had died, but no one had taken in out of the pipeline.

There are lots of other things that create integrity problems in the pipeline, but I’ll stop here.

We have no idea about our ability to make our numbers or develop an accurate forecast if we don’t have high integrity pipelines.  I haven’t seen a pipeline that doesn’t have at least 20% garbage–some with as much as 70%.  It isn’t rocket science to understand, all it takes is skimming the pipeline report that any CRM system provides.  But for some reason, sales people and managers don’t pay attention to pipeline integrity.  Why pay people like me $10′s of thousands to do something that each sales person and each manager should be doing in the normal course of their jobs?

Buyer Verified Forecast:  We spend a lot of time trying to assess the probability of a deal.  As I’ve written many times, most of our methods for assigning a probability are tragically flawed.  Out of the box, every major CRM system assesses probabilities based on progress through the selling cycle.  If the customer is qualified, we have 25% probability of winning, following discovery it goes to 50%, after proposing it goes to 75%, when we are in closing it goes to 85-90%.  None of this measures the customer’s propensity to buy!  None of this assesses the customer attitudes toward your solution versus the alternatives! None is driven by the customer urgency or ability to justify and get approval for buying!  All these probabilities are based on where we are in the selling process.

We need to assess the likelihood of closing at a certain date, for a certain amount, based on the customer, where they are at in their buying process, how they feel about the alternatives, where they are in aligning agendas on their team, and their ability to move forward to a decision.  I cover this more deeply in the Buyer Verified Forecast article.

What’s This Mean To Forecasting?

So the reason we waste so much time in forecasting is we aren’t doing the 3 things I’ve outlined above well.  The information upon which we base the forecast is bad, inaccurate, or purely wishful thinking.  So management in trying to uncover these go back and forth with sale people and with each other trying to second guess what reality is likely to be.  Since they are dealing with such poor quality information, they add their guesses, contingency, and hedges in to the final commitments.

All of this is meaningless and a waste of time.  It doesn’t improve forecast accuracy or quality.

If we do these fundamentals well, we have a strong base of accurate information upon which to build the forecast.  With this, forecasting should not take a lot of time, yet they are likely to be far more accurate.

Finally, we have to be very careful about what the sales forecast is–and what it isn’t.  Rather than repeat myself (making this already too long article, much longer), take a look at Sales Forecast Accuracy, Demand Planning, And Other Ramblings.

Additionally, doing these three things well helps us address a huge number of other sales performance/effectiveness issues–but I’ll save those for later.


Be Sociable, Share!
Aug 18 14

We Caught ‘Em, You Skin ‘Em (The Saga Between Marketing And Sales — Part 2)

by Dave Brock
Tiger hunting

In my last post, I outlined how buying has changed.  I created a case for engaging our customers differently, more effectively.  But what’s this mean for what marketing and sales actually do?  How do we work, together, to engage our customers more effectively?

Marketing and sales can no longer work separately, but must collaborate in facilitating the customer buying process.  Those things we relied on in the past—strong brands, great products, competitive price/value proposition are now table stakes.

Now the differentiator is the customer buying experience—how marketing and sales engages the customer together.

So what does this mean to marketing and sales?

  1. We have to be ruthlessly focused and selective about whom we chase.  We can’t afford to cast a wide net, chasing every customer that fogs a mirror.
  2. Marketing, with product management, has to point sales in the right direction by answering two fundamental questions:  What problems are we the best in the world at solving?  Who has those problems and how do we find them?
  3. Marketing and sales must start engaging those customers in new conversations.  The conversations can’t be about our products/solutions, but rather about the problems the customers are might be facing.  We have to recognize these problems may be latent—that is the customer may not even be aware of them.
  4. Marketing facilitates these conversations through creating awareness, and visibility with target customers.  Whether it’s content, thought leadership, participation in social channels.  Marketing equips sales to have the conversations with customers through use cases, business justification tools, materials/training to help sales people have Insight Based conversations and other things.
  5. The conversations need be more focused—on role/persona, industry, company.  Ultimately, we must move from conversations of one to many (e.g. advertising) to one to one –led by a business knowledgeable sales person.
  6. Sales must have the skills to engage the customer earlier and differently.  They must be able to speak, as business peers, to executives about their markets, industries, competition, and business strategies.  They must move beyond understanding needs, to creating awareness and compelling needs to change.  They must have the organizational savvy/nimbleness to help the customer organize themselves, deciding they must change, and then helping them figure out how to buy.
  7. Together, we must ruthlessly focus on those customers and prospects in our sweet spot, not being diverted by others.
  8. Together, we have to offer leadership and differentiation through the entire customer buying process, including that time before they decide they must enter a buying motion.

The “new world of customer engagement,” has forever changed the roles of marketing and sales.  “We catch ‘em, you skin ‘em” no longer works.  Our fates and our work efforts are totally intertwined.  Collaboration is no longer an option, it’s mandatory for our success.  There is no longer the marketing process followed by the sales process.  The marketing and sales processes are completely intertwined.

To be successful, we must work together, we have to be nimble and adaptable in handing off to each other, in adapting what we do to engage the customers more effectively.

Today’s marketing and sales teams begin looking a lot like top NBA teams.  Each person on the team has their defined role—guards, center, forwards.  We have plays and know how to run the plays.  We know how to work together, how to get the ball down the court, how to pass the ball from player to player.

Most of all, we know how to be nimble and adaptable in the game.  We know how to get the ball to the open player.  We know how to get the ball to the person best capable of taking the shot (can we imagine that marketing might actually get the order?).  Most of all, we know our success is based on our ability to work as a team!

This post originally appeared in SAP’s The Customer Edge.

Be Sociable, Share!
Aug 18 14

We Caught ‘Em, You Skin ‘Em (The Saga Between Marketing And Sales — Part 1)

by Dave Brock
Cat Hunting

We’ve all heard some variation of the same story:  Two hunters are in the woods, they’re separated.  All of a sudden one hunter runs by the other at top speed screaming his head off.  He’s being chased by a bear.  As he passes the other hunter he yells, “I caught him, you skin him!”

Sometimes that seems a perfect description of the relationship between marketing and sales.  Marketing spends it’s time trying to create demand—any kind of demand.  They “caught the leads,” it was sales responsibility to “skin them.”

But in this story, sometimes it seems marketing and sales are oblivious to each other.  They’re each hunting bear, crossing paths, sometimes getting in each other’s way, sometimes blaming the other for screwing up the shot.

We sales people think “they” don’t care.  We used to think that marketing’s criteria for a hot lead was the prospect had to “fog a mirror.”  Later, the more cynical of us, thought, marketing didn’t care if the lead was alive or dead—for them, success was the lead, everything after that was sales responsibility. (We caught ‘em, you skin ‘em.)

Marketing would get upset with us, the sales guys, saying, “They never follow up, they never close the leads, they are missing all the opportunities.  They groused at us sales guys for not closing out every lead—because that’s what they were measured on.

Occasionally, almost by accident, a lead would turn into an opportunity, sales would chase it, win it, there was momentary euphoria, the marketing/sales process worked.

But there were some things that marketing did we sales guys liked.  They provided endless amounts of brochures, mostly meaningless, but at least in full color with lots of pictures.  I used to fill my briefcase with them.  It was always great to leave them with customers, sometimes, they were a great excuse to see customers.

Two functions, acting independently, marginally acknowledging each other, but mostly doing their own things.

This was, in too cases still is, the kind of odd co-existence between sales and marketing.  We each kind of know we need each other.  There were moments of great collaboration interspersed with long periods of ignoring each other.

Fast forward to today—much of the story is the same, but everything around us has changed.

All that stuff we used to do, that really didn’t work well then, isn’t working at all.  Neither sales nor marketing is achieving their goals.  Executive management is asking tough questions, usually focused on “what are we paying you folks to do?”

What’s changed?  Well, it’s pretty simple, but since we are so focused on our products and solutions, we tend to miss it.

It’s the customer that’s changed.  Customers have far different expectations, requiring us to engage them differently.  Let’s look at some data:

  • Research shows buyers are a minimum of 57% of the through their buying process before engaging sales people.[i]
  • 46% prefer creating a short list of alternatives before making a decision to reach out to sales people.[ii]
  • 77% of B2B buyers indicate they do not talk with a sales person until they have completed independent research.[iii]
  • 78% indicate the number of people involved in the buying decision have increased.  Average B2B buying group size is 5.4.[iv]
  • With larger buying groups, it becomes more difficult to reach a decision, with the likelihood that No Decision Made of greater than 60%.[v]
  • 67% of the buyer’s journey is done digitally.[vi]
  • Yet 53% of customer purchase decisions are made because of their buying experience.[vii]

Confusing isn’t it!

Buying has changed!  To effectively align with the customer through their buying process, both sales and marketing have to change the way customers are engaged.  What we did before didn’t work very well, now it’s a recipe for failure—all while spending lots of money.

We have to change the conversations, we have to change how we engage our customers.  We can only do this by working together.  We can no longer think of marketing and sales as separate processes, but as tightly interleaved.

First, what the customer cares about is different.  It’s no longer about us (if it ever was)—our products, services, and how wonderful we are.  Instead, the conversations have to be about the customer, their business, opportunities and challenges they face and how we can help them improve.

Customers want to learn, they want to be taught.  As popularized in the Challenger Sale, Insight becomes critical.  Sales must now engage the customer earlier and differently.  It’s no longer just finding a customer with a problem, determining their needs and requirements, presenting a solution.  Sales must help the customer understand there may be new ways to do things, opportunities they are missing.  We might be engaging the customer long before they even recognize the need to change.

Marketing is different.  Relevant content, talking about the customer and their business is critical.  Content must be relevant to the customer role/persona.  It must be relevant to where they are in their buying process, helping move the customer as they become ready to move to the next phase, complementing or supplementing sales.

So, I’ve laid the groundwork for a new approach to engaging our customers.  What’s this mean for how Marketing and Sales work together?  Do we continue as we have—Marketing catches them, Sales skins them.  Or do we change?

In Part 2, I’ll discuss more about what these changes in customer engagement mean to how Marketing and Sales are most effective.

This post originally appeared in SAP’s The Customer Edge.

[i] CEB Evolution Of Digital Marketing, 2012

[iii] 2013 DemandGen Buyer Behavior Survey

[iv] 2013 CEB Study On B2B Decisionmaking

[v] 2013 CEB Study On B2B Decisionmaking

[vi] Sirius Decisions (don’t have specific reference)

[vii] CEB, The Challenger Sale

Be Sociable, Share!
Aug 14 14

Who Is The Customer Experience For?

by Dave Brock

The answer to this question seems obvious, the customer experience, whether it is buying, post buying, or anytime they engage our company, is for the customer.

It’s the experience they should have in every interaction with our organization.  When they are looking for information, how do they find it?  Is it meaningful, relevant, and timely?  When they engage in a buying process, do we align with how they want to buy, creating value in each step of the process?  When they buy, do we support them in the ways that are helpful and responsive to them?  When they don’t buy from us, do we continue to engage them in meaningful relevant ways–if they want?  Do we do this through the life of their involvement with our organization?  Do we do this for each individual that comes into contact with our organization, through whatever channel they choose?

The customer experience is for the customer!

Yet in too many of our designs, the customer experience is about us.

Who do we want to deal with and how do we want to deal with them?  What is the most efficient/cost effective way to deal with them?  How do we get them to hear what we want them to hear?  How do we get them to behave the way we want them to behave?  How do we channel them to make it easier or less expensive to deal with them?

As I’ve written before, too often, our customer experience design is really about what’s good for us not the customer?  Too often, it doesn’t answer the question:  “How do we create value for the customer in each interaction they have with our organization?”

It may be an ad, it may be an email, it may be the website, it may be their impression when they visit us, the experience when someone in our organization answers the phone or replies to an email.  It may be how we engage them as they buy or when they are using our products.  It may be what we value, what we stand for and how it aligns with their values and beliefs.

If we care about the customer experience, we have to design it from their point of view.  We have to understand what they value and how we create value in every interaction.  We have to involve the customer and prospective customers in our design.  Yet too often, we design these experiences in our offices and conference rooms–far removed from the customer.

We cannot design the customer experience from our own experience or guesses of what the experience should be.

There’s a story, it may be mythology, but decades ago, GM, Ford, Chrysler executives were truly mystified about why people didn’t like their GM, Ford, and Chrysler cars.  They heard complaints about quality, rattles, squeaks, issues about serviceability.  The story goes they genuinely didn’t understand why customers were complaining and going to other cars manufacturers.  Their experience in driving their cars was completely different.   They didn’t have quality problems, rattles, squeaks.

But then they discovered something different.  Every day, when they drove to their offices, someone would take their cars.  They would wash them, clean them, give them a quick inspection.  They’d tighten up some bolts, remove some squeaks, make sure the care was perfect for the executive when they drove off in the evenings.  The experience these executives were having was completely different from that of their customers.  They were blind to the real customer experience.

So what does this mean?

If we care about customer experience, then we have to engage our customers and prospective customers in the customer experience design.  We have to go out to our customers and see things through their eyes–look at our web sites through their eyes, call our support centers to see what they see, watch our sales people from their point of view.

Some will say, “Dave, you’re being naïve, if we designed everything the way the customer wants, then costs would go out of control!  We’d be unprofitable!”

It’s a legitimate concern, but there are several ways to look at this.

The most obvious, if your customers or prospective customers don’t like the customer experience, they won’t buy.  So whatever you do for a customer experience is unprofitable.  If we design experiences which cause to buy, which drive customer loyalty–both causing them to buy more, but also to refer others to buy, we drive revenue creation.

Second, we as human beings tend to over design, over complicate things.  We guess at what the customer wants, we are bound by our past experiences, bound by “the way we do things,” past policies an procedures.  We tend to start from past designs/approaches, layering more stuff on top of them, until they become massively complicated, inefficient and expensive.

Customers want simple.  They want easy.  Just as we want to be efficient, they want to be efficient and effective.  Often, starting with the customer, engaging them in creating and designing the experience results in a more effective, lower cost method than if we designed it ourselves–absent the customer view.

Finally, we have to make choices.  We have to make choices about who our customers are–and who they aren’t.  Not everyone can be our customer, we want customers we can serve well, create great value and who value what we provide and how we engage them.

If we try to be all things to all people, we are eventually nothing to everyone.

We have to know and commit to our sweet spot.  We have to engage them in designing the customer experience that creates value in every interaction they and we have.  If they value it, they will pay for it, not each interaction, but in continuing to do business.

We tend to forget, it’s in the customers’ best interests that we are profitable.  That we can create enough revenue to create the experiences they want, to create the solutions and services they want, to grow in our capabilities to serve them, to reward our employees and shareholders.  After all, if we aren’t profitable, we would cease to exist and they would no longer be able to get what we want.

It’s naïve to think that creating great customer experiences, engaging the customer in designing that experience, and delivering it is mutually exclusive with being efficient, cost effective, and effective overall.

The customer experience is for the customer, not us.  Let’s find out what they want and how we can create value in each interaction.

Be Sociable, Share!