Skip to content
11 Comments
  1. Very true.

    In my experience forecasts suffer from pressure – internal and external and distortion.

    Managers put pressure on reps to fill holes in their forecast and reps put pressure on themselves to avoid being the tall pole at the weekly forecast review.

    The distortion affect is even worse. Customers often have a distorted perspective of their own situation. Then the forecast gets filtered through the reps distorted version of reality, then onto the manager.

    At least that’s what it was like for me

    I first learned to tell stories to avoid negative attention on the forecast call 🙂

    • Paul, outstanding points. I’ve seen the very same, all of which drive any hope of accuracy out of the sales forecast.

  2. Dave, this is right on. The other thing that drives me crazy is reliance on a probability based forecast that’s applied to a single deal. Example is where deals in “closing” stage are assigned 90% close probability and when asked how many of them close, the VP of Sales says “about one out of three.” And then puts the pressure on the salesperson to close his “90%” deal.

    • Andy: Thanks for the comment. I’ve written about this quite a bit before. Most of these probability based systems simply measure progress through the sales process and have nothing to do with a propensity to buy. It’s such a fundamental logical flaw, yet 90% of sales probabilities, and 100% of the out of the box implementations of CRM have this just wrong approach. Why organizations continue this is beyond me. All it does in cause pipeline integrity problems, forecast problems, and defocuses managers on the right coaching to help their people close deals.

  3. What a brilliant piece of art, Dave!
    I really like all the issues you pointed out, especially the focus on internal design points when it comes to forecasts. But we depend on the customer’s decision…
    The people dimension of this is actually fear. The fear not to make the numbers. And the “fear-driven” initiatives are “I need more pipeline, now!” programs. As you said, they often produce the opposite. And the reporting is increasing and increasing, week by week. What those organizations actually want to achieve is managing risks they cannot manage – the buyer’s decision. Of course, they will get more pipeline, and as you stated perfectly: The price is that we lose focus and that we also reduce the probability to win the “right” deals.
    We can only manage behaviors to achieve results.

    The topic also shows that – as it is with sales in general – everybody in the company is an expert when it come to forecasting.
    Of course, everybody needs “THE” forecast …

    Another trigger for cross-functional alignment across the entire selling system!

  4. Janice Mars permalink

    Loved reading this! As a big sales process gal, I could not agree more. It’s Impossible To Have Accurate Forecasts Without A Strong Sales Process! But that is obviously not enough. You can’t force people to buy on your timeframe however you can possibly influence. In many cases, that can truly upset your potential buyer especially since you have been working collaboratively through the sales process and now you just want the deal because your management says to close it. Huh? Makes no sense to me but we have all seen this a million times. I agree with you, instead of forcing deals to close when you need them for your forecast – and invariably creating inaccurate forecasting – spend more time creating qualified deals at the top of the funnel which should eventually lead to more deals closing. Or figure out how to expand other existing deals that are at the bottom of your sales process, or get that required additional revenue from current clients where they have a need and you have established a strong relationship and credibility. Hey, sales management – be more proactive with your forecasting using sales process to know where deals are prior to waiting to the end of a month or quarter. Just stop forcing deals to close. It’s just dirty.

    • Great comments Janice! Forcing deals to close is rarely a workable strategy. As you point out, fixing the forecast has more to do with understanding the dynamics of deal flow, close rates, cycle time, etc. Working the entire pipeline, not moving a deal is the best way to drive more accurate forecasts and better results.

      That, however, should not prevent us from always seeking to compress the customer buying cycle–but not because we need it for the forecast, but we want to accelerate the customer’s ability to achieve the expected results.

      Thanks for the great comment! (BTW, understand we might be doing some stuff together, looking forward to it.)

      • Janice Mars permalink

        Yes David. Totally agree on trying to compress any sales cycle to get your clients their desired results. Always a great plan for all parties. (and BTW – same here!)

  5. Hi All,

    Very inshighful discussion on the Sales Projections. However I wanted to understand the linkages between Sales Projections viz. e viz. the Procurement Plan. Can anyone be able to guide me what could be the best possible way to get accurate monthly or quarterly Procurement Plan.

    I also need the information regarding Cash Flow Projections which shall include expenses and Cost of Sales along with the Sales Projections.

    • Pranav: I think your question has to do with forecasting demand/revenue flow on parts for which you have a contract. For example, if you are supplying parts that are embedded into another product, what is their build plan or demand plan. Generally, as a part of finalizing an agreement/contract, you need to come to agreement with the forecasting/demand planning process with the customer–and the change process. That should be part of your contract and expectation setting with the customers.

      As for forecasting cash flow, I’m not clear what you are asking, but you know your general run rate on sales expense and any extraordinary expenses you might incur, so you can manage the expense to the level appropriate. You also know the forecast and actual revenue, so you can leverage that data to measure things like CPOD and other sales expense ratios.

Trackbacks & Pingbacks

  1. Stop Wasting Time On Forecasts! - Content Marketing Insider

Leave a Reply

Note: XHTML is allowed. Your email address will never be published.

Subscribe to this comment feed via RSS