Stop Wasting Time Forecasting
We worked with the training division of a large Scottish bank. The reps spent an enormous amount of time forecasting and measuring different parts of the business instead of selling.
One day, the head of their Sales Academy, for whom we were designing their training, exploded with frustration.
‘It’s like we’re trying to fatten a pig for market. You want the pig to get bigger and bigger, but we keep weighing the pig instead of feeding it!’
You’re on the hook for accurately forecasting sales, and you should be. After all, it’s an integral part of any sales manager’s job.
However, you’re not on the hook for wasting your time putting the forecast together before it can be done accurately and then defending it when it doesn’t work out.
The first activity helps the business but the second hurts it. It hurts because it eats away at the time you could be spending developing, training, and coaching your people - activities which will generate a lot more sales than repeated forecasting.
So, how do you end up wasting so much time forecasting? What’s the series of events that leads to your wasting time? Usually, it’s something like this:
Near the beginning of the year or the quarter, your manager requests that you (a) hit certain sales targets and (b) develop a forecast that shows how you will reach these targets.
You work with your team to examine the deals currently in the pipeline and evaluate where new opportunities exist. You identify the size of each deal and estimate when it will close. So far so good.
You start the quarter. After a few weeks, you notice that some deal values are decreasing and close dates are slipping. You increase the amount of conversation with your sales team about deal amounts and close dates. You want accuracy in their prediction, but now you’re falling short in your Q1 numbers, and you let them know that you’ve got to close certain deals this quarter.
The quarter ends, and senior management isn’t happy. Your short fall for Q1 is added to your Q2 target, and you are told to come up with a forecast that will hit this target. You let your team know this is expected, and emphasize they enter the close dates you need into the CRM
Halfway through Q2, reality is falling way short of your unrealistic forecast. Senior management now mandates new ‘slippage’ metrics with a fancy dashboard and a new governance process of required review meetings for you and your team to attend.
Q2 results actually match the original Q2 target, but, of course, they fall short of the adjusted Q2 amount, which included the Q1 shortfall. The CRM is no longer regarded as reliable and a new set of spreadsheets and reports are now required each week.
You do a quick calculation of the time now being invested in additional measurements to get the forecast right, and you realize that, as a team, you are now investing one person-week of time more each month than you were at the start of the quarter. That’s five extra days of reviewing sales and five fewer days of doing sales.
How crazy is this? More measurement does not equate to more sales results!
You’ve got your own version of this scenario, don’t you?
The only way out of this insanity is to stop finding more ways to “weigh the pig” and start forecasting more accurately. There’s no simple prescription for doing this, no simple tip or trick.
However, you can try the following approach, taking your time, and letting your native intelligence come up with solutions that fit your situation.
Talk with your team about this crazy dance and get everyone to see that all of you are wasting time you need for selling.
Accept the need for accurate forecasting. Your company needs it to plan product release, marketing, and all sorts of things, including paying your salaries and commissions.
But - and this is where you’ve got to exert your authority - your team and senior management must also accept that, in the early stages of a deal, forecasting deal amounts and close date is mostly guesswork and not a commitment that you’ll close the deal!
This is a vital distinction. Accept it and act accordingly: with your team and with your own manager. Stop stacking the pipeline with unrealistic close dates and deal amounts, admit you don’t yet have a plan to meet the targets, and set your salespeople free to work on selling while you come up with a plan.
Yes, this will be really challenging for you. Fine. Step up and handle it.
There is another way to get more accurate forecasting by weighting the pipeline according to the stage at which the customer is in his buying process, not where you are in your selling process. But more about that later.
For now, stop suffering for the wrong reasons (giving crap forecasts you know you can’t hit and accepting more time-wasting measurements of it) and start suffering for the right reasons (you can’t see a way - yet - to meet the targets they’ve set for you).
At least you’ll be working on the real problem. That gives you a fighting chance to win.