Engaging with clients in different industries and sizes all over the world has been extremely rewarding. One of the first things we do in our engagements is an Executive Sales Discovery and GAP analysis.
Over and over we see commonalities with organizations, the inability to provide a dependable forecast to the CEO or the Board. This alone can cause organizations to fail, but as important it causes organizations to make poor decisions as to manpower and expenses/forecasting and to public embarrass themselves with analysts, the street and their board.
I define poor forecasting accuracy as +/- 15-20% at beginning of quarter and +/- 5-10% at last month of quarter. In most cases this means a lot of $$.
So what causes sales organizations to have poor forecasting accuracy?
1. Lack of a defined and institutionalized Winning Sales Process within your sales organization. That also leads to a lack of a common understanding and communication of deal stages.
2. No formalized individual deal or funnel reviews by sales executives.
3. Reactive selling vs. proactive or challenger sales methodologies. Relying on installed base but not developing new accounts is another way of looking at this in some instances.
4. No close plans, understanding of the customers buying process and individuals involved in making the decision and mapping that to your organization, executives and process.
5. Poor CRM adoption and analytics to review in-depth Sales funnels, individual sales metrics and key close and time ratios. In most cases a sales operation group needs to lead this charge.
6. No over quotas by level. This mean if the Company Goal is $50M then the individual sales goals should be +/- $55M-60M or in some cases more. Not everyone will make his or her individual goal. Take a look at the last 3 years of history.
7. No involvement in formal Win-loss reviews, key deals and individual reviews and team reviews by company executives and marketing.
8. Poor to little in field coaching and auditing of salespeople and key deals by sales management. NOT asking the tough closing questions and or qualifying questions at each stage of the sales process.
9. NO back up deals and lack of sales pipeline to support the close ratios and other key metrics ratios. Typically your 90-day sales funnel should be 3-4 times the size of your goal. Sales funnel starts at opportunity not lead.
10. Sales management disconnected from their sales team and Company Executives disconnected from the Sales organization and its leader.
There are other factors as well but this is a start. I encourage you to take a look at your organization with these 10 points if you are experiencing poor sales forecasting. Let us know how we can help.