Just Stating the Obvious

posted by Mel Harding
Sep 16

There is no question that the issue of forecasting and forecasting accuracy is of paramount importance. 

Peter Michie has just provided an excellent overview of the forecasting methodology his company uses for it’s clients.

David Brock wrote an interesting article on forecasting, well worth the read.  If you send David an email (at dabrock@excellenc.com  he’ll send you a copy of the article.

Also a different slant on the same subject of forecasting is provided by Jeannette Marshall, check out this article (http://optioneerjm.blogspot.com/2010/08/forecast-project-or-dart-board.html)  it’s very good.

But at the end of the day, everyone agrees that forecasting is a necessary and that it’s an ongoing challenge.  And it would appear from from both Peter and David say, that CRMs are no help at all.

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Forecasting:–Part II: All That Glitters is not Gold

posted by
Sep 3

ALL THAT GLITTERS IS NOT GOLD

Forecasting: – Part II

 

In Part I of this article on Forecasting I outlined some of the problems associated with traditional forecasting methodologies.  In this, the final part of the article, I will introduce the underlying concepts of a more effective forecasting process.

 

Forecasting Overview – A Better Way

So, back to the drawing board; there has to be a better way….

 

Founding Principals

Before discussing processes that might form part of a better way, let me cover some principals upon which a better forecasting should be built.

  1. Value to Everyone: The sales forecast should be of value to everyone in the chain… Sure the Company needs to know where its sales are coming from & how much, but so does every sales person and sales manager.  Read More…

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Forecasting: To boldly go where no-one has gone before.

posted by Mel Harding
Aug 1

 As mentioned in my last post, Peter Michie of PERFORMAX will be discussing forecasting.  Peter has many years experience in sales and sales management and utilized that experience to build a successful consulting company named PERFORMAX. 

Background

In my experience over years of working for sales organization either as an employee or as an outside consultant I’ve found that one of the most potentially valuable company processes, Sales Forecasting, is often

-        Used as a “whipping post” for sales people by their managers

-        Totally inaccurate in the resulting forecasts.

Read More…

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But soft! What light through yonder window breaks? (More Accurate Forecasting)

posted by Mel Harding
Jul 23

More Accurate Forecasting and Reducing Close Date Slippage (CDS).

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In earlier posts I discussed uncertainty in selling situations and how uncertainty manifests itself as a range of probabilities of success in closing a piece of business, and I coined the term ‘Uncertainty Range’ to refer to range of probabilities.

I also showed that the size of the Uncertainty Range was a direct indicator of how well the opportunity was qualified; a poorly qualified opportunity has a much larger Uncertainty Range than a Qualified or Well Qualified opportunity.

And if you recall, I introduced the term Degree of Qualification (DoQ), which is a measure of how well the opportunity has been qualified and represents your level of knowledge about the opportunity.

And in my last posting I discussed how we need to qualify an opportunity along 2 dimensions, the Probability of Winning and the Probability of Closing by the Close Date.

So let’s bring all these concepts together make some sense of this stuff and see how they apply to what we do for a living, which is selling.

Read More…

57 Comments


Death of Sales Manager: Close Date Slippage (CDS)

posted by Mel Harding
Jul 17

In the previous post I mentioned that for practical purposes when it comes to forecasting most sales reps (& sales managers) only include opportunities that they are highly confident of winning.  It doesn’t make a lot of sense to advertise to the world (via a CRM) the opportunities that you’ll lose.  But research by Beagle Research indicates that only 40% of companies have a forecast that is accurate to 85% or greater. 

So where’s the disconnect? 

Read More…

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Forecasting: Welcome to The Twilight Zone

posted by Mel Harding
Jul 13

This sounds ominous, but it isn’t.

Before we get into the details of forecasting, perhaps we should consider why we spend so much time and effort creating them.  They must be important otherwise we wouldn’t do them.

A company needs to create a budget.  So what is a budget?  It’s simply a statement of how much they will spend and how much they will earn.   It’s revenue versus expenses.  Normally, it’s pretty easy to forecast expenses, and to some extent expenses can be controlled.  What’s not easy for a company is forecasting revenues; there is a lot more uncertainty associated with revenue.    I’m not going to say anything more about budgeting, I’ll leave that to the finance guys.

In a company there is only one group that generates revenue, and that’s ‘Sales’.  So it’s not unreasonable for senior management to want to know how much revenue the sales department will generate in some future quarter etc.    So the CEO goes to the VP of Sales for a revenue forecast, who goes to the District Sales Manager, who goes to the Sales Manager who goes to the Sales Rep.  They all want a forecast.

Read More…

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If It Ain’t Broke, Don’t Fix It!

posted by Mel Harding
Jul 2

In my last post I described a simplified, but common scenario where a sales manager has submitted her next quarter (Q3) forecast; the quota is $500K and she has 15 opportunities in the forecast, each worth 1$100K and each with a probability of closing equal to 33 1/3 %.  

At the end of Q3, she made her quota of $500K, so what happened? 

This is not a trick question…! 

The answer is obvious; the sales reps closed 5 of those 15 opportunities in Q3 for the full amount of $100K each, and they did not close the other 10 opportunities.    

So can we draw any conclusions from this simplified example?   Yes we can.  

The probability of winning a piece of business changes as the opportunity moves through the sales cycle.  

But what causes it to change? 

Read More…

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Only trust a forecast from Gandalf

posted by Mel Harding
Jun 24

Let’s talk about Forecasting

There’s an old joke that goes:

The VP of Sales phones one of his Sales Managers and asks, “What’s your forecast for Q3?”  And the Sales Manager responds, “What do you want it to be?”

So is forecasting a science or an art and is the forecast fact or fiction (or both)?

Certainly if Gandalf gives you a forecast, you should probably believe it.  But what about sales forecasts from the rest of us mere mortals.

A May 2009 study by Beagle Research found that less than 40% of the companies they surveyed claimed that their sales forecasts were accurate to 85% or greater.  Considering that a lot of decisions are made based on a sales forecast you would have to agree that is a very low number.

But there is also another dimension to a forecast, a ‘political’ dimension, one that’s typically not spoken about.   Let’s face reality; it’s political suicide to forecast NOT to make your numbers. 

Read More…

3 Comments


Dealing with uncertainty in selling situations.

posted by Mel Harding
Jun 16

I had a number of comments and questions recently about uncertainty in a selling environment and how we, as sales people, manage it.

Before I jump into that, let me provide an everyday example of how we deal with uncertainty on a regular basis and it will perhaps shed some light on the subject.

A close colleague of mine, Gord, is the VP of sales for a mid-sized tech company; he has 3 sales managers and 20+ sales reps in his group, and, as you can imagine, spends a great deal of time on the road.

Last week Gord was in the Chicago area for a few days; doing what VP’s do best.   He flew out on Monday morning and had a return flight to Boston at 4:00pm on Thursday.  On Thursday he was in Lansing, Illinois, (a small town south of Chicago) meeting with a couple of his sales managers. 

Gord had never been to Lansing and was unsure as to the best route to get back to O’Hare in time for his flight home, so he logged onto Google Maps and printed out the directions.

According to Google Maps, Lansing is about 45 miles from O’Hare and the drive should take an hour.

Gord wants to be at O’Hare by 2:30pm, which leaves him 1 1/2 hrs to drop off his rental car and check-in.

Success for Gord is arriving at the airport by 2:30pm.  So if he follows Google’s directions (which is his playbook) and leaves Lansing by 1:30pm, his probability of success is 100%.  Correct?  

Hardly!

Read More…

84 Comments


Degree of Qualification & The Confidence Factor (CF)

posted by Mel Harding
Jun 9

In my previous post I stated that when dealing with a company or individual the definition of ‘qualified’ is binary; they’re a Qualified Prospect (meaning they’ll buy something) or they are not a Qualified Prospect (meaning they won’t buy anything, at least not now and not from me).

But when dealing with an actual sales opportunity the definition of ‘qualified’ is fluid and one must talk about Degrees of Qualification (DoQ), and the DoQ of an opportunity is a measure of how much you know about it.

So if DoQ of an opportunity is NOT a true measure of my chances of closing the sale, then what is and how do I arrive at it? Read More…

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