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. 

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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!

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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…

In my previous post I mentioned that the term ‘Qualified’ is much more fluid when applied to a sales opportunity as opposed to the definition of ‘Qualified’ for a prospect.

With an opportunity I can have a well-qualified opportunity, a poorly qualified opportunity, an extremely well qualified opportunity, etc.  So when dealing with a specific sales opportunity we’re talking a range of degrees of qualification (DoQ).   With a prospect; it’s either qualified or it isn’t.

But what exactly does qualified mean when someone says, “I have a Qualified Opportunity.”? Read More…