Lessons Learned in Four Decades of Sales Forecasting

To say that forecasting is the bane of existence of most sales people, managers and leaders is a bit of an understatement. In working with sales organizations worldwide, it seems as though more time is spent in forecast meetings than actually meeting with clients and prospects! For most sales reps, the choice between working on the forecast and getting a colonoscopy would lead to a trip to the proctologist. And yet, most organizations rely heavily on the “data” that is produced in forecasts to make decisions on everything from budgets to bonuses. I used quotes around the term data, because while the term is appropriate, many forecasts are in reality “wish-casts.” That is, the data is based on too much hope and blue sky about what may happen, and not enough empirical evidence to be accurate.

In the CSO Insights 2016 Sales Performance Optimization Study, respondents reported only 45.8% of forecasted opportunities closed, 30.7% were lost, and 23.5% were “no decision.” Losses to competition is one thing – but the alarming news is that your reps are wasting huge amounts of time on opportunities that will never close! This suggests a failure of the funnel management review process. An effective funnel management review process identifies and culls opportunities where customers are not making a decision before the opportunity reaches a forecast. Also, if the funnel management process is functioning properly, CSOs can expect that the percentage of wins within a forecast would be better than the odds of a coin toss!


coin tossSimply providing routine inspections of the numbers reported up the chain of command and making adjustments based on gut feel is not enough. As a sales leader, if you want to produce better sales forecasts, it is incumbent upon you to take a different approach, working to move from a subjective to an objective approach. To produce consistently good forecasts, sales leaders need to pay attention to the following principles:

Good forecasting is based on the clients’ requirements, not yours.

Accurate forecasting requires an understanding of your buyer’s behavior. If you want to learn how sellers ought to sell, learn how buyers buy, and if you want to have an accurate forecast, the same holds true. Too many forecasts are tied to the vendors’ time period requirements and do not taking into consideration what is compelling the buyer to execute the agreement. To assess where the client is in the buying process, you should develop a series of questions based on the following criteria:

Opportunity Assessment Checklist

  • What is the prospects’ business issue we are addressing? What is negatively affecting their business and proving detrimental to their success? How long have they had this problem?
  • What is their desired outcome or future state?
  • How will the prospect define success – what is their measure for a successful implementation?

These upper three are “why the prospect buys”. It shows that your team truly understands their business and business obstacles to success.

  • What is our solution and how does our solution solve their problem?
  • How is our company / team / t’s and c’s / solution uniquely positioned to satisfy their business inhibitors?
  • What is the reward (ROI) for the deployment of our solution and how will their business outcomes be positively impacted?
  • What is the risk of NO DECISION? If the prospect does nothing, what are the potential risks to their business. If there is no risk, they will likely make no decision.

Good forecasting requires continual improvement. A forecast is a snapshot not a movie. At any given time you need to remember that, done well, forecasting represents a moment in time, and since the landscape is constantly changing, forecasts need to be continually refined. You may experience changes in your business or in the marketplace that indicate that an additional milestone should be added to your process. Or perhaps you find that over time, the values you placed on each of the stages in the pipeline need revision because you have more predictive data about closing rates.

Use these principles to help your sales organization to forecast more effectively and you will have created great value for your company and made your job much easier in the process.

To help you better identify closeable opportunities and produce more accurate forecasts, please download a complimentary copy of the Opportunity Assessment Checklist.

About the Author

James HaleJames Hale Founder and CEO, Mprove Sales

Jim Hale is a recognized sales leader with broad success in Entrepreneurial and Corporate environments. He has developed and led worldwide sales and operations and has extensive experience with selling and managing teams in the Americas, EMEA and Pacific Rim. Jim has led both channel and direct sales organizations consistently improving revenue and margins while implementing profitable cost controls. Jim has hired and developed sales organizations at IBM, Oracle, Ernst & Young and Vantive as well as a number of startup companies.

Note: this blog post first appeared at

Process Optimization

The Importance of Processes in Effective Lead-to-Revenue

Process OptimizationComponent 3 in our recent eBook The Essential Guide to Building Your Lead-to-Revenue Machine is optimized marketing and sales processes. You can read lots of articles and white papers about the various technology options – CRM, marketing automation, sales enablement etc., but in my experience, unless you get the processes right,  even the best people and technology will just help you fail faster and more expensively.

This is why we always recommend that our clients start with processes as the first component of a well-oiled, end-to-end marketing and sales infrastructure – and only then make sure they have the appropriate technology and people to run the lead-to-revenue (L2R) machine.

Here are some important keys to creating and optimizing your marketing and sales processes:

  1. Concentrate your efforts on finding the companies and individuals that have a genuine need for what you offer. This a much easier and less stressful way of doing things—for both you and your prospects? Response rates will be higher, close rates will be higher, and you will not have to manipulate anyone.
  2. Keep things simple and focused on as few priorities as possible. A good way to kill the productivity of a sales force is to throw too much at them. Too many products, too many offers, and too many messages equate to too many chances for the sales team to lose sales.
  3. Treat sales leads with care and respect. It really offends me when sales departments mishandle the leads/inquiries given to them by the marketing department. I have seen sales reps ignore leads, denigrate leads, and follow them up in a half-hearted manner. Often this occurs because the VP of Sales speaks poorly about what marketing is doing, creating a culture where reps feel it is okay not to work the leads they are given. Leads cost money, and few of us have extra money to waste. If the lead quality is not where it needs to be, please review my post about creating a service level agreement (SLA) between marketing and sales.
  4. Build effective sales lead management into the process. One of the best ways to follow the advice from the previous point is to carefully qualify the inbound inquiries and then create an ongoing drip-marketing program to nurture these leads until they are ready to engage in the buying process. Quality sales lead management can boost sales performance by 100 percent or more.
  5. Allow for a highly flexible sales process. While “flexible process” may sound like an oxymoron, sales is both an art and a science. If you over-engineer the process, you can end up with a group of sales reps that will do anything you tell them, except the most important thing — close business. Sales is a game of technique, but also one of instinct and intuition. Thinking and acting outside the box is okay as long as it falls within reasonable limits.
  6. Create a culture of accountability and support. Many sales managers are good at telling their people what to do, but not so good at supporting them. However, the more you try to direct someone’s actions, the more the ownership is retained by you, instead of by the rep, where it belongs. The sales rep’s job is to produce his or her revenue targets. Your job is not to tell your staff how to make their numbers; it is to support them in every way in achieving their goals.
  7. Remain consistent. One of my clients had great technology, but also had a very bad habit of changing their product offerings and value proposition every six months or so. The sales team was encouraged to spend their time on the newest offerings instead of what had worked for them in the past. This required extensive retraining of the team, and they never found their rhythm. In a tough selling world, consistency can be the attribute that keeps your team on top.

Get your processes right to boost your lead-to-revenue success.

Marketing and Sales Alignment

Factors In Choosing Your Sales and Marketing Model

It bears repeating that despite all the possible permutations of how you can get there, there are only three ways to grow your business:

  1. Increase the number of customers
  2. Increase the average transaction size
  3. Increase the frequency of purchase

In order to be successful, you must align your marketing and sales model to meet one or more of these three objectives. If you can increase all three metrics, you will soon have a world-class operation. And while there are many possible ways to achieve a revenue objective, some organizations (perhaps yours) are not using the best strategy. Each of the possible methods has its plusses and minuses, and the best choice for you is not always the obvious choice. You should not make decisions regarding your marketing and sales model simply based on what your competitors are doing but rather on your unique assets and weaknesses.

When I talk about a sales and marketing model, I am referring to the specific methods and processes that are used to generate revenue. A sales and marketing model can be as simple as a corner lemonade stand, or as complex as Amazon’s e-commerce engine. Major sales models include direct sales, telesales, channel sales, retail sales and ecommerce sales with many hybrid options.

Tough Questions That You Need to Answer

Before considering a new way of doing business, it is helpful to understand your current situation. Begin by asking these questions:

  1. How did your current marketing and sales model evolve?
  2. What is your motivation for keeping the status quo?
  3. Are you doing things out of habit or by deliberate choice?
  4. Is your sales force earning its keep?
  5. Are your current channel partners helping or hindering progress?
  6. Are there any time bombs at your company?

Time bombs are those issues that, if not addressed, could have serious consequences downstream. If you prefer a different analogy, think of time bombs as the potential Achilles tendons of your organization – where you are most vulnerable to atrophy or attack. The Andy Grove statement, “Only the paranoid survive,” certainly applies here. Sometimes, the best time to be paranoid is when you don’t feel that you have to be. Here are a few of the most insidious time bombs:

  • Metrics that are way below standards – for example, a high cost of customer acquisition.
  • Good products, but a sales team that is stable, comfortable, and very inefficient.
  • Channel partners that are leaving you for the competition.
  • A prohibitive cost-of-goods.
  • Products that are more than one generation behind the competition.

This post was excerpted from the white paper, How to Choose the Best Marketing and Sales Model.

sales process

But We Have A Sales Process…

A couple of weeks ago, I was on a panel with a number of peers. A couple of the panelists suggested the majority of companies they worked with had no sales process in place. I have a slightly different point of view, one that is perhaps worse news. Most of the organizations I work with have a sales process in place.

At least that’s what they say. They’ll even pull out a piece of paper, a flow chart, or show me their CRM system to prove they have a sales process. I’m always curious, so I ask a lot of questions and generally I find a couple of things at play:

  1. While a company may have a sales process, it has not been updated to fit current market realities and priorities.
  2. The managers and sales people just aren’t using the sales process.

It’s actually pretty easy to see this. Just sit in a pipeline review and listen to the conversations managers and sales people have in reviewing their deals. As they discuss the deal, look at the activities they have defined in their sales process. Ask a few questions about the deal, using the activities as a guideline for your questioning. See if the responses are aligned with the sales process. For example, the other day I was sitting through a review with a new client. They had two key activities in the discovery phase of their sales process: Understand the customer decision making process and who is involved. Also, understand the criteria by which the customer will evaluate the investment in the solutions and justify it internally. Great criteria! However, we were reviewing a number of deals that were in either the proposing or closing stages of their sales process. I started asking some questions, “How does our solution look based on their justification criteria?” “Who is involved in the decision making process, who’s the real decision maker?”

If these deals were truly in the proposal and closing phases of the sales process, the sales people would have had very clear responses to those questions. They didn’t–they mouthed some nominal responses, but really didn’t answer the questions—–then they went on to talk about what they were doing to win their deals. Hmmmmmm, what’s up here? Clearly they aren’t using the sales process. A few more questions and you can determine whether the sales process is out of date or just not being used.

The only reason to have a sales process is to help sales people manage opportunities from qualification through closure as effectively and efficiently as possible. The activities identified in the sales process are a result of analyzing both how customers buy, and the activities critical sales must undertake in facilitating the customer’s buying process. If sales people aren’t using the process (and it’s an appropriate process), then they aren’t performing at the highest levels possible. Additionally, since the pipeline is an aggregation of all the deals sales people are working on, the integrity of the pipeline and its accuracy for forecasting are immediately suspect.

Sales people not using the process are not performing as they should. Managers not assuring their sales people are using the sales process are being irresponsible–both to the sales people and to their organizations. Deal reviews are most effective if they are initiated by talking about where we are in the process—that means using the process to inspect the deal, using the process to provide a road map on next steps, using the process to assure you are competitive, and using the process to make sure you are creating value for the customer. Everything else is a drill down into the details of the activities.

As I mentioned, one of the reasons sales people and managers don’t use the process is because it has become irrelevant. Over time, the way your customers buy changes. Markets, competition, and your solutions change. What may have been a great sales process 5 years ago, is probably irrelevant today. If your sales people aren’t following the sales process, but consistently winning business–reassess and update your sales process. The only thing worse than not using an irrelevant sales process is using an irrelevant sales process–but you will see that with plummeting win rates, long cycles and loss of competitiveness. Make sure you review and update your sales process periodically. If there are major changes in market conditions, if there are major changes in your target markets, if there are major changes in your solutions–you probably need to update your sales process.

Organizations that don’t have a sales process need to have one. Organizations that have a sales process but are not using it are fooling themselves.

If you want to drive the highest levels of sales performance, make sure managers and sales people are using it. Make certain your process reflects current best practices for winning business. Everything else is a waste of time.

Reprinted by permission. View the original post here.