Funny thing. In the past few months we’ve found an unusually high number of our clients seriously concerned with inaccurate sales forecasting. To put it bluntly, they are finding it impossible to get forecasting right at all. In situations like that, it doesn’t take ESR long to diagnose the cause: a sales process that isn’t complied with or no process at all. (Sales leaders in those companies do understand the problem and the cause. They look to us to provide them with alternatives.)
Employing technology above and beyond basic CRM systems to improve the accuracy of forecasting isn’t new. We’ve written quite a lot about The TAS Group’s Dealmaker. White Springs and Revegy would also be included in those conversations.
I thought it would be valuable for you to hear from a colleague of mine, Michael McGowan. Michael has facilitated the sales process module of the International Selling Programme, of which I’ve been a part for the past 6 years. Here is the interview:
Dave Stein: Accurate forecasting is among the biggest challenges sales leaders face today. What do you believe is the reason for that?
Michael McGowan: There are two reasons. The first is that sales operations do lack reliable forecasting tools, tools that provide credible data. Traditional sales automation tools such as CRM cannot provide accurate forecasts because they have no mechanisms – and no proven processes – for producing what statisticians would deem valid and reliable data. Accurate forecasting is a statistically-based process, so you need a pretty smart tool to do it. And even if existing sales automation products contained such tools, the software is usually so clunky to use that the sales people won’t enter any data in the first place. Secondly, when you have a forecasting challenge, it indicates you have lots of other challenges. In a way, forecasting isn’t the biggest challenge; it just highlights all the other challenges. Inaccurate forecasting usually means your sales process is not being used. It often means that individual sales people are applying conflicting and meaningless rankings to opportunities. It even means that the sales people are not qualifying opportunities or looking for the “bad news.” That’s why we say, when you fix forecasting, you fix everything.
DS: If a sales operation wants to improve its monthly or quarterly forecasting, where should it start?
MM: You cannot forecast accurately until you install or introduce a common language for measuring the timing, velocity and reliability of an opportunity. Many companies introduce a “sales process” and even a sales methodology, but they fail to introduce a true common language for measuring, scoring, ranking and classifying opportunities. When we say a common language, we means that there can be no room for exceptions, experience and subjectivity, or theories about “every situation is different.” Otherwise, you cannot calculate a credible forecast across people, products, units or divisions.
If you were to ask which variable is the greatest predictor of income, all evidence says it is the timing and velocity of opportunities. If you get this “scoring” mechanism wrong, the sales forecast will be unreliable. But to get it right, you need more experience or an ability to guess well, i.e. you need a smart (forecasting) tool.
DS: How can technology help sales operations to improve their forecasting?
MM: Interestingly, one of the main drivers of accurate forecasting will be mobile devices such as pads and tablets. These are encouraging and enabling sales people to actually use sales automation software. In fact, software vendors are now having to develop their interfaces to accommodate the demand for simple tools. The other driver is the emergence of cloud-based business applications. Vendors with strong, proven intellectual property (IP) can now cost-effectively develop smart applications such as forecasting, without succumbing to the inflexibility of the likes of traditional CRM software. It means for example that a vendor with a specific forecasting solution, can link to any CRM or ERP and stick to being good at forecasting. It’s why sales forecasting tools are emerging as a new, but substantial sub-category of sales automation and sales performance technology.
DS: How might the sales consultancy and training community leverage new forecasting tools and technology to provide even more effective solutions to clients?
In the U.S. market, the recurring themes we hear from sales leaders is that sales transformation programs must now include proven sales technology, and secondly, forecasting is the number one pain point for mid to larger sales teams. They are looking to their sales training vendors to provide this technology as part of any intervention or learning program.
The actual role of the sales training vendor is also going to change. The majority of sales training and consulting still focuses on teaching selling and related skills. However, an outside training vendor often can provide more value and leverage, by acting as an “accountability coach” along the lines suggested by Gary Harpst’s Six Disciplines for example. That means the training or consulting vendor will be sharing the forecasting tool with managers to diagnose, strategize and plan high-impact learning interventions.
About Michael McGowan, CEO Sales6ix
Michael McGowan co-founded Sales6ix with his colleague Patrick J Cody in 2011. McGowan started his sales career with American Express and operated a franchise of the DEI Management Group for ten years. D.E.I. had been one the leading sales consultancies in the USA since 1979, when it was founded by Stephan Schiffman. Michael has worked with hundreds of sales teams in the U.S., U.K., Europe and Australia and in 2010 authored Rules of the Road for the Sales Team. He is currently building sales operations for his new Sales6ix product in the U.K. and U.S.A.
When it’s impossible to “get forecasting right,” the cause is “a sales process that isn't complied with or no process at all.”?
I’m not sure how these two are connected. Even though I disagree with your statement, let’s suppose that a case could be made that process conformity was the most significant variable enabling forecast accuracy. That premise ignores that [stuff] happens outside of the process script. Further, would rote adherence to a bad process be preferable because it somehow made forecasting “right”? That’s one of the messages here, but I don’t think it’s a sound idea.
In my experience, there are many forces and events–some known, many unknown–that are significant in influencing sales outcomes. As sales professionals, we often attribute greater power to our influence than we actually have. Therefore, we expect our forecasts can be appropriately accurate. The reality is that many things that are consequential for outcomes are impossible to predict.