I’m always amused by the games that go on as managers conduct pipeline and forecast reviews. Data shows sales people spend at least two hours a week on pipeline and forecast reviews. Think of it, 5% of the sales organization’s time in some of the most confusing and useless discussions I’ve seen. If we learned how to do these effectively, we could not only improve the quality of these reviews and information, as well as significantly reduce time spent in reviews.
Here’s a scenario I run across too often:
The first line sales manager sits down with the team collectively or individually to review the pipeline and forecast. Sometimes the conversation looks like:
Manager, “What do your pipeline and forecast numbers look like for this month/quarter?”
Salesperson, “What number do you need me to commit to?”
Manager, “We’re really getting pressure for this….. What deals can you pull in and make happen?”
The conversation goes on until they agree on a set of numbers to present to management. Sometimes, they might actually look at the CRM pipeline, but too often, the “numbers” that are agreed upon are separate from what the CRM data shows.
Then the manager, assembling all the data, gets ready for a meeting with his manager. He doesn’t want to overcommit, he knows some of the sales people on the team are a little optimistic, some are pessimistic, so in preparing to review the number with his manager, he “adjusts” them from the agreements he has reached with his people.
He sits down with his manager, presents his numbers and the deals his folks have presented. The discussion goes back and forth, the manager typically pushes back and challenges, they end up negotiating and agreeing on a number.
That manager now needs to go to her boss, doing the same thing. This goes on all the way up the food chain, everyone adjusting their numbers based on the discussion, being conservative, and hedging the judgments of their people.
It gets to the top sales executive. By that time, the numbers have been massaged and adjusted through all the levels of reviews on their journey to get to the top of the food chain. There, all sorts of things might happen. If each level has decreased the commitment, by the time it reaches the top levels, the pipeline and forecast are frighteningly low. Panic set in, new decrees to build the pipeline, to lock in more deals, and so forth cascade back down to the sales people. In this latest “crisis,” they immediately drop everything, respond to the panicked messages, wonder, why the original pipeline and forecast weren’t good enough, but shrug their shoulders and go on.
It seems the longer the path length from the sales person to the top management, the more distorted the pipeline and forecast get, as each person adjusts the numbers for their “reality.”
There are any number of games we play in this process. So we see fire drill after fire drill, going on, each taking huge time from all people involved.
Having gone through this experience, in the next month, particularly if the number was missed, we go through the same cycle again, except everyone is making more adjustments, adding their own “English” to the pipeline as they go through the process one more time.
They try to increase the accuracy, by tweaking all the data based on their “judgments” and conservativism. Instead, we should be focusing on pipeline integrity and forecast accuracy.
But none of this addresses the issue of pipeline and forecast accuracy. To have highly accurate pipeline’s and forecasts, we have to start with high integrity pipelines and well defined criteria for forecasting deals. Without this, everything’s just a guess–that’s why we waste so much time in looking at pipelines and forecasts.
The foundation of a high integrity pipeline is the sales process that sales people use. The sales process tells you where the deal is in the pipeline and how it’s moving. Manager’s in reviewing pipelines with their people must focus on pipeline integrity. Are the deals placed correctly, based on where they are in the sales process? Remember, a pipeline review is has completely different objectives than deal reviews.
Once we have verified that all deals are correctly positioned in the pipeline, we have the foundation to a high integrity pipeline. Managers can focus coach the pipeline focusing on shape, volume, and velocity.
We also need to have clear criteria forecast criteria, that is, “what conditions must a deal satisfy to be committed to the forecast?” Too often, we commit things to the forecast based on sales person efforts to close a deal by a certain time, rather than when the deal is going to be closed. Whenever, we start hearing language like, “blood commits,” “pinky swears,” and so forth, we are implicitly basing the forecast on sales effort rather than buyer readiness.
Ideally, we want a buyer verified forecast. Now, we can’t do forecast reviews with them, but we can established criteria based on the buyer activities and decision making process, rather than our efforts to get the order.
First line managers need to be driving these two activities with their people. If they are executing this well, the pipeline reporting/management and forecasting process are very simple. There should be no difference between what the sales people report and what senior management sees.
All those interim meetings and “negotiations” go away. Conversations change from negotiating the number to determining what do we need to do about it. Everyone has a single consistent view, there is no translation loss or adjustment.
Let’s stop the games. Let’s focus on making sure we have high integrity pipelines and forecasts driven by buyer data. We’ll save huge amounts of time and focus on the issues most critical to driving business volumes.
