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| The Hockey Stick Sales Forecast |
Sales operations managers are very familiar with the hockey stick sales forecast, but most don’t interpret what it says about their business. They should, because the hockey stick tells them their sales strategy isn’t working. Worse – it tells them the sales force is under pressure. When the sales team is under pressure it writes unrealistic forecasts, and then gives away the farm trying to achieve them. It writes bad business, and that’s bad for the business.
The graphic here shows a typical hockey stick sales forecast for the 13 weeks in the quarter. For most weeks sales levels are forecast to be low, but at the end of the period enough business gets written to reach the target for the quarter as a whole.
Somehow, this team is doing poorly, but don’t worry. Everything is going to work out OK. Relax, the guys will bring home the bacon.
Oh Yeah?
Nope, the management team needs to take notice, and take action.
This quarter is not going to be OK. The number will be missed. The sales won’t come in. Cash will be in short supply in the following period, and the CEO is going to need to warn the analysts of disappointing news.
The typical response from the beancounters is yelling at the sales manager. They know they’re in trouble. The sales guys need to work harder, push prospects into closing early, make more calls, do more deals. Stay off the golf course, and on the job.
Of course they’re wrong, as usual.
The concept of a sales rep lazing around for most of the quarter and then burning midnight oil toward the end, is laughable. No sales professional worth the description delays closing deals. They bring them in when the time is right, regardless of when that is. Prospects sign orders when they’re ready – not when their rep wants them to.
There’s one message this hockey stick is shouting out loud. The sales strategy isn’t working, and management demands are forcing the sales team to cover that up.
What’s the answer? Is it beat up on the sales manager? Maybe it’s lean on the sales people to work harder? Could it be more focus from the accountants, aggressively interrogating the teams during conference calls, and ratcheting up the pressure when things supposed to happen don’t?
Sorry, the answer is None Of The Above.
The real answer answer is target a realistic market with a properly constructed value proposition and set sales, revenue and cash plans which turn that picture into viable business operations.
Here’s what a sales forecast should look like. It’s in close date order with next to close at the top of the list. We’ve colour coded the lines to highlight the %age probability. Naturally, those deals closing soonest will be the best qualified, with most of the sales process completed. Any deal with 70% probability or more is shown in green. 50% – 70% deals are shown in Amber and below 50% the deals are shown in red.
What’s the point in that, you might ask? Well you can answer that yourself. What would it mean if a deal near the top was showing in red? And what would you do about it?
If you’d like to read more of our ideas on how to make sales and sales management make sense check out our eBook Succeeding in Sales Management. It’s packed with thoughts and examples. You may not agree with all of them, but you’ll certainly be thinking about sales differently, once you’ve thought about it.
