Sales Pipeline Forecasting Is There A Better Way?

To put it mildly most companies sales forecasting just isn't delivering, a staggering 90% of the deals do not close as forecasted even when the close probability is 75% or over. Even more astonishing is that 54% of forecasted deals are lost to competitors or to a no decision.

This is a trend that both senior management and sales management is aware of. And with the visibility now at executive level, sales is creating a demand for more accountability. Interviews with MD's and sales directors indicate that companies can no longer stand idly by hoping the sales team delivers as indicated. Visibility and accuracy need to be improved. And if sales cannot do this we found that the Finance Directors would!

Here is another shared dilemma where we see projected sales are actually a trailing indicator ­ by the time you know if a deal will actually be won or lost the game is over! To this end Sales Directors and MD's are turning to leading indicators in the sales process (e.g. ability for prospect to own product or service, timescale - is it on track, sales team ability to gain access to power etc). Every single metric available is playing an increasing role here as senior management grapple with the challenge of improving forecasting of sales more accurately so they can reap competitive and operational advantage ­ and avoid problems associated with not knowing the true position of the pipeline and just relying on 'gut feel'.

But it's not the same for every organisation; many have used these challenging times to not only clear out dead wood but to build team strength. They are also starting to instil more team discipline. Today we can see Sales Directors & MD's reasserting themselves in their demands for activity, pipeline reporting and adherence to their sales processes. During better times, experienced and even junior sales executives often balked at providing visibility into their activities. 'It's not my style', 'I really don't have time for it', 'I don't believe anyone can tell me what's going to happen' were more easily accepted when sales executives were exceeding targets. But those times for most are now gone. Time and again we found that Sales Directors & MD's have stiffened their resolve. One Sales Director even said:

"We are not dealing in the halcyon days. We are now going to have to do things differently. At the end of each week, you're either doing the things we require or your not. If you are not then you should go somewhere else, because we are going to insist on this and more importantly than insisting on it, we don't want you here if you are not a team player. That's all there is to it. After that, we are going to measure the hell out of this stuff because the fact of life is that we have every right to inspect everything that you are doing and that you are not doing"

To support all of this we are now seeing a noticeable up turn in the number of companies adopting formal methodologies. Whether they create these themselves or licence a commercial offering they are committed to making sure that all their sales staff, start to sell the same way, and that they apply rigor to what they do. In comparing the performance of companies who adopted a formal process versus those that don't, on virtually every metric used to judge success, the processed focussed teams outperformed their less structured competition. In regards to some aspects of selling the differences were absolutely mind boggling.

What we do understand today is that you simply cannot rely on 'gut feel' or any type of 'feel good factor', you have to enforce a practical measurable no nonsense sales process. As a good start you could take a look at your sales funnel and measure key information, however the reporting process seen with many CRM packages will only give you a very basic picture and in certain cases the wrong picture. You should look for a system that is customisable that has multiple 'touch points' within each 'sales indicator'. For example it's no good speaking with a prospect if they do not have an available budget. You usually have to speak to the budget holder and also understand what conditions must exist before they can release the budget. Given this example is it any wonder that many companies don't find this out until it is too late? Lastly it must be easy for sales to complete and sales management to digest so that they can all focus on the areas that still need attention.

Once you have implemented and customised what works for you maybe you can then start enjoying life as you will be able to understand what you work on and what may be worth leaving alone. Now take a look at your pipeline and hold your head up ­ it's so predictable when you know how.

© The Sales Academy 2005. You may include this article in your ezine or on your website or distribute it to others, provided you include the copyright statement and the bio information tag line found at the end of this article.

Michael Palman, a global Master Sales Coach and author. Mike helps people and businesses do ore, do it better and get the results that they want. Mike has had a successful career in sales for over 25 years and now helps other salespeople get the sales edge. Mike lives in both the UK and South Africa.

For more articles by Mike Palman, visit http://www.theaalesacademy.com

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