Surprise! That’s a great thing to hear when it’s your birthday or anniversary, but not something that senior executives, board members or investors appreciate hearing when business results are announced.
Case in point: In October 2012, Google surprised analysts by reporting third-quarter results that missed expectations, triggering an 8 percent drop in share price and wiping out almost $22 billion in Google’s market value.
Final sales results at the end of a quarter also shouldn’t bring surprises. But a SiriusDecisions survey found that only 21 percent of companies achieved 90 percent or greater sales forecast accuracy level at 30 days out – despite the hundreds of millions of dollars they spend on sales force automation tools and the (estimated) 2.5 hours per week that each sales rep and manager spends managing the forecast.
Far too many companies continue to use intuition-based forecasting, sometimes influenced by wishful thinking, to supplement or even override their system-generated forecasts.
A better way to forecast starts with assessing opportunities against a sales process that has stages and observable outcomes aligned with the customer’s buying cycle. The key is to combine the sales rep’s knowledge and perception of deal status with confirmation of the buyer’s progress through the decision cycle. For example, many sales processes include a step for preparing and delivering a proposal. But it’s not enough to simply deliver a proposal – reps should ensure that customers acknowledge receipt and confirm that the proposal is viable and merits consideration.
Sales operations should provide sales managers with an opportunity review worksheet that guides the weekly one-on-one review with the sales rep and provides insight into opportunity risks and vulnerabilities, stalled deals, and deals that need additional resources assigned or specific activities completed. The sales rep and sales manager can then add knowledge about the account, decisionmakers and competitors that is not easily captured in a sales process.
Accurate forecasts can be a challenge for even the most process-driven organization, as customers change requirements, budgets get delayed and competitors maneuver. Using a process-driven, evidence-based approach that incorporates sales reps’ understanding ensures greater accuracy and minimizes those last-minute surprises.