Forecasting: Why Bad Things Happen to Good People

By Philippe Lavie

The forecasting sunshine pump: Have you heard of this before?

That is when the sales reps initiate their sunshine pump when their manager comes in and ask for the forecast. Below quota, every opportunity that has come across this rep’s desk get forecasted at least at 50% probability to close, whether it is real or not. Above quota, the good opportunities that should be forecasted are sandbagged in the desk drawer to keep the sales manager off the rep’s back. So where is the accuracy in such forecast.

Can sales management, corporate senior executives or the Board really depend on the words of a sales rep when looking at the revenue forecast? We have found, while working with our clients, that most companies can forecast their revenue around the 80% mark in dollars or local currency. But when they attempt to forecast the opportunities that will generate that forecast, the accuracy within any quarter drops below 15%. In other words, 85% of the actual opportunities that will close in that quarter are unknown or poorly forecasted at the beginning of the quarter.

Don’t know about you but I would seriously dislike living that way if I were a senior sales executive. Download this white paper to learn more about forecasting best practices.