Why does sales forecasting so often result in unmet expectations? How do you remedy what is often a frustrating cycle? In this series of blog posts, we’ll explore the conundrum of successful sales forecasting, and why it eludes so many businesses. If you’ve found yourself caught in this cycle, don’t despair. You’ve come to the right place.
Now, picture this…
It’s the last week of the month. Each sales rep provides his manager his forecast with his best guess as to what will close this month. Taking this information, the sales manager prepares her forecast and submits it to her VP sales Americas. He turns around and prepares his forecast to his VP worldwide sales. When the forecast gets to the CFO, CEO, and the Board, the forecast has been touched by many with their own guesses, biases, and wishful projection to attain “Nirvana” this month. (This story applies to quarterly forecasts too, as many sales people know.)
The month comes to a close and suddenly the sunshine, smiles, and optimism disappear as time comes to justify what transpired. Revenue was missed by 20% to 40%, less than 50% of the sales reps met their quotas, and the expenses and inventory increased significantly based on the original forecast. Does this sound familiar? If you have been in such a situation, and if you were the VP sales (worldwide, Americas, or regional), how did that make you feel?
It is funny how the results and responses of the CFO and CEO are similar in such a scenario. If you’ve found this to be the case, here are a few questions you can start thinking about to change this:
- What happened?
- What are you going to do to fix this mess and never put us again in such a position?
- Why aren’t you controlling your forecast and pipeline grading more effectively?
So why do bad things happen to good people? In next week’s post, we’ll look at exactly why so many sales people are not controlling their forecast and grading their pipeline effectively. In the meantime, what do you think is the culprit?