Predict the Weather but Control the Sales Forecast and Revenue

Posted by Dave Kurlan on Tue, Jun 06, 2017 @ 06:06 AM

rain.jpg
Image Copyright Mark_KA

It's June 6 in Westboro, Massachusetts, USA, and the temperature is 49 degrees Farenheight or 9 degrees Celsius. It's pouring rain and with the exception of 3 nice days in the middle of May, when the temperature was in the 80's, it's been like early April since, well, early April!   The weather sucks.  And in case you aren't familiar with what the weather should be like at this time of year, it should be 80 degrees (27 degrees Celsius) and sunny.  

You may be more familiar when the rant sounds like: "It's almost the end of the quarter, we're only at 65% of forecast, the pipeline is half empty, and nothing is closing. With the exception of 3 nice deals that came in during May, our salespeople have sucked." 

While the crappy weather and your crappy 2nd quarter revenue have crappy in common, there is one huge difference that can help you hit your sales forecast even when the weather forecast is for rain.

As long as you know the monthly sales goal, closing percentage, average order size, and length of the sales cycle, I will guarantee that you will meet or exceed the sales goal.  Let's pretend:

  • The monthly goal is $100,000
  • The closing percentage is 20%
  • The average sale or account is $25,000
  • The sales cycle is 6 months.

If you do the math and nothing else but the math, then as long as 20 new opportunities, worth a total of $500,000, enter the pipeline each month, beginning 6 months ahead of the first monthly goal you intend to meet or exceed, you will never miss another sales goal ever again.

Let's walk through the Algebra.  If you close 1 of 5 then 5/1 x $100,000 is $500,000.  But you can't just have one or two big opportunities worth $500,000 in the pipeline because you close only 1 of 5.  Remember, your average sale is $25,000 so you'll need close 100,000/25,000 or 4 and at 20% that's 4 x 5 for 20 opportunities.  Finally, with your 6 month sales cycle, what you add to the pipeline in June represents December revenue, not June, so beginning this month you're working on next year's revenue.

As long as you manage what you can control - the new opportunities that enter the pipeline - then you will never miss another number again.

Back to the weather.  Consider my rule of puppies, which says that the harder it is raining, the more often the puppy will want to go outside and make sure that I get wet. And don't forget the rule of spring baseball, which states that the more games our son is scheduled to play during April, May and June, the colder and wetter the weather will be.

Topics: Dave Kurlan, closing, sales pipeline, sales forecast

Sure Fire Way to Know Which Sales Opportunities are the Best Sales Opportunities

Posted by Dave Kurlan on Wed, Feb 24, 2016 @ 06:02 AM

I just love it when cool gets cooler and I'm not talking about the winter weather in New England.  About a month ago, I wrote this article on Targeting and shared a generic model for scoring opportunities.  George Bronten and Henrik Oquist, CEO and COO of Membrain, took note and already developed the concept as a new feature for their world-class CRM application, Membrain.  You have to see how we integrated this new feature into the Baseline Selling version of Membrain.  In the image below, you can see that we added a scoreboard milestone at two stages of the sales process.

BLS-Process-in-Membrain.jpg

This allows us to purposefully rescore an opportunity as we learn more about it.  The next image has a little more of the scoring detail.

Scoreboard-Detail2.jpg

As you can see from our own instance of Membrain, we score the size, title, urgency, timeline and amount of competition for a particular opportunity.  This opportunity would have received a much higher score if there it was a smaller company, there was greater urgency and the timeline were this month instead of this quarter.  You might be questioning why the score would be higher if the company was smaller...A bigger company has 10 times the number of things that could delay or prevent a sale from closing and while all of those things could also occur with a mid-market or smaller business, they are far less likely at this stage in the sales cycle.  Don't believe me?  Then you don't have enough experience with enterprise size accounts!

Finally, in this listing we can rank opportunities by their scores (right-hand column).

scorecard-display.jpg

Some CRM applications have the ability to rate the likelihood of closing based on assigned weights to various milestones or stages.  While that is better than when salespeople enter an arbitrary percentage, it's not nearly as good as when you have created specific criteria and values.  Neither man nor machine can skew those things!

In just a few days, this scoring system has had a tremendous impact on our company.  We are able to look at opportunities through a different and more accurate lens, allowing us to make better decisions about sales forecasts, resource allocations, and specific opportunities.

Thanks, Membrain!

Topics: Dave Kurlan, sales process, sales pipeline, membrain, sales forecast, scorecard

A Guaranteed Fix for Inaccurate Sales Forecasts

Posted by Dave Kurlan on Tue, Sep 15, 2015 @ 06:09 AM

The weather has become quite predictive - if you want to know what it will be like in say, an hour.  Meteorologists are still fairly accurate within 24 hours, but for the most part, especially where I live in New England, they are challenged to get it accurate beyond a day in advance.

Think of that in terms of your pipeline, forecast and budget.  We know that forecasts are notoriously inaccurate, but that's when you're looking at the forecast for the month, quarter or year.  Meteorologists would never be accurate if attempting to predict temperatures, precipitation, cloud cover and storms a month in advance.

Are your expectations completely unrealistic when you attempt to forecast sales for the month or quarter?  For most companies, inaccurate forecasts are the norm and expectations for accuracy are insane.  But that's when companies rely on CRM applications that fall victim to any of the following 10 challenges:

  • It was designed for customer service rather than sales.
  • It has a contact or customer focus rather than an opportunity or sales process focus.
  • It was over-designed with too many features.
  • It is not user friendly.
  • Salespeople hate to enter information into it.
  • It's too easy for salespeople to manipulate the likelihood of closing.
  • Sales Managers do not regularly inspect opportunities for accuracy and appropriate stage.
  • Pipeline is a state of being, not a gap analysis.
  • Pipeline is a report rather than a staged, visual representation of the business.
  • Salespeople don't live in it and it hasn't become an essential part of the sales culture.

There are dozens of CRM applications out there.  While some are very well-known, like Salesforce.com, others are very obscure.  Well-known doesn't mean you should use it at your company - it might not be right for you.  Obscure doesn't mean that you shouldn't use it at your company - it might be perfect.

In the end, regardless of features, if the salespeople don't embrace it, then it will be a failure.  We have so many clients that bought CRM applications that aren't being used as expected, it's embarrassing.  Yet moving to another CRM application seems like throwing money out the window and admitting that your initiative was a failure.

On the other hand, companies think nothing of changing copier brands - even in the middle of a lease, they change banks when terms or relationships make it necessary, executives move in and out of cars every two years, homeowners cycle through crappy landscapers, we upgrade our phones, tablets and laptops every year or two, and we never think twice!  Why is it such a nightmare to move to another CRM application?

Moving is really not that difficult.  The problem is that it cost a lot of money to customize the first application, get everyone trained, and input all of the data.  There is a huge fear that moving to another application will be just as difficult as the first go-round.  But that's more fear than reality.

For example, we moved a client from a popular CRM application to a more useful and appropriate application.  They did spend and waste a fortune on the first one, they did spend months entering data, they did go through a long and drawn out training program for users and it was a monumental failure.  However, moving to the new application was a easy as pie.  It needed almost no customization, had no complicated navigation, and an hour of training had everybody up and running. The data was imported, not entered manually, and the salespeople love it so much they are not only using it, but embracing it.

The best news of all comes in the form of the client's results:  

  • Salespeople are living in CRM!
  • Opportunities cannot be arbitrarily moved forward in the sales process.
  • The likelihood of closing is calculated based on reality, not hope.
  • 100% adoption translates to real time, accurate data in the dashboard.
  • Salespeople see their pipeline stage gaps and proactively respond to them.
  • Forecasts are accurate.
  • Everyone is happy.

It's not that moving to a better CRM application is a new cost or even difficult - it isn't!  It's that for most, walking away from the initial investment of money, time, emotions, commitment and your bad decision is so hard.  But it's not a divorce, it's more like changing banks.  You move away from one that no longer suits your needs and begin working with another that you perceive to be better.

Do you need some help sorting out your CRM situation?  Just shoot me an email and I'll steer you in the right direction.

Topics: Dave Kurlan, sales pipeline, salesforce.com, sales forecast

Should a Salesperson be Punished after a Huge Sale?

Posted by Dave Kurlan on Mon, May 04, 2015 @ 11:05 AM

punishment.jpg

My wife and I watched with a combination of fascination, sadness and shock as the coach of our son's 12 and under AAU baseball team made them run suicides after the double header they won on Saturday, and again after the double header they won on Sunday.  Why would he punish them after winning four games this weekend?  And how does this apply to sales?  You'll be amazed by what you read.On Saturday, the team had a chance to win both games by the mercy rule (the game ends if one team is ahead by 10 runs or more after 4 innings), but let the other team back into the game both times.  The coach didn't like their effort and execution and taught them a lesson by making them run suicides for 20 minutes after the second game.

On Sunday, the team won the first game, but allowed the other team to tie the second game forcing extra innings.  They eventually had a walk-off win, but once again, he thought they were flat, didn't like their effort, pointed to mental mistakes, and made them run suicides for 30 minutes after the second game.

As his parents, this punishment overshadowed a very impressive ball-crushing performance by our son.  But for the coach, the team's performance comes first.  The coach is paying more attention to behavior, attitude, and effort, than he is to the score.  He believes that by focusing on these three things, he will drive home the lessons he wants them to learn from this.

Shouldn't sales leaders be applying these lessons with their sales organizations?  While the best sales leaders do, in fact, follow this strategy, many sales leaders pay too much attention to sales results - the numbers - while ignoring the significance of metrics and conversion ratios that lead to revenue.

For example, Bob leads the team in sales this quarter with $500,000 in sales and he is praised, recognized, and presented with an award for his outstanding performance.  But it's a sham.  Bob landed one deal the entire quarter instead of the 6 he should have closed.  Although his quota for the quarter was only $300,000 and he killed it, if this deal hadn't come through, he would have been dead last.  Additionally, this deal was forecast for the previous quarter, so he really had nothing going on this quarter.  Had sales management looked more closely, they would have seen that he did not add any new opportunities to the pipeline in the quarter, and had only 6 conversations on just 12 outbound attempts.  Where was his effort?  What's with his attitude?  And where was the behavior?  Should Bob have been the hero or should it have been pointed out that he sucked all quarter and happened to get lucky once?

Clearly, it benefits the entire sales organization to call attention to a big deal and a quota-buster.  We want to make sure that everyone knows that these results can be achieved and should be achieved.  At the same time, if the other salespeople approach Bob and ask how he did it, the opposite effect will occur.  They would learn that it is OK not to make calls, not to have many conversations, and not to convert those conversations to meetings.  Additionally, they would learn that ineffective qualifying and forecasting can pay off, and letting prospects off the hook, not closing the door, and being passive and mentally lazy can work as well.

The scenario with the Bobs of the world is no different than what happened last weekend with the baseball coach.  We can't reward results unless the attitude, effort and execution that led to the results was consistent with those results.  In addition, we shouldn't punish salespeople who put forth the proper effort, attitude, behaviors and execution, only to come up short.  When we identify the most meaningful KPI's, and recognize salespeople for achieving those, the results will come.

[Update - Stick around and read the comments to this article, add one of your own, share it on LInkedIn or Twitter (buttons above the photo) and read this follow-up article.]

Topics: Dave Kurlan, sales conversation, Baseball, sales behaviors, sales KPI, sales effort, sales forecast, sales execution

Fix Your Mediocre Pipeline for Accurate Sales Forecasts

Posted by Dave Kurlan on Mon, Jan 26, 2015 @ 13:01 PM

Most salespeople don't pay too much attention to this.  Even though we perform a pipeline analysis and restage the pipeline with every individual sales evaluation and comprehensive sales force evaluation we conduct, we typically discuss this exclusively at the executive level.  So imagine my surprise when a salesperson sent along his lessons learned from a session on closing deals and included this...

He said, "I went back to your evaluation to see exactly how you restaged my pipeline...You said the quality of my pipeline opportunities was:
U-Toronto - Medium 
Mt. Sinai - High
New York Genome - Medium 
Columbia - Low

If this is how your method determined the order - then it was spot on...On both the low and high ends. Columbia has fallen completely off the radar while Mt. Sinai has progressed to the proposal and closable stage.  U-Toronto and NY Genome are still progressing forward slowly - with additional presentations required and much more qualifying work needed by me. 
I staged the pipeline today and:
Columbia is a only a suspect
U-Toronto is a prospect  
New York Genome is qualified and
Mt. Sinai is closable" 
So what exactly took place?  Two months ago, this salesperson answered 19 questions about each of 4 late stage opportunities that were - and this is the key - considered to be proposal ready and closable.  After we analyzed the data, we rated the quality of those 4 opportunities as you saw above, and then restaged them as you can see below.  Keep in mind that if they were truly late stage - proposal ready and closable - his pipeline would have looked like an umbrella stand base:
pipeline1-1
However, based on what we learned from our analysis of his answers, instead of his pipeline looking like an umbrella stand base, it looked more like a top!  The image below is what his supposedly late stage pipeline really should have looked like:
pipeline2-2
Obviously, that's quite a difference!
The ability to place your opportunities in the proper stage of the pipeline is the key to a predictive pipeline and accurate forecast.  Gerhard Gschwandtner of Selling Power Magazine recently interviewed me about this very topic and you can watch the 5-minute video right here.
"Is your pipeline a reliable predictor of future revenue?" is just one of 19 important questions we answer when we evaluate a sales force.  And while it's quite helpful to see the actual quality and restaging of your pipeline, the additional 18 questions/answers/insights are usually even more important to most clients.  You can learn more about a sales force evaluation by clicking the image below.
evals .

Topics: Dave Kurlan, sales force evaluation, sales pipeline, sales assessments, objective management group, sales forecast

Top 5 Sales Issues Leaders Should Not Focus On

Posted by Dave Kurlan on Wed, Nov 19, 2014 @ 06:11 AM

manning

Did you ever watch Peyton Manning, Tom Brady or Aaron Rogers have a bad day at Quarterback?  Did you notice that the following day, everyone was saying that he sucked?  While it's possible that these three Quarterbacks could have a bad day, most of their bad days are less about them and more about whether or not their offensive lines gave them the time and protection they needed to find an open man and make a good pass.  It could also have something to do with whether or not their receivers were able to quickly get open.  Give a good Quarterback enough time and they will make you pay.  Put enough pressure on them and they can look as bad as anyone else.  In football, it's all about cause and effect.  Bad quarterbacking by a good Quarterback is usually the effect, not the cause of the bad performance.

The same thing is true in sales.  We get calls and emails here all day long from busy executives of growing companies who mistakenly believe that they know what they need help with.  The Top 5 Requests are:

  1. Selling Value
  2. Negotiating Skills
  3. Presentation Skills
  4. Forecasting
  5. Closing Skills

In fairness, most salespeople could stand to improve in these areas, but these are not root causes as much as they are effects.  These five items are the sales equivalent to Quarterbacks having a difficult day.  What we really need to know are, what are the sales equivalents to the offensive line's ability to protect and the receiver's ability to get open?  Let's review these one by one.

Selling Value

Establishing indisputable value to a customer is an outcome based on a collection of capabilities.  It requires that a salesperson have supportive Sales DNA, specifically in the areas of being comfortable talking about money, having a high money tolerance, being a value buyer and not needing to be liked.  It requires that salespeople have consultative selling skills in order to differentiate, uncover compelling reasons to buy from them, and conduct the conversation nobody else is having.  It requires having the ability to connect all the dots, in just the right way, at just the right time.  And finally, there must be a philosophy about selling value and related strategy in place.  To learn more about selling value, join me on November 25 for our presentation on How to Sell Value in Modern Times.  Click here to register.

Negotiating

Negotiating is a trap door that salespeople fall through when, as with value selling, they lack the complete collection of capabilities required to avoid negotiating.  Negotiating is not something in which salespeople should strive to improve.  It's something they can completely avoid.  They must have supportive Sales DNA, specifically, an ability to stay in the moment, be rejection-proof, and not need to be liked.  Even more than with selling value, salespeople must be able to uncover that compelling reason to do business with them and differentiate better than anyone else to have the conversation that nobody else is having with their prospects.  It requires that they have the ability to quantify, cost-justify, and provide a compelling argument for ROI.  Finally, avoiding negotiation requires salespeople to possess excellent qualifiying skills!

Presentation Skills

A presentation is only as good as what was presented, why it was presented, who it was presented to and when it was presented.  Most salespeople present features and benefits instead of solutions, present too early in the sales process, present to the wrong people, and present for the wrong reasons.  The real cause here is a faulty sales process, with demos and presentations mistakenly being sequenced as a milestone to gain interest, instead of a milestone to seal the deal.

Forecasting

A forecast is a human prediction being made by software applications.  The problem is not with the software, as much as it's with the humans that enter the data and override the variables.  The real blame must be given to sales process and qualification. Sales processes that have been inappropriately staged and sequenced will always cause forecasting nightmares.  When it comes to qualification, there are usually two issues.  The first is that salespeople regularly fail to thoroughly qualify because they have chronic cases of Happy Ears.  The second issue is that qualification frequently occurs at the wrong time - either much too early in the sales process, before a prospect has a compelling reason to participate in qualification, or way too late in the process, when salespeople finally learn why a deal hasn't yet closed.

Closing Skills

It appears to many that closing skills are perhaps the most important set of skills a salesperson could have, but the science says otherwise.  Closing is an outcome that occurs naturally and easily after salespeople have thoroughly and effectively navigated all of the prior milestones and stages in their sales process.  Therefore, an apparent lack closing skills is really caused by an ineffective sales process, insufficient Sales DNA, a large skill gap, and most importantly, an inability to sell consultatively and thoroughly qualify.

Do you like my Blog?  Support it by voting for Understanding the Sales Force as Top Sales Blog at Top Sales Awards.

Register for the Top 5 Hidden Factors That Determine the Fate of Your Sales Force - a 45-minute presentation on December 10 at 11 AM Eastern Time.

Read my article over at the Hubspot Blog - What Effective Role Playing Sounds Like.

Topics: sales process, negotiating, sales forecast, selling value, sales presentation skills

Controversial "Best Time" For Salespeople To Fill Their Pipeline

Posted by Dave Kurlan on Thu, Jun 21, 2012 @ 15:06 PM

empty sales pipelineThe obvious answer is to make sure that they fill the pipeline when it begins to empty or is getting close to being empty, right?  

Wrong.

If the pipeline is nearly empty today, your salespeople are feeling scared, stressed, discouraged and demotivated.  If awful is how your salespeople feel, then do you really believe that NOW is the ideal time to get them prospecting?  I understand how badly you need them to get the pipeline filled, but from their perspective, and in the state they are in, are they capable?  Will they do it?

If their pipeline runs dry and that isn't the time to ask them to fill it up, then when would be the right time?

You won't like this answer, but it's correct.

Have them fill the pipeline, or in this case, add to it, when their pipeline is already full.  That's when they feel the most motivated, excited, confident, positive, relaxed and successful.  That's when they should look for more opportunities.  That's when they will be most effective and successful.  And adding opportunities to the pipeline is what will prevent them from ever having an empty pipeline.

This works just like the saying, "If you want something done, give it to a busy person."

Topics: Dave Kurlan, sales management, Sales Force, sales pipeline, sales competency, sales funnel, Sales Accountability, sales metrics, sales forecast

Who Do You Call When Your Sales Forecast is Busted?

Posted by Dave Kurlan on Tue, Apr 20, 2010 @ 05:04 AM

When your short-term sales forecast indicates that you'll come up short this period (month), what do you direct your salespeople to do in order to fill the gap?

Do you have them:

  • Intensify Their Cold Calling? - That's appropriate if you're in a very short sales cycle, otherwise it only helps your situation long-term.
  • Call Existing Customers/Clients? - If you are in a business where you can easily up-sell, cross-sell, add-on or renew, this is a nice short-term solution.
  • Call Former Customers/Clients? - Once again, if you're in a short sales cycle, this is a very good option, othewise, it's a smart long-term solution.
  • Network for Referrals and Introductions? - This is a smart on-going activity but can't be relied on for anything short term because your salespeople have no control over whether anyone will provide referrals or introductions, whether those referrals and introductions materialize and convert, and how long they might take.
  • Inbound Marketing?  The current in thing to do is much like networking in that you have no control over the who, how many, or when that these leads represent.  It's a smart activity to integrate into your ongoing lead generation program but can't be relied upon for short term business.
  • Send out emails?  Come on!  Emails are fine for marketing, updates, confirmations, short queries and delivering a single message to many people.  Emails are not for selling!
  • Revisit Nos? Timing is everything...perhaps last time wasn't the right time but maybe today is...
  • Host an Event? Once again - good ongoing, long-term strategy that won't fill your immediate gap.
  • Participate in a Trade Show? - See above.
  • Screw it?  This is our old Red Sox motto - Wait Until Next Year...
  • To Hell with it?  This is when you pick up the bag and fill the gap yourself...

Are there more options?

Were you consciously aware of all these options?

Which ones do you pursue?

Are there options that work better in your business?

Are there options that have worked better for you?

 

 

Topics: Dave Kurlan, sales management functions, lead generation, sales forecast, hitting sales goals

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About Dave

Best-Selling Author, Keynote Speaker and Sales Thought Leader.  Dave Kurlan's Understanding the Sales Force Blog has earned a medal for the Top Sales & Marketing Blog award for six consecutive years.  Dave's Blog earned a Bronze Medal in 2016 and this article earned a Bronze Medal for Top Sales Blog post in 2016. Read more about Dave.

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