Sales Forecasts Do Not Have to Be as Wrong as Fortune Cookies

Posted by Dave Kurlan on Fri, Oct 29, 2021 @ 12:10 PM

Forecast

There has been much talk in the news about forecasts - and while most have been wrong they are still more accurate than Fortune Cookies!

Thanks to satellites, computer modeling and doppler radar, weather forecasts are more reliable than ever before.  Yet despite those advances, they are still guessing - educated guesses to be sure - but guessing about what will happen, when it will happen, and where it will happen.  I live in central Massachusetts and between late November and early April, most winter storms track up the east coast and when a storm tracks a few miles east, west or south of the New England coastline it determines whether it will bring, rain, snow, ice or a combination, and if mostly snow, how much snow to a given city or town.  They get it right - a lot - but they get it wrong often enough too.

We have also seen 19 months of COVID-19 case, hospitalization and fatality predictions which have been totally and consistently wrong.  Two weeks to stop the spread has turned into vaccine and mask mandates that show no sign of going away, especially when they treat each new variant like the pandemic is starting anew.  

We get economic forecasts, employment forecasts, and of course the most famous of all forecasts during October, political polling.  We know the polls are are always off by enough points to get the results wrong.

With all of these forecasts having the chance to be completely wrong, it makes me wonder about the way sales leaders and CEOs react to sales forecasts.  After all, should we expect anything different when it comes to sales?

For the longest time, sales forecasts were expected to be wrong because the salespeople themselves were the ones making the predictions.  That's like us predicting the weather.  "Oh, we're scheduled to go to the beach tomorrow so it has to be nice outside."  It's the equivalent of, "I've had some great conversations and I need one more deal to come in this quarter so it's looking good!"

Then, CRM's began to include calculated predictions to make the forecasts more accurate.  The calculations were based on how much of the sales process had been covered to date instead of how a sales rep felt.  It was supposed to improve the accuracy of the forecasts but it didn't because the percentage of sales stages completed is only as good as the sales process itself. To this day, most of the sales processes I review are missing entire stages, missing key milestones, or sequenced so poorly that they aren't really processes at all but are more like a bunch of loosely connected ideas about selling.  

I have personally reviewing hundreds of sales processes and Objective Management Group (OMG) has evaluated the sales teams of more than two million salespeople.  From that experience, I can tell you a few things with authority:

Overall, only 33% of all salespeople have the competency Sales Process as a strength or, if we flip that around, 67% have it as a weakness for all the reasons I mentioned in the paragraph above.  The good news is that 83% of the best salespeople in the world have it as a strength while only 6% of the weakest salespeople in the world have it as a strength.  The best salespeople are 1383% more likely to have sales process as a strength!

Related to that, but even more problematic, is CRM.  OMG has a sales competency called Sales Technology and CRM is the primary component of that.  Only 18% of all salespeople have it as a strength, 51% of the best salespeople have it as a strength, and only 4% of the weakest Salespeople have it as a strength.  Even though it the scores are worse than Sales Process, the best salespeople are still 1275% more likely to have it as a strength.

THE SINGLE THING that has the highest predictive accuracy is a properly built sales scorecard.  Not a marketing scorecard where you score how close an opportunity is to your sweet spot, but a scorecard that objectively - not subjectively - scores the opportunity itself based on six to seven very specific conditions.  While the conditions are different for every company and can vary by sales team or offering within a company, they can usually be selected from a group of no more than thirty-five possible conditions.  Then they must be prioritized, weighted and tested before being rolled out to the sales team.

But even after building a scorecard, I still see companies with inaccurate forecasts because of inconsistent use of it.  Unless the scorecard becomes a required milestone in the qualification stage of the sales process, nothing will change.  Each opportunity must achieve a minimum score in order for a salesperson to proceed to a formal quotation or proposal and if it doesn't achieve that score, the opportunity should not be pursued.  That is a tall order for salespeople, frontline sales managers, and their sales leaders.  And when an opportunity does meet the required minimum score, it should be pursued with all available resources because that opportunity is winnable.

There is a time-tested and successful process for building a predictive sales scorecard and its success transcends industries, offerings, territories, audiences and verticals.  The question is, will you ask for help in getting a scorecard built, or will your forecasts continue to be as inconsistent as pandemic predictions have been?

Need help on this?  Send me an email or reach out over LinkedIn.

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Topics: Dave Kurlan, sales pipeline, sales forecast, pipeline review, sales scorecard

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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 medals for the Top Sales & Marketing Blog award for nine consecutive years. This article earned a Bronze Medal for Top Sales Blog post in 2016, this one earned a Silver medal for 2017, and this article earned Silver for 2018. Read more about Dave

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