Top 10 Reasons For Inaccurate Forecasts

The Sales Pipeline Nazi

When I wrote this article, the Northeast corner of the US was being walloped by yet another snowstorm, which in this case, was very accurately forecasted.  At the same time, the first email I saw today had a link to a very funny video – a spoof of a Pipeline Review being run by Hitler.  Here is a link to that video on You Tube.

So the storm and the video led me to the following thoughts.

We joke a lot about sales forecasts being no more accurate than weather forecasts, but everything is relative.  An inaccurate forecast of cloudy won’t have much of an impact on anyone, but an inaccurate forecast of sunny and warm might.  An inaccurate forecast of flurries might not cause a problem if they don’t materialize, but an inaccurate forecast of a foot of snow – in either direction – has serious consequences.

Inaccurate sales forecasts are legendary.  Here are the 10 most common reasons why salespeople, sales managers, Sales Directors and CEO’s suffer from this:

• They lack a formal, staged, criteria-based pipeline.
• They lack a functional, sales-specific CRM or Pipeline Management application.
• Their sales process is not integrated into the CRM/Pipeline Management application.
• Salespeople have the power to suggest the likelihood of closing.
• Salespeople have the power to override the application’s weighting of an opportunity.
• Salespeople fail to LIVE in the CRM application, providing infrequent updates, causing most report and dashboard data to be outdated.
• There is a lack of accountability for keeping the application up-to-date – not weekly, not daily, but in real-time!
• The data being entered is not being inspected by management.
• Nobody cares about getting it right.
• The concept of pipeline management has not been integrated into the culture.

As for the weather, we learn to live with those inaccurate forecasts by preparing for the worst.  We also learn to check back often, get an updated forecast the night before, the morning of and right before that outdoor event, trip to the airport, or 6-hour drive.  What if our salespeople did that?  What if sales managers did that?

If sales forecasts are truly like weather forecasts and we have learned to make the best of the weather, why can’t we simply employ the same strategies and tactics to sales forecasts?  Why can’t we get updates, check-in, check back, verify and re-verify?  Why can’t we get it right?  Why don’t we get it right?

In my opinion, there are a combination of factors at play that discourage salespeople from taking the steps that I just mentioned:

• Laziness – “It’s too much work!”
• Fear of Rejection – “When I check back, what if they changed their mind?”
• Need for Approval (Need to be Liked)  – “They might not like me anymore.”
• Fear of being wrong – “How could I live with myself?”
• Pressure to find new opportunities – The only time hunting takes precedence over anything!
• Consequences of removing an opportunity and its related value from the forecast and/or pipeline – “It’s much better to slide the opportunity to next month than the alternative.”

We must get sales forecasting right.  And we can.  If one company can do it, all companies can do it.  But it takes a commitment, from the top down, to make it work.  It takes work after the commitment has been made.  If the first 9 reasons, from my list at the beginning of the article, are properly addressed and the appropriate commitment has been made, then any company wishing to have an accurate sales forecast can have one.