Accurate forecasting is the responsibility of both the MD and the salesperson. Both have a vested interest in accurate reporting and both will find it impossible to do — and ultimately to keep — their jobs if they can’t consistently produce an accurate sales forecast.
How Bad Forecasting Can Plague an Entire Organization
The last thing in the world MDs want is to rely on bad data, forecast too high and then miss the mark. The only way an MD can accurately forecast is to teach, train and help the salespeople to be accurate themselves.
Inaccuracy has organization-wide ripple effects. When inaccurate forecasts flood the CRM, it has a chilling effect on the entire team’s ability to forecast with confidence. When it comes to accurate forecasting, developing a consistent qualification process is half the battle. The other half is consistent and thorough deal reviews.
Deal Reviews and Qualification-Based Communication
Consistent and thorough deal reviews are the surest way for MDs to avoid unpleasant conversations with salespeople who are promising to close a deal in July, when they made the same promise in June and May.
Communication has to be part of every potential deal. What’s happening with this prospect? Where do we stand with that deal? Basic communication can prevent forecasting issues before they arise and put MDs in a position to help their salespeople avoid mistakes.
There are several reasons why salespeople can suffer multiple unnecessary slips:
- They are overly optimistic: When salespeople wear rose-colored glasses, it’s easy for them to conflate the best possible outcome with the most likely outcome.
- Ineffective sales qualification methods: When salespeople don’t qualify their opportunities correctly, accurate forecasting becomes almost impossible.
- They’re bluffing: Some salespeople are simply not hitting their numbers and use forecasting to give the illusion that better outcomes are right around the corner.
- Lax deal reviews: If a salesperson misses a mark because no one bothered to check the pipeline that month, that is not the salesperson’s fault. The blame lays squarely on the shoulders of the MD, whose job it was to monitor that status of potential or upcoming deals.
Deal reviews are a wonderful opportunity to help salespeople develop their qualifying skills. What were the next steps the salesperson and prospect agreed upon? When was the last time they spoke? How did they leave it? Was the prospect going to email the salesperson? If so, remind the salesperson never to leave it up to the prospect, who may be too busy to remember to return contact. Instead, reinstill the fact that the salesperson should always maintain the initiative.
Some conversations between MDs and struggling salespeople are smooth and inquisitive. Others have to be harder and more aggressive to shake the salesperson out of a rut or to lay down a reality check. When salespeople miss three or four forecasts in a row, for example, it might be time to tell them that their jobs depend on future pipeline accuracy.
Each case calls for a different type of communication. In most cases, however, it is a good idea for MDs to try to get their salespeople to empathize with their situation. They should be upfront that they’re going to take the salesperson’s numbers to the CEO, and their ability to do their job correctly depends on the accuracy of the team member’s forecast.
Red Flags and Warning Signs
During deal reviews, MDs should watch out for the following indicators, tips and suggestions that something may be wrong:
- Lack of certainty in words and the use of noncommittal language, such as I think, maybe, perhaps, not sure, etc.
- A bit of poking around reveals that they don’t have all the information or a clear picture of where the deal stands.
- Salespeople are working on too many deals simultaneously and are having trouble focusing their time, energy and efforts in the right places at the right stages. If salespeople seem frazzled, the MD should ask them specifics about what they’re doing to qualify, to follow up, etc.
- Salespeople are treating all prospects the same when, in fact, some will close much easier and earlier than others. Are salespeople putting too much preparatory work into meetings with repeat buyers? Are they not putting enough effort into landing a potentially huge client?
- Failure to be tactical and reach out for help when needed, e.g.: calling a manager to see if there is wiggle room on price.
Both salespeople and MDs must rely on each other to accurately forecast on a consistent basis. MDs cannot forecast accurately to CEOs if their salespeople are feeding them inaccurate and unreliable information. But on the other side of the equation, the salesperson in the trenches cannot forecast correctly without the guidance, advice and counsel of an engaged and experienced MD.