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How To Forecast Sales Part 2

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In the last article, I wrote about forecasting and the importance of a proper sales process to get it right. Without the right sales stages and milestones, you get the wrong signals. You hear a lot of,

  • “Deal looks good.”
  • “They loved our demo.”
  • “They like us a lot.”

And you have 0 idea what’s really going to close.
Assuming you have the right process, or one that’s good enough for now, we’ll talk about how to inspect the pipeline.

Because you review financials and anything else meaningful. So you have to review the pipeline: it tells you what will happen (sometimes). If you don’t, you just get a lot of hopes and dreams that don’t turn into actual paying customers.

And it’s hard to run payroll or issue distributions on hope.

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We can’t overstate the need for a real pipeline review. 

Before we cover that, though, let’s talk about what a pipeline review typically looks or sounds like.

If you’ve been in a meeting with the sales team and heard anything like the following, raise your hand…

  • “I feel good about it. I’d peg it’s an 80% chance we get this.”
  • “Well, we met with Mike over there, and we had a great meal, and we didn’t talk about the deal, and we didn’t get a timeline, but…”
  • “I know Sarah from way back when, and our brothers went to school together, and then we connected at this conference, and I told her what we were doing, and she said…”
  • “We have a good shot, but we are going to need to sweeten the deal and offer some discounts to get this done.”

You can also include some long, convoluted story that doesn’t tell you anything about why the customer should or would buy. 

As well as a strategy to win the business that came straight out of a Jack Ryan novel.

And you know what? You will leave that pipeline meeting without any clue as to where those deals are. 
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Been there? Seen that movie? Know how frustrating it is?

Let’s talk about what you can do to fix it.

You need to change the way you run pipeline meetings.

First, establish ground rules for pipeline reviews. A few of them you’ll need:

  • Reviews are mandatory for everyone in sales
  • Anyone from senior management can attend
  • The goal is to help the rep and the company make more money, not make people feel good
  • This isn’t the meeting to gripe about how hard it is, tell us how hard you’re working, or bring up anything other than these deals and where they stand
  • Expect hard questions and deliver straight answers
  • Get to the headlines. If you want more information, you’ll ask for it. We don’t need the whole story or why this one is special.

Second, you’ll need a process.

I don’t like doing this out of the CRM, and I’d prefer reps come with headlines on the deal such as how far the deal is from close, the highest level they’re plugged into, etc…. BECAUSE it’s a forcing function, and most companies don’t have a way to get this view of the pipeline. But you do you.

In a perfect world, reps show up with a report they can throw up on the screen that shows the following for each deal:

  • How far out the close date is
  • Name of the deal
  • How they sourced/found the opportunity
  • Expected revenue
  • Highest level they’re plugged into with that opportunity (assuming B2B0
  • WHY THE PROSPECT WANTS IT
  • How discussions about money/budget have gone
  • Clear next steps

You get that, you’re cooking with gas. You CAN do it from a CRM, but I don’t prefer it.

The reps must come with the answers to each of those questions, ready to go. And they need to be able to defend why each deal is at the stage it is, assuming your sales process is staged appropriately.

Third, you need someone whom the sales reps trust and respect to run the meeting. That person is responsible for saying this:

“John, go through your deals one by one. I’ll stop you if I want more information. Don’t give me the whole story, just the headlines based on the information we’ve asked for.”

If John starts story-telling, the manager needs to redirect him, firmly.

If John rambles, the manager asks direct questions, like, “John, tell us why they want this,” or, “Tell me what they said when you presented pricing.”

If John can’t give a clear and compelling reason why the prospect wants to buy, or detail clearly what was discussed on pricing, the manager needs to say so. “Sounds like we don’t know why they want this.”

If John doesn’t answer the actual question asked (more common than you may realize), the manager needs to press to get the answer: “Have you had a conversation with anyone who can sign a check?”

This person can’t accept hemming and hawing, or waffling answers that meander and don’t directly, concisely get everyone in the room real information.

Because that’s the purpose of this meeting: getting to the truth.

This is hard to start, and will take a while. You’re usually getting people who love to talk – A LOT – to be very direct and very brief.

The more you do this, the faster it goes, and the clearer your forecasting becomes. Because you are hearing the naked truth about each opportunity.

Fourth, you need to quickly restage based on the information you get. Or else, what’s the purpose of this exercise?

If a rep tells you a deal is closing in 2 weeks, but there’s been no agreement on pricing or budget, kick it back. (I have clients where we kick back deals if it doesn’t meet the right criteria. Why? Because the company owners need a pipeline they can believe.)

And the rep needs to see you do it. You reduce the confidence in the deal closing from say, 85% to 60%.

If a rep is saying a deal is going to happen in 4 weeks, but she’s dealing with a mid-level manager, trying to sell a high 6 figure deal, and hasn’t engaged with anyone required to approve it, kick it back.

If a rep believes a deal “looks good” but has no clear next step, or any reason why this company WANTS your solution, you have to say, “You don’t have a deal” and either kick it back or take it out of the pipeline.

It’s uncomfortable, but it’s part of the discipline of managing sales… and forecasting.

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Why do this? Because you want the cold, hard facts. And very often, the people who are closest to the opportunity are missing some. You need to know that if you’re tasked with forecasting, budgeting, or ensuring the company hits its goals.

You need to handicap where you are.  So you can forecast what’s coming in.

And you need to challenge the sales team to go get the information you need to win the deal.

Ideally, without discounting.

Give it a go. It’s not for the faint of heart, but you didn’t get where you are in business by doing the easy thing.

If you want help on this, shoot me a note.

In our next article, we’ll look at how you can score deals to provide another layer of accuracy in your forecasting, using data, not stories or feelings or hunches.

 

Adam Boyd