The Most Accurate Forecasts are Grounded in Data, Not Emotions
Secrets of the Most Accurate Sales Forecasts
I love data. I also happened to be the odd child who loved taking school exams. I genuinely enjoyed studying, but absolutely hated pop-quizzes—they were soul destroying. How could my teacher have the nerve to put me on the spot? Panic. I didn’t figure it out until college (or after) that the tests I did the worst with were the ones I couldn’t just memorize and go through the motions for—they were open ended. I had to think.
I was thinking about all this related to Sales and what it’s like for a Sales Rep—good ones and bad ones—to prepare (or not) for pipeline and quarterly business reviews. And, even more so, about what it’s like for Sales Managers and Execs to endure the painful “grading” process. If Reps have been doing their learning and work all along, this exercise shouldn’t be that difficult—but it is.
I caught up with two leading Sales leaders about how they’ve changed the deal inspection and business review games in their organizations. Check out these insights below…
Step Aside Managers and VPs
Bill Binch, Global VP of Sales for Marketo, one of the fastest growing SaaS software companies in the US, has completely flipped the grading process on its head—he isn’t even involved! Nor are the line managers. It’s completely on the Reps individually, and as a team, to determine what’s real and what’s not in the pipeline. Reps meet as teams each quarter, without their managers, and are given 12 minutes each to justify their deals to the rest of the team. They have to 'pitch' their commit number for the quarter and defend the deals that make up the forecast. The other Reps can ask anything they want to challenge the deals. Each Rep must be succinct and clear about why their forecast is legitimate. Essentially, they defend their commit.
At the end of the challenge, each of the Reps has to submit how many deals they think the team will close (volume) and how much revenue they project will close in the quarter. Reps can reduce or increase the forecasted amount if they want to. The team leader for the exercise aggregates it and posts it for everybody to see — showing the high estimate, the low estimate, and the average. The individual "bids" are saved and, at the end of the quarter, final bookings are compared to the bids. Whoever is the closest to the dollar bid wins a prize.
This approach is brilliant because every rep wants to win the prize, and consequently they turn in a forecast prediction that’s as accurate as possible. When a Rep meets with a manager, they're typically talking about what is GOING to happen. When they meet in quarterly business reviews with their team, the Reps are looking for what is NOT GOING to happen. It’s a great balance between the data in the CRM system and what the Reps are saying to their Managers. In fact, Bill says the sales forecast generated from the team meetings is often more accurate than the forecast in the CRM system!
Praise in Public & Coach in Private
Like me with pop quizzes, Reps despise being put on the spot. While there is nothing worse for a Rep than losing an opportunity, being chastised in front of a group about why they are losing or why they lost is almost as bad. It’s not productive and is like pouring salt in open wounds. Bart Fanelli, Sr. Director of Global Field Operations for Splunk, a fast-growing technology company, along with his peers, has developed an approach that focuses business reviews on a few major areas:
- Past quarter achievement review [attainment and forecast accuracy]
- Current quarter opportunity metrics [stage in the playbook vs. time in the quarter]
- Forecast for the quarter vs. coverage
- Playbook stage execution review
There is no public “dress down” in this culture—which should not be confused with low accountability or the culture being “soft”. Bart says, “We all know what’s expected of us and when treated with respect in public, then coached in private, the team feels accountable and obligated to perform highly. We all want forecasting to be an unemotional event—and data is at the center of this. Having a good, reliable process, timely data and sales analytics is the scientific part—and only the beginning. The field team has the hard part in applying their “art” to achieve the rest…”
And while doing so, the overarching tone here is “bad news does not get better with age.” The Sales team is encouraged to test their way out of opportunities as soon as possible and, if that can’t be done, the opportunity is (qualified) and worth pursuing. Doing it this way creates a unique phenomenon – pipeline and metrics are highly accurate, along with our forecasts.
According to this Sales Enablement pro, “there’s no shame in losing. But there is shame in taking a long time to lose.”
While these approaches are vastly different, there are a couple common elements – 1) using data as a grounding point and 2) challenging real deal status through conversation. The pressure on a single Rep to perform is great, but with some collaborative coaching from their peers and managers, they should be in a better position to know when to fish or cut bait and to feel good (or not) about forecasts and commits. For both of these organizations, the role of Sales Playbooks is quite significant and I plan to share more of that with you in future posts.