May 26th, 2016

Improve Sales Forecasting with a Consistent Sales Process

sales-forecasting-accuracy

There are two things that unite virtually every sales organization: 1) the desire to improve sales performance and 2) to achieve results as quickly as possible. In this series of posts, I discuss three ways in which the sales process can be used as a blueprint for rapid behavior change that drives better results. The first post in the series focused on common language; the second post focused on consistency provided by the sales process; and this final post addresses forecast accuracy.

Improved Sales Forecasting Accuracy

For sales forecasts to be meaningful, they must be credible and accurate. Yet, on average, “24% of all ‘sure-thing’ sales deals — current customer relationship management (CRM) opportunities deemed 80% or more likely to close in the current month — eventually slip out of the real-time forecast into subsequent selling windows … or actually don’t ever close at all.” This sobering statistic comes from research reported by the Aberdeen Group in June 2015.

The time to discover unexpected deal slippage or loss is certainly not at the end of the forecasting period, be it quarterly or monthly. It is important to pinpoint problems as quickly as possible to allow for course corrections. This takes a dynamic sales process that incorporates a considered series of stages, activities, verifiable outcomes, and high-impact coaching questions. The process should be flexible and scalable, with room in the execution for good judgement by sales professionals.

Companies with a dynamic sales process significantly outperform their peers in quota attainment and plan attainment. According to Harvard Business Review research in 2015, there is an 18% difference in revenue growth between companies that have defined a sales process and companies that haven’t. Critical to success is the time spent by managers to coach their reps. Managers, who coach their reps on their pipelines for three hours per rep per month, achieve 11% higher revenue.

In order to improve sales forecasting accuracy, having a sales process is not enough. Your sales managers must use it to coach their sales teams and improve the quality of the dialogue by focusing on moving deals through the pipeline and not on forecasting.

In the course of my work, I spend a lot of time working with clients on their sales processes, whether a simple fine-tuning is required or building them from scratch. Too often, we have seen sales organizations stumble because they fail to recognize the importance of their sales managers as force multipliers and do not empower or enable them to become coaches. This leads to little change in behavior and incremental impact on business results. That’s why verifiable outcomes are identified as unambiguous leading indicators of movement through the sales cycle. This allows sales managers to track and coach to these outcomes, either spotting red flags or building confidence in forecasts.

An additional benefit of this approach is the influence that verifiable outcomes have in screening and assessing opportunities. Just knowing what the expected outcomes will be provides the guidance to be more rigorous in terms of qualifying or discarding leads. The forecast becomes more reliable because iffy opportunities that could never materialize disappear, leaving only those with true potential.

Having a dynamic and well-crafted sales process forces an honest look at opportunities, changing the nature of conversations between sales professionals and their managers. “I’m not pursuing this prospect because he/she is not ready to buy and hasn’t allocated any budget.” “There isn’t an immediate need in the prospect’s organizations, and we cannot differentiate ourselves from competitors.”

A sales process that encourages such honest appraisals leads to better communication, greater consistency, and shorter, or at least contained, sales cycles. Leading companies with such sales processes have experienced significant change in terms of cycle reduction, the ability of their sales professionals to articulate value, and increased sales forecasting accuracy. We know this from what our clients tell us and from the research, including our own surveys and those of the Aberdeen Group and the Harvard Business Review.

The positive impact of using the sales process as a blueprint for rapid behavior change is real and measurable.

sales-forecasting-accuracy

About The Author: Stephan Hagelauer

Stephan is Vice President of Client Success at Richardson. Stephan’s areas of interest are strategy development and execution. He has more than 15 years of experience developing strategic plans and implementing transformative initiatives for Fortune 1000 and mid-size organizations. Stephan has extensive experience managing strategic initiatives involving: front-end analysis, data driven analysis, process improvement, success metrics, and change sustainment. His focus is on achieving business objectives by successfully deploying strategies that materially impact an organization business’ objectives.

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Stephan Hagelauer

6 Responses to “Improve Sales Forecasting with a Consistent Sales Process”

  1. May 26, 2016 at 11:26 am, Richard J Orlando said:

    Enjoyed reading your point about the importance of the sales manager rep honest discussion about the pipeline, or, as I term the “moment of truth”. Screening and assessing opportunities is critical to success for committing (or saving) expensive presales resources. I also believe this process measures the effectiveness of the qualification process in the early stage customer sales meetings. Why is it in the forecast?

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  2. August 23, 2016 at 4:54 am, Kiyokomaki said:

    Hi very good information thanks for sharing.

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  3. August 24, 2016 at 6:08 am, josephjack said:

    This information is very useful… thanks for sharing

    [REPLY]

    • August 26, 2016 at 2:30 am, Kiyokomaki said:

      Thank You!

      [REPLY]

      • September 19, 2016 at 8:13 am, williamjoshua said:

        Every organization likes to have a Consistent Sales Engine. The existing Sales Engine is tweaked incrementally to produce a Consistent Sales Engine.

        [REPLY]

  4. August 31, 2016 at 4:54 am, Kiyokomaki said:

    Every organization likes to have a Consistent Sales Engine. The existing Sales Engine is tweaked incrementally to produce a Consistent Sales Engine.

    [REPLY]

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