This post originally appeared here in the salesforce.com blog Quotable.
Sales forecasting is a hot topic. From allocating company resources to communicating expectations to investors, sales forecasts play a key role in maintaining a healthy enterprise. Over the past two years, in conversations with senior sales executives, most have expressed anxiety over their team’s ability to forecast accurately. And in fairness, accurate sales forecasts are important. But after reflecting on many of these conversations, I think most executives don’t have a sales forecasting problem – they have a sales capability problem. Their forecasts aren’t erratic, they are just out of reach. (Learn more about forecasting: Sales Forecasting – Fantasy vs. Reality: How to leverage your data to drive sales success).
As you probably know, sales forecasting can be a very frustrating activity for senior sales executives. They desperately need accurate forecasts to do their jobs, but accurate forecasts are elusive. If you want accurate forecasts, you need to determine if the real issue is forecast accuracy or poor sales capability. If your forecasts are erratic – sometimes low, sometimes high – there are known best practices to remedy that illness (See this Dreamforce presentation). But if your sales team always falls short of its forecast, you have a different issue — an issue that requires more fundamental work on the capability of your sellers and managers. Neither issue is a good one to have, but properly identifying the problem is the first step in solving it.
When I golf, the ball it sometimes goes 20 yards over, sometimes 20 yards short, and the rest of the time 20 yards left or right. I never hit the target because I’m not an accurate golfer. If I always hit the ball 20 yards short, my problem would be that I simply don’t have the strength, technology, or technique to hit the ball correctly. My experience shows me that sales leaders are experiencing a similar scenario in their forecasting. They’re falling short of their forecasts, but it’s not a forecasting problem. Their sales teams are just not able to product at the desired level – the problem is really poor sales performance. If you’re in this situation, there are two things you can do differently to hit your forecasts moving forward.
I recently spoke with a senior sales executive who claimed, “My sales team is terrible at forecasting. They always miss their revenue target by 10%.” I’d say that his team is, in fact, excellent at forecasting. If he just lowered his expectations by 10% every time their forecasts were handed upward, his team’s forecasts would be an astonishing 100% accurate. Problem solved.
But this isn’t an acceptable solution for most sales leaders. Their sales forecasts are typically some combination of expectations from the field and demands from above. Rarely do we encounter a sales executive who is actually empowered to lower their target to meet reality. Sales leaders are expected to alter reality to meet their target. In fact, you could argue that this is why sales leaders exist. So on we move to option 2.
If you’re not one of those lucky golfers who can just find a shorter golf course, you’ll need to improve your ability to reach the green. This brings us to the more challenging task of increasing the absolute capability of your sales force. As I alluded to above, your choices here are to improve the strength, technology, or technique of your team. These elements combine to make the ball go farther.
‘Strength’ in a sales force is a euphemism for getting enough of the best raw talent you can find. If you can hire and retain the best salespeople in your industry, then you’re generally off to a great start. However, this is a longer-term strategy, because you’re not going to upgrade your sales force in the next month, quarter, or even this year. Strengthening a sales team is an ongoing process, and the job is never really complete.
‘Technology’ in sales is pretty self-explanatory. These are all the tools you provide your sales force to drive improvements in efficiency and effectiveness which ultimately lead to productivity. Whether it’s CRM such as Salesforce, call routing software, a call planning app, or a prospecting tool, there is technology out there to make your sales team better at what they do. Identify it, prioritize it, and invest where it makes sense.
‘Technique’ in a sales force is the skill set of your sellers and (perhaps more importantly) their managers. This is often where the most immediate capability improvements can be found. Through investments in training and coaching, you can elevate the game of your sales force in the very near term – literally improving the potency of your sellers today. For instance, if your sellers are trained to better qualify opportunities, you’ll get healthier pipelines and win more deals tomorrow. And if your managers are trained to coach those pipelines, the improvements will be even more dramatic. (See: Is Sales Coaching Dead?)
If you get the right folks, provide them with tools, and invest in their skills, the ball will unavoidably fly higher and farther.