As soon as we know our sales target for the year, most of us start to think about how we will achieve it. “Which contracts are likely to close?” “Which look risky?” and “Do I have a sales process to help me?”
We feel good about sales forecasts when they look achievable but we worry if they look challenging. Quite often we ‘play safe’ and forecast low to avoid disappointment. That might sound prudent but it can also be the cause of problems. Other operational decisions might be based on our estimates. There is no substitute for accurate forecasting.
While running some sales coaching programmes recently, I noticed some people have real concerns about the sales numbers they have been given. There is special worry among those who are selling into the public sector, because they fear heavy cuts in public spending later this year. In the private sector, many feel costs have already been trimmed to the bone and leaders expect a strong drive to increase sales and raise performance. This is certainly supported by findings in the new 2010 Miller Heiman Sales Best Practices Study.
Sales people are under pressure to perform both from their customers and from within. It has never been more important to qualify the sales you want to pursue.
- Identify the real opportunities
- Qualify them properly
- Cover the bases in more detail
- Fully understand your customers’ buying process.
- Use Valid Business Reasons to differentiate your sales approach and to convince decision makers to see you.
The Miller Heiman 2010 study suggests accurate sales targeting is essential to create accurate sales forecasts. Because sales forecasts that are too high or too low, often lead to the misuse of resources and poor investment.
It’s not just about how you forecast sales. It’s about sales strategy. That’s why in our sales training programmes, we work with the participants to make sure they understand their customers’ business first. Whether you’re forecasting on profit, volume, billable hours etc – it’s accuracy that counts. Get it right and help leaders make critical decisions. Get it wrong and it affects everyone.
Now I would like to hear your thoughts about your approach to sales forecasts.
Are you given a number from elsewhere in your organisation?
Do your customers have a better a view of how much business they are likely to do with you?
What makes a sales forecast accurate?
Please add your comments here.
Stephen Newman
Tags: forecasts, public sector, sales process
I have been actively involved in sales for over twenty years from field sales through to Managing Director and the process of constructing and delivering targets has always been one fraught with issues… Sales people need to be fully engaged in the process and to see how the targets have been set and what criteria the setters have used in order to arrive at the numbers.
The setting of targets has to be tied to the business needs but should not seek to alienate the sales team or, in some cases, seek to provide safe harbour for the sales team by being too low (I have seen this happen).
Unless the company has a thorough understanding of its customer and their requirements then the setting of the sales targets becomes one of survival over strategy. The process should be involving, engaging and lead to achievable results that are directly related to the company’s needs… there is nothing more disheartening than a company that has to constantly revise its actual figures in comparison to the numbers so bullishly delivered at the beginning of the financial year.
My advice (for what it’s worth) consult, consider, converse, create and confirm… then, and only then, can you publish the numbers and obtain buy-in from all concerned.
This is always a tricky one…if you set forecasts that are unrealistic…it will actually be detrimental to the sales process…if you set them too low…people can become complacent and your pipeline doesn’t grow….getting it right is never easy particularly now when noone know’s the impact of ‘what happens next’ in the economy..My instinct is look at what was achieved last year, know what your break even point is to keep the business going this year and then work out where the revenue can come from over the next 12 months and constantly review and change – you may have to lay people off!….there needs to be a lot of evidence to justify a realistic forecast.