We Missed Our Sales Forecast

Don LinderEveryone in business dreads hearing the words "We missed our sales forecast." We all know that this statement will likely result in a variety of mostly unpleasant consequences.

Forecasting sales accurately isn't easy, so why should we go to the trouble? Let's look at a few of the benefits to accurate sales forecasting:

  • For the sales rep, accurate sales forecasting will allow him/her to focus on what really needs to be done to achieve success. Do they need more customer support or more "qualified leads?"
  • For management, accurate sales forecasting allows effective early planning of the correct resource requirements including ensuring product availability and the correct people and financial resources. For management, one of the most feared forecast deviations is when sales of products that the company has manufactured/stocked under perform forecast and sales of scarce products are much higher than forecast. This type of missed forecast causes a double impact . . . having to clear out obsolete in stock product at fire sale prices while also scrambling to manufacture more of the scarce product so that business isn't lost to competitors who can deliver.

In our experience, failures in sales forecasting are most commonly caused by one (or both) of the following flaws in the forecasting process:

  1. The sales force doesn't believe accurate forecasting is of much value for them personally. As a result, the sales force doesn't worry about the accuracy of the information going into the sales forecast.
  2. The forecasting process is defined by various stages of selling activities, i.e. demonstration completed, proposal submitted, etc.

To be more realistic, a forecasting process needs to track the stages of the customer's buying process, i.e. funding approval, evaluation of options, etc. Once you have established the meaningful steps in the customer's buying process, determined the time lag between steps, and the "drop-off" ratios, it's time to ensure the sales force will buy into the process.

Through our "Managing Sales Success" program, we've come to realize that the two keys to a successful buy-in by the sales force are:

  1. having each sales person develop their own performance plan; and
  2. active, positive coaching of sales people using their own performance plan in a "forward looking" manner.

Those companies and individuals that have committed the effort required for accurate sales forecasting can testify to how much more successful they are with greatly reduced levels of stress.

 

Don Linder, the founder of Major Client Selling, uses structured tools and creative strategies to solve the complex puzzle of selling to big customers. He's the author of "The Seven Deadly Mistakes that Cause You to Lose Large Sales." You can reach Don at don_linder@majorclients.com.

 

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