Fixing The Sales Forecast

1
Fixing the Sales Forecast
SmartFunnel Sales Webinar Series – June 4, 2014
Copyright © 2014 SmartFunnel.com
Peter R. Fillmore
Founder & CEO, SmartFunnel.com

Sales Forecasting - Agenda
Copyright © 2014 SmartFunnel.com 2
Forecasting
Buyer Intentions
New Model
Buyer
Intentions
The
Causes
The
Problem

Context – B2B Sales Forecast
• Deal size $20K+ and “Buy Committee”
• Examples:
A. Mobile Communications – Industrial
• 2008 Presentation to IBF
B. Enterprise Software
C. Factory Automation
D. Hi-Speed Internet – Hotels

The Situation
Source: A market research firm – Published 2014
Pipeline
Stage
Probability
%
Identify 20%
Qualify 40%
Propose 50%
Approve 80%
Close 100%
Generic Sales Pipeline:
Project Planning?

The Situation
Opportunity
List
Value
Deal A $50K
” B $50K
” C $50K
” D $50K
Generic legacy – Forecasting Pipeline:
Probability
%
Weighted
20% $10K
40% $20K
50% $25K
80% $40K
Gap

The Situation
Opportunity
List
Value
Deal A $50K
” B $50K
” C $50K
” D $50K
Generic legacy – Forecasting Pipeline:
Probability
%
Weighted $
Sept
$
Oct
$
Nov
20% $10K $10K
40% $20K $20K
50% $25K $25K
80% $40K $40K
$40K $25K $30K
Gap

• “% Probability” is a dangerous concept
– The data is 100% internal – “Confidence…?”
– It starts too high
• Q: “What is your confidence level?”
• A: “Looks good – 40% confidence level”
– Always goes up
– Never goes down …(until failure)
The Causes – Part 1

• “Proposal” Stage looks like progress, but is NOT
– Buyers often ask “Can you give me a Proposal?”
– Management outside sales often think:
• More proposals = more business
– CRM systems tend to reward a Proposal submission
as “completion of all previous stages”
• Linear and incomplete thinking – causes inflation

• “Pipeline” Spreadsheet evolves to become the
“mother of all spreadsheets”
• Organizational silos emerge
Sales
Forecasting
SpreadsheetsBad data

• Wait!! …it gets worse! The Silos exist inside and
outside the organization
– Forecast fixers don’t work on Sales Process
– Sales fixers don’t work on Forecast Process

Problem Summary
• Sales people rushing to create more proposals!
• Project Planning stage (& Sales coaching)
overlooked
• Forecasts usually inflated by 100%to 200%
• Resources in sales and tech support drained
• Resource turnover in Sales and Sales
Management

Customer Intentions
(aka Buyer Intentions)

Like Mars and Venus, two different planets!
Customer Intentions
“% Probability” Customer Intentions

Buyer intentions can be measured –
1. People buy to solve a problem
Customer Intentions

Ask different questions – re the 4
“decision elements”:
1. Problems to be solved?
2. Payback expected?
3. Timing elements & time drivers?
4. Proposal fit?
Customer Intentions

Customer – Inside view
Mission –
Cost...(Gaps)
Mission –
Cost…(Gaps)
Mission –
Cost…(Gaps)
• Decision elements are always in play
• Assess decision maturity (“Progress”) of the 4 elements

New Forecasting Model
Customer Intentions are based on
4 decision elements

Pro-active
– Seller working with
buyer on Project Plan
… ask deeper questions
Measuring Intentions
Passive
– Buyer working on
Project Plan
… ask questions

Progress scoring … evolving “Project Plan”:
Measuring Intentions
Decision
Elements
Indicators – Economic buyer view Prog %
Guide
Stage
Score
Qualify 0%
Problems Quantity, diversity, support …written? 0%-15%
Paybacks Multiple, hard + soft metrics…written? 0%-15%
Timing Multiple drivers / allies…written? 0%-15%
Proposal Fit Relevance, Sales included…written? 0%-15%
Verbal 20%

Progress scoring … evolving “Project Plan”:
Forecasting Intentions
Decision
Elements
Indicators – Economic buyer view Prog %
Guide Score
Qualify 0%
Problems Quantity, diversity, support …written? 0%-15% 10%
Paybacks Multiple, hard + soft metrics…written? 0%-15% 10%
Timing Multiple drivers / allies…written? 0%-15% 0%
Proposal Fit Relevance, Sales included…written? 0%-15% 10%
Verbal 20%
Forecast
“Opportunity A” Value - Total = $100K $100K 30% $30K

Forecast Foundations
If you wish to see the horizon, ride a tall horse.
The tallest horse has:
• Foundation process to measure
buyer intentions, with
• Pro-active engagement in the
Project Plan

• Forecast problems and selling
problems have the same root cause
• …and the solution involves fixing the
foundation of the sales process
Surprising Discovery

Review our Webinar “Speeding Up Sales”
Foundation thinking
Foundation: Work with the 4 elements of Customer Intentions
Passive ask
Forecast better – close to
100%
Pro-active
engage
Use business resources better
Collaboration
Selling
Sell more & faster
Coach better

• “% Progress” starts at 0%
• Estimating errors trend toward:
– Smaller errors
– Clarity of errors grows with coaching
– Deal list errors cancel each other
– % Progress can go up – or down!
• Forecast improves
• Sales results improve
So what’s new?

The New Model
Opportunity
List
Value
Deal A $100K
” B $100K
” C $100K
…etc
Forecasting Pipeline Table:
Intentions
P P T P
Prog % Prog
$
$
Sept
$
Oct
$
Nov
45% $45K $45K
30% $30K $30K
35% $35K $35K
$30K $45K $35K
Gap is gone!

New KPI – Leading indicator
Funnel Value - 6 Mo. Trend
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
1 2 3 4 5 6
Current Month = 6
Unw eighted Funn
Funn Value
Sales
Sum of Prog $ = “Funnel Value”

• “Stretch Targets” – CEO and
BoD pressures
– Any smaller numbers viewed as
escape hatch…including an
accurate forecast
• Sales Managers not coaching
• Sales Pros hate “Sign dates”
• Whole chain of command
uses % Probability… e.g. CFO
Entrenched culture issues
CEO
Sales
Sales VP
Staff
CFO

• Strategy session on your forecasting history
and patterns
• Identify your own industry and company
“Customer decision elements”
• Review process and culture – engage CEO
• Design new forecasting process – don’t ask
about % Probability, design and build
customer intentions, and track % Progress
metrics there, where it counts
• Use SmartFunnel as sales front end to CRM
Summary – Action Items

April 2, 2014
Speeding up Sales
May 7, 2014
The Odd Couple:
Sales & the CEO
June 4, 2014
Webinars – A Trilogy
Any
topic
repeat
requests?

Thank you
June 4, 2014
Peter Fillmore
peterf@smartfunnel.com
www.smartfunnel.com

Fixing The Sales Forecast

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