Three Common Sales Forecasting Mistakes Blog Feature
Dan Fisher

By: Dan Fisher on May 19th, 2017

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Three Common Sales Forecasting Mistakes

leadership | sales forecasting

As a sales leader, missing your number sucks. Even worse is delivering the news to your CEO.  Talk about a quick way to kill your credibility!  Does this conversation sound familiar?

Business Owner/CEO: “How are the numbers looking this quarter?”

VP of Sales: “Things are going pretty good, we just need a couple more deals to close out the quarter.”

CEO: “So which is it?”

VP of Sales: “Ah…well….I guess we need a few more deals” 

As you can probably image, this type of conversation doesn’t instill confidence in the CEO. And it certainly doesn’t make the CEO happy knowing they’re going to surprise the board with disappointing results.  In this day and age, if your CEO is put in a position where they’re surprising their board with under performing results, they could be hitting the unemployment line.

As a sales leader, what can you do to ensure your sales forecast is accurate?  Here are three common sales forecasting mistakes and how to avoid them.

Sales Forecasting Mistake #1
Running the Sales Pipeline Review Call

I have been part of more than my fair share of painful sales pipeline review calls. I’m talking about those calls where the sales manager judges each opportunity based on their gut instinct and then they decide-based on how they’re feeling in that particular moment-which deals belongs in or out of the forecast.  I’ve seen managers push deals into a forecast that don’t belong there.  They say “Dan, why do you have this deal at 30%? Put it at 80%”.  This naturally makes their sales forecast look better to upper management but it doesn’t improve the probability of the deal closing and the forecast coming to fruition. It also leaves sales reps wondering “what in the heck just happened?” 

Instead of telling reps what you want to see in their pipeline and changing the probability-to-close percentage with those opportunities, sales leaders should be empowering their reps to self-diagnose their sales pipeline and prescribe specific behaviors and buyer actions that will advance their opportunities down the funnel.  Here are a few examples to consider: 

  • For a sales pipeline lacking opportunities at the top of the funnel, make sure your reps know who they should be calling on and how they should be approaching those prospects. It is likely you may need to prescribe more prospecting activity if the top of the funnel is weak.
  • Before prescribing solutions be sure to identify and agree on with your rep the root cause issue behind the bottlenecks preventing opportunities from progressing. Once the root-cause issue is identified and agreed upon, prescribe specific steps and activities that the rep should execute. Be sure you have a clearly defined and quantifiable way for measuring progress and be sure to establish a timeline and a follow up plan on these activities. For more information you can read my blog, how to coach sales reps to their sales pipeline. 

Sales Forecasting Mistake # 2
Tracking Activity Instead of Measuring Pipeline Progression (& Failure to Align with Buyer Journey)

Most staffing firms don’t have a clearly defined sales process and even those who do often fail to properly define the stages. The illustration below is an example of a poorly designed sales process.

bullhorn sales process.png

The reason the sales process illustration above is poorly designed is because all of the steps or stages are tied to the things the sales rep or the recruiter does. The illustration is nothing more than a listing of the activities the sales rep or recruiter has or will complete.  This is the most common sales forecasting and sales management mistake. They simply track activity and tell their reps or recruiters “do more activity” with the belief that more (of this activity) will increase the chances of the deal closing.  Yet increasing the activity level does nothing to increase the likelihood of the deal closing.  If you were to base your sales forecast off of this sales process it would be way off the mark.

Meeting with a new prospect doesn’t mean they’re ready to buy. Presenting a candidate to a client also doesn’t mean they’re ready to buy. Sales forecasting needs to be tightly tied to the buyer and the specific steps or actions they must complete for the sale to close.  These steps should be observable and quantifiable.  

For example, what close probability percentage would you assign to the following opportunities? 

  • You, along with 12 other providers received a request from a prospect to respond to an RFP to be a supplier to a $10M staffing program.  You are submitting your response to procurement.
  • You have submitted six candidates to your client a week ago and you are waiting on feedback.
  • Your prospect is currently struggling with a project and is looking for help to get the project back on track and completed on time. You have met with the project leader and her team several times to discuss the project goals and the deliverables they need delivered (by a team of consultants).  They have asked you for a proposal. 

If you were to apply a forecasting methodology that focuses exclusively on activity you would find that all three of these would have the same close probability.  But if you tie buyer behavior and the actions they complete to the forecasting methodology however you would have very different close probabilities associated with each.

Sales Forecasting Mistake #3
Lack of CRM/ATS Adoption

Staffing companies who struggle with sales forecasting also struggle with CRM/ATS adoption. The two really go hand in hand.  For many sales reps, once they enter a job order into their CRM the mindset is they’re “throwing the job order over the wall” for the recruiters to work on.  For many there is an unconscious belief that it is now up to the recruiters to fill the order. From that point forward there is very little to no documentation of the discussions that take place including the decisions that are made between the sales rep and the customer (why they’re passing on a candidate, why they want to see more candidates, etc.).   There is no documentation or transparency because many sales people believe if they document notes and next steps in the system they will be put under a microscope and the quality of their work will be scrutinized not only by their manager but by their peers. 

The real root cause of the issue here is a management issue.  What I have seen time and time again is either A.) the sales manager doesn't hold team members accountable to CRM/ATS documentation because that is "micro managing" (B.S.) or B.) when the sales leader and/or business owner don’t understand the true value of a CRM including the sales process and how to measure and track the health and velocity of a sales pipeline, the CRM becomes a dumping ground. The reporting pulled from the CRM system is only reporting on lagging indicators not leading indicators.  Lagging indicators are things that are happening late in the deal where the rep or manager no longer has the opportunity to influence the outcome. Read my blog, why focusing on closest to the money is a waste of time for a better understanding of why sales leaders should really be focused on early stage opportunities and not "closest to the money" stage opportunities.

A properly configured CRM system (assuming you have one) eliminates most of the work associated with producing a sales forecast.  Dashboards can be created to show your deals by stage and probability to close.  Buyer behavior including the steps and actions they have committed to and still need to complete serve as the milestones and basis for the forecast, not the sales manager or sales rep's “gut instinct.”   The sales manager can then provide the sales rep with pipeline specific sales coaching.  This helps eliminate the excuse, “I haven’t updated my opportunity in the system yet” from your reps. 

How do you go about sales forecasting in  your staffing firm? What sales forecasting mistakes have you learned from? What do you find most challenging about sales forecasting?  Let's start a discussion in the comments section below.

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About Dan Fisher

Dan Fisher is founder and owner of Menemsha Group, a provider of sales enablement solutions dedicated to helping IT staffing firms improve win rates, shorten their sales cycle, and increase revenue per sales rep. Since launching Menemsha Group in 2008, Dan has consulted with over 200 IT staffing firms and has invested over 5000 hours coaching IT staffing sales reps. He’s authored is his own proprietary sales methodology and has previously spoken at Staffing World, TechServe Alliance and Bullhorn Live 2012. Prior to launching Menemsha Group, Dan spent 16 years in the IT industry running local, regional and national sales teams. Dan worked for Kelly Services, Oracle Corporation and Alliance Consulting. Dan currently resides in Boston, Ma.

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