Ok, I admit, this is a bit of a rant…I HATE inaccurate sales forecasts..I mean really, it’s not that tough to produce an accurate sales forecast yet few sales people rate this as high on their list of things to do.
I think it’s one of the most important things a sales person has to do, so I guess we can see where the conflict comes in.
So yes, I hate inaccurate sales forecasts with a passion…always have done and the chances are that I always will.
Call it the control freak in me or simply put it down to the feeling I get when I look at something and know I can neither trust what I hear nor what I see…and that most likely the sales person has prepared this forecast as a rushed administration exercise as opposed to a thoughtful and considered document of record on which the rest of the business will make some pretty important decisions.
Maybe it’s because an inaccurate sales forecast is the ultimate in bad/poor judgement.
Have I given you enough reasons to dislike the inaccurate sales forecast as much as I do?
Here’s how to get rid of this issue in your business…methods I’ve used when looking after a variety of sales teams through their turnaround
It starts with the sales manager – explain to your sales team what a sales forecast really is. It’s a document or record, it needs to be constructed with the highest level of detail. What does this mean? Set out the criteria of what is acceptable for an accurate sales forecast, this alone will stymie a lot of the inaccuracies once you ask the sales person to complete such forecast details as contact details, email, mobile, direct dial, delivery address, delivery date, purchase order date, quantity, quality, decision maker/signatory, special conditions, ancillary contacts, current order stage, hurdles to potential sign off
Have a standard process for the sales person to follow that’s mapped into and is part of the sales funnel and sales pipeline management – a stepped process that naturally leads to an inclusion in to the sales forecast or not – this means setting staged criteria that must be met before the sales prospect can be moved along the sales pipeline.
Make sure the checks and balances are ongoing – if a sales person constantly presents inaccurate sales forecasts it is an indicator that things are probably not as they should be further up the sales pipeline and this could be costing your business sales. Perhaps it’s their inability to properly and fully qualify sales leads as they move through the sales pipeline, maybe it’s that they aren’t fully in contact with their sales leads and prospects, maybe they just don’t care – either way, inaccurate sales forecasts need to be explored.
Use sales forecast accuracy as a KPI within the business – that’s the gap between what was forecast and what actually came in as sales. Let’s make this clear – it’s not a revenue calculation so let’s imagine the sales person forecast 100k that month and brings in 120k. All’s good if that’s and exact match on 100k plus and extra 20k, although the manager should dig to find out why the extra 20k wasn’t forecast. It’s not all good if the 120k consisted of only 50k from the original forecast – since that’s just an indicator that the sales person is out of control in some way or form – maybe that they hate admin, maybe that they don’t know their pipeline very well at all – either way, it’s bad news for the business and anyone who is involved in business planning.
As well as being a key business performance tool, a sales forecast is a document of record and a document of good judgement. Failure to report this accurately, with meaning and relevance is an indicator of other negative factors at play further up the sales pipeline.
Having an accurate sales forecast is vital for any sales lead organisation.
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