The JF Guest Author Spot
Despite tons of money spent on CRM software, and hours of time dedicated to business pipeline reviews, the forecast is still not accurate. Why?
The fundamental flaw in all forecasting is that we are asking sales people to report on their own performance. It's a bit like the US Congress asking pro baseball players if they use steroids. If we ask salespeople to report that they are failing, we are kidding ourselves.
Level 1 Fix
Most organizations and sales managers ask for a forecast and apply a lot of pressure in the process. For example, a Sales VP told me the other day that his people could not properly project their business. I asked what he had tried to improve forecast accuracy. He said, "Last December I asked them all to commit to what they were going to close in the following 90 days." I asked if that approach worked and he said, "No. They didn't make the number they had committed to and they were THEIR numbers!" I asked him what they said when he debriefed their opportunities and walked them through a structured analysis of each deal in progress. He said, "I don't do that."
Please stop and think about that for a moment.
If you hired a golf coach who said, "Steve, the problem with your game is that the ball doesn't go in the hole early enough and often enough." What would you think of that golf coach?
You can't coach based on OUTCOMES. If you want to change an outcome you have to address the underlying behaviors. When we beat them up with their own numbers, we aren't adding any value and we are probably damaging their self-esteem. This results in subjective and inaccurate forecasts.
Level 2 Fix
So then we try a 'uniform milestone' grading scheme in an attempt to remove the subjectivity by establishing clear guidelines for what it means to be "at 80%." This is better, but still more subjective than objective. These approaches fail because they try to solve the problem with tons of paperwork or lots of annoying buttons in a CRM system. The problem is that the reps gather all the information and then PUT IT IN A FILE OR IN A CRM SYSTEM. They look at it as busy work and they do just what it takes to keep their boss off their backs..
Further, if you've ever been through an account or opportunity review as a rep you face a manager who keeps asking questions until he find one you didn't ask. It's reduced to a game of "gotcha." Again, very little learning is accomplished and the rep's self esteem is bruised.
State of the Art
The state of the art is to use an Ultimate Contract. It is an agreement between the salesperson and the customer that outlines all of the key qualification conversations and the due diligence process that will lead to the ultimate 'yes' or 'no.' The purpose of this document is to make sure you don't develop a proposal unless you are certain you have captured the full set of requirements and that they are seriously consider buying from you.
"The greatest enemy of communication is the illusion of it." - Pierre Martineau.
The Ultimate Contract requires the rep to ask the tough questions. (Please note, the real problem is that reps don't ask the tough questions! We need to help them learn how to do this.) The verbal agreement is then reduced to writing and SHARED WITH THE CUSTOMER to ensure clarity. Since you send it to the customer, it serves as a behavior trap that you set for yourself, to make sure you ask all of the tough questions.
Since the customer had to see it and agree to it, it adds the next level of accuracy to the forecast. Subjectivity is removed by verifying the conversations with the customer. The account review becomes an integral part of the sales cycle.
How to do it
The manner in which you get to those agreements - tactically - conversationally - is the difference between being pushy and mutual agreement.
We use the term 'contract' to emphasize that sales people on the average need to recognize that it is a two-sided agreement and that both parties should have an equal degree of commitment. Contrast that with a proposal - in which the buyer's only commitment is to allow the proposal to enter their in-box. When you call to follow up, they say, "I haven't had a chance to read it yet."
It's in both parties best interest that you reach an engaged agreement or pull the plug on a process that is going nowhere.
As with any sales tactic, if well-executed, it works well. If not, it comes across as pushy.
Don't toss out the CRM system
By-the-way, you can still use the CRM system. Just have the salespeople attach the Ultimate Contract to opportunity. Ask them to do less paperwork, then insist they do the minimum essential. The Ultimate Contract will give you a clear window into the real status of every opportunity and into the skills set of the rep who produced it.
I humbly suggest that a verified, mutual agreement is central to the original question about accurate forecasting.
An engineer by background, Steve Kraner is now the CEO of Sandler Sales Institute, a company that helps high tech executives embrace and develop their sales strategies.
Steve confesses that he disdained the sales side of business early in his career. A mistake, he says, that's often repeated by 'techie' founders and CEOs. Steve admits that he had to learn to love sales - and says that so do high tech leaders if they want to win. According to Steve, many technology leaders don't like selling, so they hire salespeople instead of embracing and leading the sales process. The result, he says, "is a technology company with as many sales systems as salespeople: a company that cannot forecast, team sell or scale." In sum, a company that's going to lose.
You can read more about Steve here
Today's News: The Queen of Cold calling, aka Wendy Weiss, has made another royal proclamation:
What would happen to your business if you were able to double the number of qualified, prospects you are able to reach?
How would it affect your bottom line if you met with and/or had comprehensive telephone conversations with twice the number of qualified, decision-makers?
How would it feel to have qualified, decision-makers eager, willing and delighted to meet with you?
Join Wendy Weiss, The Queen of Cold Calling, as she discusses cold calling and how she helps entrepreneurs, business owners and sales professionals - just like you - prospect fearlessly and schedule more new business appointments in less time.
The Cold Calling Free Preview Call is on September 18, 2008 and details can be found by clicking the banner below.
Social Media Today is enjoying a birthday today, so to Robin and the gang - best wishes!
Tomorrow: Question: Why do potentially good salespeople fail? Answer: Bad management.
Link to original post