Is Sales Forecasting Worth the Effort?

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  1

  kova5

  11/23/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  It really depends on the industry you are in, how you approach the forecasting exercise and the tools you use. Yes, forecasts will always have a margin of error, but if you use the right tools and forecast basis (not just thumbsucks from the sales staff), you can refine your forecasts to be useful. Certainly, in those industries where forecasts, to a large degree, can be based on past history, then a foreacasting tool that offers a variety of forecasting algorithms, error tracking and the option for manual manipulation is invaluable for production planning and material replenishment, particularly where lead times are long, or trends and seasonality play a role. When integrated with the rest of the business system (in ERP software such as SYSPRO, for example) forecasting becomes an extremely powerful tool for gaining efficiencies in a business.

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  2

  Mike Maisel

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  In the fictional scenario you describe above, it is clearly not worth the effort. It is just playing with numbers to kill time. However, if forecasting is used to teach, coach and drive pipeline/deal management from the bottom up, then forecasting can be an excellent way proactively manage sales and other resources.
  
  At the rep level, managers can ensure adequate prospecting is being done do introduce sales into the pipeline as well as to see that sales are being managed through that pipeline.
  
  Then, this bubbles up the chain so that obstacles can be cleared/resources applied through the process as needed.

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  3

  ndlicht1

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  It ultimately ends up being whatever the CEO wants it to be so why bother.
  
  I think a better solution may be to expect a top 10 forecast of sorts that goes like this
  
  1. Stage- where you are at
  2. Why its worthwhile- justify and explain
  3. Close status- explain exactly where you are in contacts, approvals, budget allocation and with FACT, not fiction how you know that and how you know the expected close date, purchase date.
  
  Thats it - simple. Do this monthly and hold sales people accountable for what they said.
  
  Thats a forecasting process that can have credibility and get you respected upstairs as a great sale manager.
  
  Neil licht ndlicht@verizon.net

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  4

  stevem99

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  You certainly captured the typical monthly process many firms go thru. In the end, the innocent get fired and new sales people come in to start the whole cycle over again.
  
  The problem is that even though it never generates an accurate forecast, the process of reviewing every account has to be done. I guess this is an example where going thru the process is more important than the numerical results.
  
  Steve (www.spmsolutions.net)
  

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  5

  WhenHerbSpeaks

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  How often is Al Roker correct?
  End of story.

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  6

  mohamed taha

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  let us take it differently, forecasting is like marriage, in most of the cases it must be done
  as much as u study the conditions and be realistic, the chance of success will be great

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  7

  Brian Rock

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Geoffrey's scenario is eerily familiar.
  
  Back in my ad agency days I remember being asked to forecast client billings. Somewhat naively I submitted the figures that I actually thought that the client would spend, based on historical data and what clients told me about their forward planning.
  
  Sure enough management pressured me to revise the numbers upwards to make the forecasts look better, which I did. The inevitable outcome: months later I had to answer to management about why I failed to deliver on "my" forecasts.

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  8

  sschiffner

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  If your CEO and upper managment are CGA's or CPA's you are in for a foresasting nightmare that usually is only useful to the accountants. Too often companies forget that they are sales organizations, not accounting firms. Yes I agree that you do need to have sales plans and growth forcasts but it can't be at the expense of generating sales.

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  9

  e1wood

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  I like to tell my Manager that I've created a 'goal', not a forecast....as the forecast by Freddie Mac changes monthly.

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  10

  dlaszig

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Trend analysis when combined with forecasts can make the process more real-world, and be a useful way of setting up milestones for sales people based on historic performance and personal best.

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  11

  JoshReeve

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Geoff, great post.
  
  But I think some of the comments are confusing sales reporting and forecasting. Identifying prospects and how hot or cold they are isn't forecasting.
  
  Geoff, some forecasting is almost essential, for instance as a manufacturing example as above, the head of manufacturing knows that he needs to keep busy, so he has to set a minimum production, on the counter side, sales needs to meet that production with sales at a minimum to cover that production and overheads. (If it were only that simple!)
  
  The message I get from your post is that Forecasting doesn't work, when you have a million minions all doing their own forecasting. How can you do it better?
  
  One forecast, one team across the group working on it.

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  12

  jimjarvis

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  It is true that you can use numerical forecasting, based on the last few months results. But is THAT accurate enough? What if you have seasonal cyclic behaviors, or an inherently long sales cycle? Pretty soon, you're making stuff up, as you try to guess whether this year will be like last.
  
  It is true that individual sales forecasts will be wrong. The statistics of small numbers guarantee that. Unfortunately, we don't know in which direction, or by how much they'll be wrong. In the aggregate, however, the noise should even out across territories, regions, and industries, such that something not "too noisy" results. So long as sales management doesn't fudge the data.
  
  The mfg mgr's numerically based forecasts, compared against Marketing's external forces derived estimates, compared against the sales rollup, SHOULD present senior management with a sphere of uncertainty which is smaller than any single source could produce.
  
  The key to an effective process is to resist the urge to fiddle with the bottoms up forecasts, until you get to the point where you can compare the results of the three basic techniques. At that point, you have the opportunity for building an operating consensus around team derived assumptions and resource allocations.
  
  It'll still be wrong, but the organization should be better prepared to sense errors quickly, and respond to them, as reality unfolds.
  
  OH... and in the shameless commerce department, consider hiring an executive coach, experienced at leading Strategic Planning, to help you work the process.
  
  Jim Jarvis, President
  www.themorsegroup.net

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  13

  Coach-Lee-428

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Forecasting from my perspective is setting new goals based upon past performance. To set a 5% increase across the board fails to recognize those customers where they might be 0% growth or those companies where they might be 10% growth. Of course to be as accurate as possible given the amount of change requires a lot of work on behalf of the salesperson and open lines of communication so that unrealistic goals are not set. By the way to Roker's comment, weather can only be predicted for up to 6 hours. I believe sales forecasts can go beyond that.
  
  Without specific written goals, then any and all sales behavior is accepted and no one is held accountable.

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  14

  starstring

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Forecasting could work if all parties involved from the rep level to the CEO all sit together, honestly put all the cards on the table and have clear expectations of what numbers are necessary for the growth of the company. The problem comes in when everyone is trying to cover their own butt and are not playing together as a team. The 80/20 rule takes some work to apply within an organization.

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  15

  connoblehill

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Don't ask people whose jobs depend on the activity to forecast. Don't ask sales or marketing people.
  Probably a project team from operations, or at least from a less optimistic more practical group. Infact it might be better to get a spread of forecasts and apply some statistics based on historical accurracy of forecasters.

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  16

  aderubeis1

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Forecasting is a dirty word to inexperienced reps but critical for modern companies to maintain a competitive edge. More than simply predicting outcomes, it enables companies to manage cash flow, increase efficiency of supply chain, JIT/order fulfillment, maximizes the ROI of special products or packs and reduces inventory.
  I teach forecasting and its associated pros and cons by first stating the three most basic methods, trend analysis, expert judgment and alternative futures. All three must be given every consideration utilizing and incorporating the software of the day. Also, forecasts should never be formulated based on a C-level wish list as an egregious error could easily bankrupt the company.
  
  Once these tenets are mastered and its conclusions justified, the secret to further enhancement of forecast accuracy is to partner with the trade?their feedback and inherent partnership is absolutely critical but, all too frequently overlooked. Upon completion, senior management must honor the numbers and the forecaster must take ownership and live with the real-world consequences.
  Anthony De Rubeis
  www.linkedin.com/in/tonydforte

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  17

  inside.track@...

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Forecasting is a tool that puts a salesperson into a mode of higher level account
  planning, scrutinizing, and tactical development they may not otherwise take the
  time to do. Yes, much is blue sky, but it does uncover a wealth of information for
  a manager in how the salesperson approaches their territory and what their real
  level of customer intelligence/relationship is on an account by account basis. Its a
  tool worth preserving if it is managed correctly.

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  18

  russ@...

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  At first I wanted to argue with the author, but think about this:
  
  What happens in your company when a sales manager or rep turns in a projection that shows a decline or flat numbers?
  
  I think most companies would say nasty things about their reps, instead of investigating the causes, and rewrite the projections to tell a better story.

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  19

  rdefazio

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  I am not a salesman, just a lowly computer programmer. Several years ago I was asked to program a stockmarket simulator in which a pseudo-stock would be subjected to trading by participants who would either bet for or against the underlying value of the stock. The "stock" in this case was not stock in a company, but rather it was the representation of a marketing idea. In other words, people were voting with their chips on whether or not a marketing plan devised by the marketing department of the company would actually work. They didn't have to defend their choices; they simply exercised their option to buy and sell in the internal market created for the company. The person who ended up with the most "money" won a prize, but the real value of the exercise was to determine what the consensus of the company's market participants was about the marketing plan.
  
  What was unique about this was that people from sales, research, secretarial, customer service, shipping, administration...in short everyone were able to use their knowledge of how the company worked and their interaction with customers to determine whether or not everyone else in the company would respond the same way they did.
  
  The result was that the marketing department's idea was a big loser.
  
  Since then, I have found that much larger companies use this stockmarket approach as a means of gauging what the sales future of the company might be, relying less on the limited views of handpicked marketing people. In one instance, I read that a large computer manufacturing company found that the stockmarket approach was significantly more accurate in predicting outcomes that its own highly paid marketing department.
  
  In my case, the technical work I did was minimal. I simply suggested that they contact a number of stockmarket simulation websites to set up an agreement to host the "trading" sessions.
  
  The problem with sales forecasting is that sales depend on highly parochial decisions on the part of very specific customers. Forecasting, on the other hand, relies on the notion that decisionmaking follows trends and patterns that are commonly replicated across broad spectrums of clients and prospects. This does not comport with real life, so ultimately, managers ask sales people to come up with numbers. VPs then massage the managers' numbers, and CEOs manage the VPs' numbers. Doing things that way is an exercise in futility.
  
  If, as one commenter suggests, the progress of sales activity starting with mining the numbers from the point of contact through the process of negotiations and continuing up to the point of the sale were built into a data model, then using those numbers in conjunction with broader economic indicators would likely produce figures that would mean something in the long run. The fact is, however, that most companies don't do this. They just guess. When they guess correctly, it justifies bonuses for those who were at the top of the food chain in the first place, and when they guess incorrectly, they blame it on sloth on the part of the sales people who provided the original grist for the calculations.
  
  Like I said, I am not a salesman, but I used to be. I closed $10 million sales of securities in a single transaction, set the sales records for another company, but in the long run I grew weary of the gameplaying and unctious genuflection one had to engage in when surrounded by people with hulk-sized egos and infant-sized self-esteem.

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  20

  Chuck Overbeck

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Accurate forecasting is critical to developing the engaged
  customer while driving company efficiency. The issue isn't
  whether or not forecasting is needed, it is how can the sales
  organization forecast accurately.
  
  The key is to start with definitions. What makes a prospect
  forecastable? I have seen sales people forecast a qualified
  prospect with a 10% probability of closing. This is like say
  because nine women got pregnant this month we can expect
  one baby next month. It doesn't work this way. Define what
  makes a opportunity forecastable (customer action) and
  stick with it. In my experience, if it doesn't have a 90%
  probability of closing or greater, keep it off of the forecast.
  
  If you do this, your forecast accuracy will improve,
  customers will be happier, and corporate will stay off of
  your back.

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  21

  Stephen Pia / Sales Coach

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Good points Chuck. And one of the best forecasting metrics (or definitions), regardless of whether you deem it a 10%, 50%, 90%, etc, is whether or not you have a next scheduled meeting date/time (phone or F2F). Once you add this metric...and...explain to your sales team that NO prospect can go on the forecast (at any stage) UNLESS there is a scheduled meeting...it's amazing how forecasting accuracy improves.

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  22

  partaind

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Sales forecasting is a joke!
  You make up a number and come up with reasons to validate
  and then, no matter what, you can't win. If you are less- you
  get yelled at. If you go over, then the next month they look at
  your sales forecast and don't believe you. And the couple of
  times that you actually predict correctly- they say that is what
  they expected so no big deal. It is one of the least productive
  parts of being a sales professional.

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  23

  BNETComment2

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Exactly what happens. Once as an Korean Air Sales Rep our Manager doubled the quota. Maybe it was the kimchee or soju, but he insisted we could make the new levels.
  
  Six months later were his threats to fire us for not making the unrealistic quota. All coinciding with our reduced expense accounts.
  
  A happy day when I left that office.
  
  
  
  

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  24

  nicky@...

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  When demonstrated in this light - NO, however this is very typical of most mid to corporate sized organsiation - we call it tribal warfare; no trust, no communication, no collective goal - everyone watching their own rear end. However, of course a business needs to know what it wants or needs to achieve in given period, otherwise teams stumble around in the dark, believing they are doing the right thing and doing it well. Inhibitors to this ideal world: poor leadership, lack of focus & direction, lack of planning/stragetgy, poor or no execution and no accountability.

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  25

  tdotson7600

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  I believe it is more than just an exercise in Sales Forecasting and is more of a confirmation of profitability for your company. You have to have some realistic financial goals during these tough economic times.
  It is a colaboration of many aspects of your business, sales, operations, finance and purchasing. They all have to agree on the ultimate end game or you all lose.

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  26

  Gila.Langford

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  I think it is a good tool if it is realistic to present sales and backlog, as it helps for forward planning for staff, income etc.
  I would like to see an article on Forward Pricing Rate Agreements?

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  27

  jad67

  11/24/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  An aspect of this discussion not mentioned yet is the uniquely low opinion that seems to be generally held in the corporation of sales people's integrity - as opposed to their money contribution when things go well.
  Would you find the corporate accountant, scientist, or HR director being so outrageously second-guessed or ignored at every level?

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  28

  wsacha

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  It is worth it if you have the time to look back over all the
  forecasts to see if you are getting better at it. The problem is
  most forecasts are only concerned with the present quarter. On
  the other hand looking at what you hoped to achieve during the
  year and actually did would provide a whole lot of better
  answers.

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  29

  Abu Ala

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  The question, to me, makes no sense (unless someone sells ideas)
  Improper forecasting= improper planning
  

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  30

  2Belmont

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Yes - although I also recognise the dangers you describe in your scenario... certainly wouldn't like to work at that firm! The main advantage to forecasting is making you take a long hard look at the sectors you are targeting alongside peers and see if there are opportunities you are missing, ie it's more about the review process than accurate numbers. Done in this spirit, with trust between colleagues, ie no 'double-your-money' imposed decisions, you get to a reasonable result - and then you can review it the next quarter!

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  31

  Etsey

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  I think the exercise is worth the effort provided that historical data and current realities are taken into consideration. The correct forcasting tool is critical for the success of the exercise. There are a lot of lessons to be learnt from trend analysis as well. In the end, the forecast should be challenging and realistic.

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  32

  abedrawia

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Sales forecasting is an esential part of any sales and marketing process.how would you set the sales and marketing budget if you will not predict how many units or dollars you will be selling?! as a matter of fact looking at what was sold in the previous months is one method of forecasting, but it is not enough if done alone, results taken by this method could be averaged with results taken by other forecasting methods. BUT the important thing is that we can not leave things for market and environmental circumstances on the contrary doing good internal and extarnal analysis would make it easier to have resonable sales forecast figures.

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  33

  WealthNetGuy

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  At WealthNet Partners, LLC we help our clients start, fund, market and grow successful businesses, thereby creating real wealth. The entrepreneurs with whom we work typically wear the sales and marketing hats. Even when there is more management structure, it's essential for the entire team to develop and be accountable to the same plan and goals. We advise our clients to measure results weekly, including sales results. If there's a gap to the downside, we discuss as a team what we need to do short term and long term. So forecasting for us gets down to looking carefully at the pipeline almost daily. This discipline may get lost in the muddle of large corporate structure. But it's key for small business owners and professionals to measure and forecast weekly.
  
  Clifford Jones, founder
  WealthNet Partners, LLC

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  34

  ddaly@...

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Hold on now!
  
  Getting a accurate sales forecast is not optional to be able to run a business.
  
  The question should not be "Is sales forecasting worth the effort?", but rather "How do you make accurate sales forecasting easy?"
  
  The challenge here is that the natural (and necessary) optimism of the sales person, and the human desire to please, usually results in inaccurate sales forecast.
  
  But it does not have to be that way.
  
  If you consider a scenario where the sales team follow a process that's mapped to the customer's buying process, then there are identifiable pieces of evidence that should inform the forecast. It seems asinine to me that sales people are asked to enter and update all the details of their deals, how it progresses, expected close date, current pipeline stage etc. into a CRM system, and then the sales person is asked to 'guess' whether and when the deal will close.
  
  There's not a lot of value being delivered to the sales person here.
  
  Consider instead a system that learns about sales cycle, attributes of deals that close, length of time normally taken to progress through each stage, and guidance for the sales person (and sales manager) as to what might knock the deal off track. If those simple elements are tracked and managed, the system will have enough data to provide accurate forecasting for free.
  
  Per Geoffrey's post, way too much time is being spent by way too many people trying to solve a reporting problem, which should in fact be auto-generated based on objective (not subjective) automated assessment of the health of the deal, its place in the funnel, the typical remaining duration to close and a few other factors.
  
  If you look in your CRM today, it's likely that you're going to see two things that are Darwinian in their stupidity. (i.e. they should not survive.)
  
  1. You will most likely see deals that have a forecasted close date that is in the past. Not unless you can perform some pretty unnatural acts - that's never going to happen. The CRM system should 'know' this.
  
  2. Then you will see a forecast based on weighted value or closure probability of the deal. In other words, a $100,000 deal that is 60% likely to close is calculated as being worth $60,000 in forecast value. The truth however is that you never close 60% of a deal. You win it, or you lose it.
  
  I won't use this forum as a commercial, but the solution I use automatically removes these problems, learns about when deals close, and why they don't, and automatically gives me sales forecasts that are more than 90% accurate 90 days out. My sales team don't do anything to generate the forecast. I get it for free. But the forecast is accurate and I can use it to run my business.
  
  Donal Daly
  http://ie.linkedin.com/in/dalydonal
  
  
  
  
  
  

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  35

  dwhiteside

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  I agree the steps above occur and find the decsription very humorous. However, the process of forecasting forces me to evaluate my pipeline against personal goals regardless of what level of accuracy I may ultimately report up to the next level.

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  36

  Steen Machine

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Plans are nothing, planning is everything -
  Dwight Eisenhower
  
  It doesn't matter if you are talking about battles over land or cell phone sales, the forecast is part of the planning process and not doing planning is a mistake. All of the individuals from sales rep to Ops guy are doing some sort of planning and taking a status and an inventory of where they are in the fight. This is a good thing as it casues the team to lift their heads out of the muck and into the sky for a long term view if only for a brief period of the coming year or years ahead. The problem with all plans is that the world changes and the enemy doesn't just sit there watching you excute your plans and achieve your forecast. Keep planning and foecasting ! It will be better for all of us.
  

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  37

  Geoffrey James, Sales Machine

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Re Note 34:
  
  I want to call EVERYONE ATTENTION to this post. It's by Donal Daly, who's guest-posted in this blog and who is one of the absolutely smartest people on the whole freakin' planet when it comes to understanding how to tune sales processes.
  
  READ HIS COMMENT CAREFULLY -- it contains some VERY IMPORTANT perspectives.

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  38

  ldmcintosh

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  I firmly believe on creating objectives that benefit customers and business. What is the purpose of the forecast? Is it set up to meet your objectives. For example, it COULD be used to ensure that production is ready to meet the short-term/long-term demand so that customers receive "on-time deliveries".
  
  Forecasting can be set up (using CRM) to be more "bullet-proof". For instance, set probabilities based on where opportunity is in the sales cycle, what product it is, who you are competing against and how the decision will be made (i.e. price, meeting requirements etc.). All of these can be weighed to calculate a probability, taking the sales person's guess work out of the equation. This can be achieved quite simply, puts some logic to the forecasting and can always be modified for improved accuracy/precision.

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  39

  wayne.silverman@...

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Without revenue and expense forecasting there would be no way to run the business as a profit center. That is why we all work in corp America, right...to build profit.

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  40

  schaffer.susan@...

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Sales forecasting is one of those onerous, necessary evils. Sure, forecasts are often wrong - but you should be using that info to create better forecasts going forward. And, if the process is creating unreliable forecasts... then fix the process. No one can foretell the future 100% of the time, but an ever-evolving, always-improving process will certainly improve the outcome.

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  41

  ndlicht1

  11/25/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  After reading Mr. Daly and others,
  
  I repeat- Forecasting, not reporting and the way we do it can become more reliable as a tool:
  
  I think a better solution may be to expect a top 10 account or opportunity forecast of sorts that goes like this
  
  1. Stage- where you are at
  2. Why its worthwhile- justify and explain
  3. Close status- explain exactly where you are in contacts, approvals, budget allocation and with FACT, not fiction how you know that and how you know the expected close date, purchase date.
  
  Thats it - simple. Do this monthly and hold sales people accountable for what they said.
  
  Thats a forecasting process that can have credibility and get you respected upstairs as a great sale manager.
  
  Neil licht ndlicht@verizon.net
  

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  42

  juliogman316

  11/27/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Forecasting is an attempt to predict the future. I don?t know many people that are good at that especially in the business world. Let me use sport analogies that might open new possibilities for success.
  As a marathon runner and long distance bike racer I have learned that all courses are not created equal, terrain, weather, number of participants, personal mood on race day and others affect the results you will get that day. On the other hand, preparation has a huge impact on the outcomes based on training intensity, discipline, rigor of workouts, wellbeing through the training cycle and mental preparation. Long distance athletes have personal records to brake all the times and they set up the pace for the results they are ?committed? to deliver on race day. For us that is not taken lightly, for us that is a promise, it is our word on the line and not a hope, good idea, one more try, or what I call ?good intentions.? My mother told me early in life that the road to hell is paved with good intentions. Now on race day I will encounter factors that are new to my plans like change in the course because road construction, change in weather, large number of participants, etc. Based on my experience and excellent training I will be able to make adjustments in order to compensate for the difficulties and fulfill my promise. The problem with sales people is that they don?t have a daily practice to train, to expand knowledge, to improve competencies, to study the client and to prepare for known and unknown events. They just go to work and expose themselves to failure. They base their performance on luck and arrogance rather than designed training programs and what is worst they go out there with a goal rather than a promise, if the deal goes sour no big deal because that is what you do with goals, they are only good intentions for performance.
  How many sales people you know that after failing on a big sale go back to their manager and ask for advice, ask for more training, ask for coaching or make a choice to learn about themselves. Before companies address sales forecast they must be realistic and evaluate the quality of their sales team and the quality of the sales training and development.
  Julio Garreaud, Executive Coach
  http://www.TheHumanArchitect.com b
  

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  43

  mktgpharma

  11/28/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  You must assume that you are the last step of the chain .... and nobody gives a sh... for you...
  1.- If you do not reach you sales forecast everyone will blame on you: manufacturing, buyers, CEO, .....
  2.- If you make more sales as predicted: Everyone will blame on you (again), because they were not prepared to produce so much product, they had to hire additional people, buy additional product (at higher prices), there will be delays in the delivery (and if you complain aout it, they will tell you that you are the responsible of this situation....)....
  
  You have to consider that this is a political game. You make a forecast but at the end you will have to rewrite it according to your boss's desires, and your boss will have to do the same with his/her boss, and....
  My advice is that you should take care of you, be a politician and PROTECT your info. The system should know a bunch of data only. DO NOT PROVIDE THE LINK AMONG THEM. Unless your boss know your customers and the market (it never happens....) you will always have some free-room to negotiate your budget.

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  44

  Taghreed_yehia@...

  11/30/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Actually, I think that the forcasting is a vital process for any organization only when applied in the proper manner. I mean forcasting is a matter of setting goals and planning not paper work and forms should be fullfiled in the way that meet the top management desire away from the reality.

•  
  45

  Jsupino

  12/13/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Here's my two cents. No. It's a political game more than a business game. It's clearly important to understand what revenue is going to be realized in the coming months, however, I find it more meaningful to base those projections on past performance and market conditions.
  
  We all know how the game is played. The manager says "what are you going to do this quarter". The sales guy looks around and picks a number slightly over mean, not too close to the top and tells a manager what they want to hear, just buying time and hoping they can figure a way out to do most of that number and keep their jobs. Then the manager adds 10% to that and pushes it up the line.
  
  Then you have the sandbaggers who KNOW what they have crossing the quarter's line, and just give that number plus a few. Forecasting, unfortunately, is just a way for a manager to have an excuse to keep or fire someone.
  
  All forecasting does, is modify the behavior of a rep and wastes time IMO. I never cared where my reps were getting the revenue, but more that the revenue came.
  
  I find it interesting that the larger the company, the more stock they put in forecasting. You get the right (or wrong) manager who tells a rep "I used to do $XXX and you should too". The problem is that management suffers from small penis syndrome much of the time and tries to pin a rep down. Tools, like salesforce, were developed as a tool, and used as a bat.
  
  Personally, I think it's for managers with a Napolean complex. There's better management styles other than "what did you sell today". In fact, that is the least successful. It creates fear and uncertainty in the force, which kills productivity.

•  
  46

  dcreswell@...

  12/14/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  This is an uncertain world. You cannot consistently forecast the future with any degree of certainty. What is certain is that there is uncertainty about anything that will occur in the future. If one works in highly political organizations such as many cited in the above responses, there is no prayer of being able to forecast anything but meaningless numbers. In a more open organization, one needs to realize that there are no facts about the future and one can only do his/her best at forecasting sales. In some mature industries, history can play a part - however, in a changing market one needs to be very careful about extrapolating the past. We work with our clients to develop a process based on mutual understanding, open communication and recognizing that around any forecast there needs to be ranges of uncertainty that bracket any forecast. Some things will be very uncertain. Other things less so. A computer-based sensitivity analysis will show that a handful of factors influence the final decision and that the final value be a range - not a single point number. The range will reveal downside risk and upside potential; management should focus on the handful of factors and on doing what can be done about the downside while focusing on driving toward the upside. Weekly meetings to discuss these assessments and forthright conversations will result in considerably better "forecasts". There forecasts will never be "right" unless one lucks out, but as time goes on the ranges will narrow with knowledge, experience and buy-in from stakeholders.
  Another observation: in many industries, particularly those with long sales cycles and where the buying decision is made not by an individual but by groups of individuals, frequently across functions, the uncertainty rises considerably. There is little the sales person can do but make an "educated guess" about the timing of closing a sale - making for wider ranges of forecasting in the face of this uncertainty. To address this, we hold bi-weekly meetings to update a dynamic assessment based on 4-5 phases of the Solutions Selling cycle. We then develop a range of forecasts based on probability weighting; like a portfolio of any kind, some things will come in earlier and some later but overall one will more often than not be closer to the sales target.
  Don Creswell, Co-Founder, SmartOrg Inc.

•  
  47

  Chuck Overbeck

  12/15/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Don, I respectfully disagree. In a study conducted earlier
  this year by the Beagle Research Group, they found that
  39% of companies have a forecast accuracy of 85% or
  better. Even if their numbers were off by 50%, that would
  still leave a lot of companies with accurate sales forecast.
  All it takes is one company out there generating an accurate
  sales forecast to prove you comments incorrect and there
  are many.
  
  The problem is most sales professionals have never been
  taught how to forecast and sales leaders have not been
  trained to develop a system that results in accurate
  forecasting.
  
  Instead of making excuses, let's realize there is a lot of
  learning that needs to take place. rel="nofollow" href="http://salessigmaconsulting.com/blog/?p=513">There
  are things we can do to improve forecasting. There are
  companies who teach these skills (in the interest of
  disclosure, mine is one).
  
  If you are having troubles getting your forecast to match
  what actually happens, get help. You can improve your
  forecasting.

•  
  48

  Chuck Overbeck

  12/15/09 | Report as spam

  RE: Is Sales Forecasting Worth the Effort?

  Don, I respectfully disagree. In a study conducted earlier
  this year by the Beagle Research Group, they found that
  39% of companies have a forecast accuracy of 85% or
  better. Even if their numbers were off by 50%, that would
  still leave a lot of companies with accurate sales forecast.
  All it takes is one company out there generating an accurate
  sales forecast to prove you comments incorrect and there
  are many.
  
  The problem is most sales professionals have never been
  taught how to forecast and sales leaders have not been
  trained to develop a system that results in accurate
  forecasting.
  
  Instead of making excuses, let's realize there is a lot of
  learning that needs to take place. There are things we can
  do to improve forecasting. There are companies who teach
  these skills (in the interest of disclosure, mine is one).
  
  If you are having troubles getting your forecast to match
  what actually happens, get help. You can improve your
  forecasting.