There are several reasons for inaccurate sales forecasting, however, the two below are the most common I see when working with sales organizations.
Monday mornings start off with sales meetings and the infamous sales pipeline review.
The sales manager interrogates, the salesperson fabricates and the CFO wonders how she can run a company when the sales department isn’t able to accurately forecast sales.
So what’s the answer? There are several reasons for inaccurate sales forecasting, however, the two below are the most common I see when working with sales organizations.
No defined sales process:
A few years ago, I worked with a company included giving tours of their warehouse as a defined step in their sales process. Their warehouse was state-of-the art and great differentiator from their competition. Once a salesperson completed this step, he was allowed to assign a 60 percent close ratio to the opportunity.
Identify key steps in your sales process to prevent “hope” pipelines. Determine the questions and decisions that must be made at each stage. Have you ever heard this statement? “I’m hoping it will close this month.” (And the CEO is hoping he can pay you.)
The infamous comfort zone:
Salespeople get comfortable calling on the same opportunities—even if it negatively affects their commissions. They do a lot of checking in and get “comfortable” hearing, “We are still interested….give me a call back in a month.” After the check in call is completed, the salesperson enters the data into the CRM tool, moves the close date to the next month and is on her way to managing a sales pipe dream.
Establish a protocol in your sales organization. Once a prospect has been in the sales pipeline longer than your company’s average sales cycle, take the prospect out of the pipeline. The salesperson can continue to pursue—it just doesn’t count toward the immediate 30 – 90 day pipeline.
What’s in your sales pipeline? Pipe dreams or real sales forecasts?
About the author
Colleen Stanley is president of SalesLeadership Inc., a business development consulting firm specializing in…