Improve sales forecast accuracy with these 7 steps…

A consistent weak point across sales organizations is their sales forecast.

Yes, it’s difficult to predict which sales will close. But your forecast drives numerous decisions across the organization. And when forecasts are wrong, the implications go well beyond commission checks.

To improve the quality and accuracy of your sales forecasts, starting immediately, I recommend the following seven steps.

1. Use consistent definitions
If your entire sales team is working from a consistent set of definitions (i.e. what is a good lead, what is a qualified opportunity, etc.), then it’s easier to trust the data you have. If you look historically at your conversion rates – overall, by industry, by geography, by rep – it’s easier to predict conversion rates and new sales from a future pipeline of opportunities. The entire sales & marketing team needs to understand these definitions, and sales management needs to enforce their usage on a regular basis.

2. Know your sales cycle length
If you get a good lead today, when will it likely close? This week? This quarter? This year? Many inaccurate sales forecasts get this one piece of data wrong, meaning your conversion rates are accurate but don’t take place in the window of time you assumed. You eventually get the revenue, but not at the time your organization was expecting it. By building in a typical (or even conservative) sales cycle length into your model, you’re making it easier to map expected sales to the week, month, quarter or year in which they’re likely to land.

3. Read market changes (and their impact on closing behavior)
The model you build last year might not work this year. If market conditions are weak, sales cycle length may have spread out. If budgets are tighter, an earlier decision maker may need permission from the CFO to take action now. These changes can wreak havoc on your sales forecast if you don’t anticipate, identify and adjust both behavior and expectations as a result.

4. Require a “compelling event” to become an opportunity
It’s the right contact at the right company in an ideal market. They can surely benefit from your product or service. But do they want it? Is it a priority? Is there something internally that is driving urgency and prioritization of what you’re selling? Requiring a defined “compelling event” for new opportunities may reduce the volume of opportunities created, but it also increases the likelihood that those deals will close, which in turn makes your forecast far more accurate.

5. Conduct regular deal reviews
Sit down with your sales reps and walk through their pipelines. Not just names and numbers, but context. Ask for the back story, why they’re qualified, what the compelling event internally is that’s driving action. This isn’t about not trusting your reps. It’s about establishing a culture of accountability, learning and collaboration.

Make these deal reviews about helping your reps brainstorm new ways of accelerating deals, establishing greater urgency with latent opportunities, and creating greater income opportunities for them personally. In the process, you’ll have a more intimate idea of the quality and accuracy of the pipeline.

6. Make updating the forecast fast, easy & mandatory for your reps
Opportunities change after they’ve entered the pipeline. Close dates move out. Or up. Deals that were on a fast track suddenly slow down, and perhaps should be moved back to an earlier stage. Most reps don’t want to make these changes to opportunities in their CRM system, as that may imply weakness in their own pipelines and selling skills.

Instead, make it easy and mandatory to make these changes in real-time. Make it clear to the sales organization that these changes will help management improve selling conditions, and address real-time changes with the resources needed to close more business.

7. Reward accuracy and honesty
Very few sales organizations reward pipeline performance & behavior. They compensate based on closed business, but not based on how close reps come to their forecasts. Create incentives for your reps to accurately forecast their expected sales. Foster an environment where honest changes to forecasts, even if the news isn’t good, is encouraged and rewarded.

Would you really reward a rep for reducing their sales forecast? Absolutely. Imagine the alternative, that they led you to believe their output would be much higher when they knew they couldn’t deliver.

What strategies and tactics have you used in your sales organization to improve accuracy? What can you add to this list?

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 begin_of_the_skype_highlighting            (905) 275-2907      end_of_the_skype_highlighting (Mississauga).

E-mail: buspilot@bell.net

7 Job interviewer mistakes....

Job candidates make a lot of mistakes in interviews. That's bad—at least for a person hoping to get hired—but what's much worse is when you, as the interviewer, make one of the following mistakes:

1. Mistake nervousness or shyness, for a lack of ability.

Some people just don't interview well. They're nervous or shy and don't make a great impression. An awkward interview does not mean a candidate can't do the job, though: Great communication skills in no way signals expertise.

When candidates seem nervous or uncomfortable, give them the benefit of the initial doubt. Help them relax. You're a leader and your job is to get the best from people—even people you haven't hired yet. You might just uncover a diamond in the deer-in-the-headlights rough.

And if the people you interview often seem uncomfortable, take a step back and consider your approach. You might be the problem.

2. Fail to go off script.

An interviewer should follow a plan and ask a reasonably specific set of questions, but the best questions are almost always follow-up questions. (Most candidates are prepared for an initial question, but questions that drill deeper are much tougher to fluff.)

Listen to initial answers. Then ask why. Or when. Ask how a project turned out. Ask what made a position hard or made a project difficult.

Not only will you get past the canned responses but you will also learn details—positive and negative—the candidate never planned, or would have thought, to share.

3. Expand on possibilities.

Candidates naturally sell themselves. Interviewers often try to sell the candidate on the job. (That's especially true when you love your company.) Before you know it you've described exciting new projects, enhanced benefit programs, opportunities for promotion due to potential expansions... lots of hopeful stuff that might happen in the future.

The problem is the candidate translates "might" into "will," and you've unwittingly created expectations you may not be able to meet.

Never describe possibilities. Describe typical career paths, for example, but only in a general sense. When you discuss future plans only share details on approved projects or efforts currently underway.

If you can't promise, don't bring it up.

4. Spring the surprise group interview.

Group interviews: Convenient for lazy interviewers, terrifying for job candidates. You rarely get the candidate's best, plus it's easy for the interview team to fall into the group consensus black hole where everyone gravitates towards the same opinion.

Of course if the position requires working predominately within a team, a group interview can provide a feel for the candidate's suitability. Tell the candidates ahead of time so they can prepare.

Otherwise, hold individual sessions. It's only fair, to the candidates and to your business.

5. Take over.

Interviews often turn into monologues... delivered, unfortunately, by the interviewer.

When that happens the candidate will rarely interrupt or try to restore balance to the interview because they want you to like them. Thirty minutes later your hiring decision is based on whether the candidate was a good listener.

Briefly describe the opening. Briefly describe your company. Better yet, make sure the candidate has a good feel for the position and the company before the interview. Explain you'll answer questions at the end. Then dive in.

The conversation should be 90% candidate and 10% you—at most.

6. Turn 10 "okay..."s into one "yes!"

It's easy to check off mental boxes during an interview: experience, okay; qualifications, okay; attitude, okay... and before you realize it a mediocre candidate with no negatives seems like a great candidate.

But do you want to hire the candidate whose qualifications and interview fails to raise any red flags... or do you want to hire the candidate who excels in a number of critical areas?

An absence of negatives is not superlative. Always look for excellence. Feel free to check off mental boxes as an initial sorting tool, but then look for the candidate who not just meets requirements but kills the requirements.

Never settle for good enough. If good enough is all you find, keep looking.

7. Ignore input from casual encounters.

Job candidates give you their best: They're up, engaged, and switched on. But how do they act when not trying to impress you?

What candidates do while waiting in the lobby can indicate a lot. Find out how they treated the receptionist, find out what they did while they waited, ask about any chance encounters with other employers... occasionally you can identify a disconnect between what they show you and what they show the people they're not trying to impress.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 begin_of_the_skype_highlighting            (905) 275-2907      end_of_the_skype_highlighting (Mississauga).

E-mail: buspilot@bell.net

Some general ideas on forecasting sales….

There are all sorts of ways to estimate sales revenues for the purposes of sales forecasting.

One point to remember when sales forecasting is that if you plan to work with a bank for financing, you will want to do multiple estimates so as to have more confidence in the sales forecast. How do you do this?

Sales Forecasting Method #1

For your type of business, what is the average sales volume per square foot for similar stores in similar locations and similar size? This isn't the final answer for adequate sales forecasting, since a new business won't hit that target for perhaps a year. But this approach is far more scientific than a general 2 percent figure based on household incomes.

Sales Forecasting Method #2

For your specific location, how many households needing your goods live within say, one mile? How much will they spend on these items annually, and what percentage of their spending will you get, compared to competitors? Do the same for within five miles (with lower sales forecast figures). (Use distances that make sense for your location.)

Sales Forecasting Method #3

If you offer say, three types of goods plus two types of extra cost services, estimate sales revenues for each of the five product/service lines. Make an estimate of where you think you'll be in six months (such as "we should be selling five of these items a day, plus three of these, plus two of these.") and calculate the gross sales per day. Then multiply by 30 for the month.

Now scale proportionately from month one to month six; that is, build up from no sales (or few sales) to your six month sales level. Now carry it out from months six through 12 for a complete annual sales forecast.

Don’t Just Do One Sales Forecast

Instead of forecasting annual sales as a single figure, use one or two of the sales forecasting methods above and generate three figures: pessimistic, optimistic, and realistic. Then put the figures in by month, as depending on your business, there could be HUGE variations by month. (Some retail firms do 50 percent of their gross sales around Christmas, from the end of October to the end of December, for example, yet barely get by June through August.)

Include Expenses in Your Sales Forecasting

Now put in your expenses by month, including big purchases by season (or however you buy materials/goods). Remember, you may buy materials or inventory in say, July, for Christmas, yet not get all of your receipts until 45 days after Christmas. There can be big cash flow implications. Also, will you be buying vehicles? Capital equipment? Make sure to show depreciation expense.

In your expenses, put in an allowance for bad debts. Figure how much of your sales are by cash, how much by credit card, how much by your extending credit. Deduct say four percent or more for credit card expense for that portion sold by credit card. For payroll expenses, put in estimated tax withholding payments quarterly that must be paid to the government.

If you're going to a bank for financing, be able to answer questions such as, have you made an allowance for a reserve cash account, for your slow months, but also in case you have to quickly replace a vehicle or equipment? You say you'll charge x dollars for your product, but what happens when your competition cuts the price by 33 percent and still makes a profit?

How specifically will you grow your business-- selling more to existing customers, selling existing products to new customers, selling new products to existing customers, and selling new products in order to attract new customers? They're going to want to see if you've got a real plan.

Remember that it is acceptable (and realistic) to have a negative cash flow projection for the early months of your cash flow projection period.

Sales Forecasting Summary

I guess you can see that instead of estimating one big sales figure for the year when sales forecasting, a more realistic monthly schedule of income and expenses gives you far far more information on which to base decisions. That's what "keeping the books" is designed to do: give YOU information you can make good decisions on.

So in effect, you prepare three cash flow projections, where you vary the percentage of sales or other figures to arrive at three different scenarios: pessimistic, optimistic, and realistic. The pessimistic view should be the "worst case" situation; plan to have enough capital and patience to get through that scenario. If it turns out that the actual results are better than that - great!

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 begin_of_the_skype_highlighting            (905) 275-2907      end_of_the_skype_highlighting (Mississauga).

E-mail: buspilot@bell.net

10 things a good sales person should never say and why......

It seems like no matter how often sales managers say it, or how frequently sales people hear it, there are some phrases they will just NOT stop using. Share with me some insight as to what I (and your clients) hear when you use these lame highly over used lines.  

1.     I was just in the area and thought I’d drop by. Are you serious! The professional I am trusting to help me with X issue has nothing better in the world to do right now than just “drop by” to see me?  If you are not doing business with me already I am probably thinking who is this guy? Why is he here and how do I get rid of him as quickly and politely as possible. Unless we really are buddies, don’t just drop by unless you are only expecting to leave something I am expecting with my secretary. Trust me; she already knows to tell you I am in a meeting, and that if I am interested I will call back. If I really am expecting something from you she knows that too. Don’t try to fool her. She hates that!

2.      Have you got a minute? No I don’t! I am busy, and I have 100 other things I could be doing. In my opinion I think you are better off trying to engage me than to give me the easy out and slit your own throat. If I am too busy to talk believe me I WILL let you know.

3.      I’ll try.   I only want to know what you will or can do not what you will TRY to do. If you are not confident enough to say you can do it, do not mention it to me. I would much rather hear, give me 24 hours to do some research on that and I’ll get back to you than I’ll try.

4.      I’m really not sure. Again, your default answer should be “give me x hours or days to do some research and I’ll get back to you. This answer tells me you do not know the answer, but you are taking my concern or issue seriously and want to help. I am really not sure is not the answer of the confident professional.

5.      It’s not my fault. Like it or not, you are most likely my only contact in the company; everything that goes wrong is your fault. If it isn’t it is still your issue to fix. The best way to deal with this is to apologize, and take the most serious and immediate corrective action as soon as possible. More importantly let me know what it is you are doing to fix it, and how you will prevent future issues of this nature.

6.      What would I have to do to get you started today?  Ever seen the movie Tin Men? Unless you want to sound like those guys, avoid this phrase at all costs. This phrase screams “I am a slimy salesman!” and any rapport you have built with this client is eroding quickly from this point forward. Instead, use something softer like this. You: Are there any other issues or concerns we have not covered sufficiently? Client: No everything looks good. You: Great! Then the next step is to…

7.      We are the lowest price in town.  You very well may be, but is this really how you want to try to compete. It typically does not take much effort to come up with a better value proposition than that. Moreover, if I DO find a lower price, you are a liar now, and any trust you built is gone. My old grand dad once told me that when picking a service you have only  three choices; good, fast, or cheap. (Price, quality, service). Pick any two, but recognize you will always sacrifice the third. Your job is to help your clients to understand this. 

8.      Always and Never.  Always and never are just plain bad. There is going to be an exception to every rule. My general rule is to avoid absolute statements wherever possible. Use these sparingly, if ever.

9.      What you need is…  Unless you are a trusted friend, I think this phrase should be avoided. I don’t even use it during a proposal. If I call you with a problem, and we have been doing business for years, and you are intimately familiar with my issues it may be ok, otherwise, present me with options and let me pick. I am the ultimate decision maker as to what   it is I need.

10.  Trust me. If you feel the need to tell me this, I am starting to wonder why and will usually assume I shouldn’t. Trust is like love. It’s built over time and the only way to gain it is to earn it. 

 Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 begin_of_the_skype_highlighting            (905) 275-2907      end_of_the_skype_highlighting (Mississauga).

E-mail: buspilot@bell.net