Plugging the Holes in Your Sales Forecast
Published on August 2, 2007
Sales forecasting is probably one of the most difficult and distasteful topics for sales executives. After 30 years of selling, managing, consulting and coaching some of the top sales executives in the world, I can you tell you it is one of the most powerful tool you can use to guarantee your success. You probably have heard the famous expression, “if you don´t know where you are going, all roads will lead you there”. Question: Do you have a sales revenue goal in mind for this year? You probably are answering yes. Second question: Are your actions supporting your goal? Again, you probably are answering yes. Think again!!!
All too often sales executives have a goal in mind and think their actions are going to help them achieve that goal. Yet, when they look deeply into their business, often they will see holes that need to be plugged. A forecast tells you in advance where the holes are and allows you to make the necessary repairs and prevent the ship from sinking. When you create a forecast, you are not only looking at the projected results, you are also analyzing why you think those results are going to happen. Often, you will find the deals are not as solid as they seem on the surface.
When creating a forecast, here are 4 simple steps you should take to ensure your success each and every year.
- Start with the end in Sight- What is the revenue goal you need to achieve this year? I am not asking what you think you can do or what your company wants you to do. I am asking what it will take to support your desired lifestyle. This includes the vacations you want to take, the level of education you desire for your children, affording the mortgage and taxes for the type of house and community you want to live in, saving money for your retirement and having a little extra to spend on other items like the car of your choice. How much do you need to make in order to live a fulfilling life? Before you write telling me money is not the only fulfilling thing in life, I agree. If you are into charity work and giving, how much do you need to make to support your favorite causes? In some cases, the number may be more than you think you can do. Still, put it down. You need to see what you are after so you can build the appropriate forecast and plan. If you shy away from thinking it is not doable, guess what? It isn’t.
- Make Sure Your Strategies and Actions Support Your Goal. Assume you are selling life insurance and you want to earn $50k more this year. The average income of the clients you have been serving is $100k per year. How would you do it? The common answer is to sell more insurance policies to more people. This is a good but limiting answer. Yes, you want more clients. But how many clients can you realistically work with at a given time? Instead of putting all of your eggs into one basket, you may want to also change your target market. What if you changed your target market to include clients with an average income of $200k? It is likely this target market would buy bigger policies (they have more to protect) and pay larger premiums which allow you to earn higher commissions. Look at your overall strategy and see if it supports your goal.
- Make Sure Your Actions Support Your Goal. This is where the forecast comes into play. First, you need to list the opportunities to see if the total matches your goal. If not, you need to find new opportunities. Second, you need to qualify the opportunities you have listed. There are a number of realizations you may come to uncover, such as:
- a. You may not be dealing with the decision maker
- b. You may be asking the wrong questions
- c. You may be falling short in your value proposition
- d. The time may not be right for a deal
- e. You should be closing the deal
- f. You should cut your losses and move on
Identify the steps of your sales cycle. See what is necessary to move each deal to the next step. If you can’t reach the next step, find out why and overcome the hurdles. Often, deals are not as solid as they appear. It is best you find this out sooner than later. Only then can you plug up the holes and ensure you safely reach your goal. These realizations only come after you look at your projected opportunities and dig really deep into how well they have been qualified and what needs to be done to get the business.
- Measure Your Results. Break that yearly goal down into the smallest time measurements possible so you can gage your results and make appropriate changes. In some cases this is a monthly sales number, in other cases it can be weekly. You can even break it down into the sales cycle steps you have identified above and see if your pipeline at each level is strong enough to support your goal.
Today is August 1st. With five months left in the year, there is plenty of time to build a forecast and see where you stand. If your results are above your stated goal, don’t stop there. Raise your goal and take advantage of the strong market. Downturns occur and you always should maximize your opportunities.
If your number is below your goal, don’t be too quick to lower your expectations. Many times you can look at the forecast, identify the holes and make the necessary changes in time to ensure your success. If you have a complex sale or a long sales cycle with time running out this year, then at least start planning and forecasting your success for 2008.
One thing is for certain…there is no overnight success. Everything is planned for in life. That includes both failure and success. The top performers all plan for their success.
For tools that will help you realize your forecasted revenues click here.