Part 1

Most managers agree that the sales forecast is something that everyone hates to do but is so necessary to run a business. Taking it a step further, most managers like to get this activity out of the way so that they can continue their very important job of getting those big deals in.

So what really happens after sales reps are asked to update their forecasts? Here is the general flow that I’ve seen over and over again. Of course there’s a variation of this if a CRM is used or other systems for that matter. In these cases it may be a validation process but for sure, a good manager will want to get a sense of what is going to close straight from the horse’s mouth.

So here it is:

1) Sales rep gets an email to update forecast by such and such a date along with either a team meeting if there are several reps or a one on one with the manager to go over the forecast and make it
current.

2) The manager then proceeds to go rep by rep over a list that he has and asks “So what’s happening in this account?…. you’re forecasting this for the end of the quarter.”

3) Each rep goes down the list and gives a summary of what the next step is and reiterates the closing date. The manager then may ask a couple of follow-up questions such as “Why do you think they’re going to close?” or “Who are we competing with?.”  Really it’s a fast review of each account that’s making the forecast list.

4) The manager collects all the information. He then adds and his own notes and proceeds to watering down the list based on his feelings of each account and/or rep. Reps that are perceived to be
optimistic will get their forecast cut on the mangers list and reps that are perceived as reliable will get less cut from their list. In the end, the manager makes a list of accounts as a % (usually less) than the sum of his received forecasts.

5) The manager presents this list to his VP and goes through the same process that he went through with his reps exception that the manager will add his perception.

6) The VP turns around and basically waters down the list once more before he gives it to the CEO.

7) The CEO now has the list and meets with the board to explain revenue projection.

Would you like to be in the CEO’s shoes?  No?  Well you probably guessed right.  If I was the CEO I would be really nervous because I know what the process is in my organization and I know that the forecast that I just reviewed with my board is mostly based on perception – altered perceptions at that, which have very little to do with facts. What’s more, everything else I do with the board is
100% based on facts. Funding, budgets, new hires, advertising, new product launch dates etc. And what adds to my nervousness as a CEO is that revenue is by far the most important aspect of my business.

So now what‘s really wrong with this picture? Well you guessed it. The forecast is not nearly fact-based enough.

What is really needed is a way to quickly rank where each sales cycle stands, know instantly what was done and what needs to be done to get to a close.

Another problem is that unlike most other processes within the organization, the advancement of the sales cycle is non-sequential. What do I mean by this? I will explain this further in the second part of this article.