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Why your Sales Forecasts Suck, and what you can do today to fix them

December 5th, 2022

For good reason, business owners get extremely frustrated when their salespeople forecast sales that never close.

NO one wins when a sale that has been projected to close in the next quarter or two results in a goose egg.  In addition to a salesperson missing their quota or missing out on commission, projected sales that don’t convert can cause all sorts of damage to an organization.  The larger or more complex the “opportunity”, the greater the damage.

Why do most organizations tolerate this nonsense?  Let’s take a closer look at this issue and conduct a reality check…:

Approximately 80% of opportunities projected by salespeople in CRMs as “Hot Prospects” do NOT result in a sale.

Approximately two thirds of these “hot” prospects that do not convert are not lost to a competitor.   They are lost to status quo.   In many cases, the prospect never intended to make any decisions or changes.

In nearly all of these zero-result situations, the salesperson neglected to unearth much or all of the most relevant information, including (but not limited to) the decision maker’s true intentions, motivations, priorities, and buying criteria.   In many cases, they don’t even know who the decision maker really is…

According to most studies, less than 15% of salespeople generate more than 80% of new revenue.  The other reps (which make up the majority) battle over the remainder of the sales. When they do stumble upon a “win”, the purchase order is typically acquired at a much lower margin than the average sale generated by the Effective Fifteen.

The Mediocre Majority have very Happy Ears.  In the rare instances when a buyer begins to share a bit about what they are really thinking, a weak salesperson will listen through a filter of optimism, incorrect assumptions, and unrealistic hope (instead of probing further to reveal more important information).  The picture they consequently see (or want to believe) rarely resembles the picture that the buyer perceives (aka:  the TRUE picture).  So, before we know it, we have another forecast opportunity sitting in our CRM that has a snowball’s chance in hell of converting into real business.

Fortunately, all of this insanity is easily avoidable, and there is a ton that any business owner can do to improve their forecast reliability and sales team effectiveness.  There are time-tested, highly reliable, foundational best practices and processes to ensure that sales projections made by salespeople represent real opportunities.   This is GREAT news for any owner willing to implement them.

Here are just a few of the most important steps you can take today to ensure that you can dramatically improve and rely upon sales projections…:

Assess your salespeople:   The statistics described above indicate that it is likely that only one-fifth of your sales reps are operating with any level of effectiveness.  The skills, strengths, weaknesses, and key attributes required to forecast properly (and sell productively) can be easily and quickly identified.   You wouldn’t send an ineffective pilot out to fly a plane, so why would you send an ineffective sales rep out to try to sell?

Adopt a rigorous, transparent Sales Process:   Most companies, and even fewer salespeople, follow a sales process.  An effective sales process has many benefits, one of which is to gather critical information.  A Qualifier Checklist may be embedded into any process and can aid tremendously in Forecast Accuracy.  The process would force this checklist to be completed long before an opportunity could be forecast as a “Hot Prospect”.  If you have a salesperson that is incapable or unwilling to follow your sales process, it is highly unlikely they will return an ROI to your company.

Adjust your Team’s Mindset:   You cannot lose what you never had.   Since you, your products, and your services are great, but are NOT for everyone, it is important to understand that every buyer interaction should be managed exclusively to determine if there is enough mutual value to continue investing time.  A losing mindset creates feelings of rejection and deflation, making it tough for a rep to get back in the saddle.  The most successful salespeople understand that   there is no such thing as “losing a sale”.  Every sales interview can only result in WINNING or LEARNING, both of which are highly productive and inspirational.   The best salespeople spend the majority of their time listening, understanding, facilitating discovery and learning.  They gather critical intelligence, so are therefore able to forecast sales with much greater precision and accuracy than the unproductive, talkative, Mediocre Majority.

This Effective Mindset is not only based in TRUTH (versus hope), it is also much more energetic and motivational for any salesperson that embraces it.

Clearly Define each step in your Sales Process, then map each step to your Sales Pipeline:   Doing so will make your entire team far more effective, providing you with vital information about the productivity of each sales rep and your entire sales machine.  A correctly constructed Pipeline will also provide you with tons of forward-looking visibility and leading indicators about future sales; critical information required to make informed decisions regarding investments in personnel, infrastructure, inventory, and more.

Adopt a simple, transparent, consistent Sales Management Process:   Sales Management may be the single biggest ingredient contributing to the success (or failure) of a private company. Unfortunately, many SMB owners think about sales management as an afterthought or conduct it “if we have time”.  They deploy sales management reactively versus proactively.  Big mistake.  IF you have implemented the steps I’ve described above, Sales Management can be a simple,

enjoyable exercise – an process that does not require much time, but one that will pay HUGE dividends.

Although perfection in the world of sales is unattainable, continuous improvement and growth are not.  Following these simple steps will not only massively improve the reliability of your sales forecasts, but will also dramatically improve your revenue and profit results.

Wishing you record growth and prosperity in 2023!

Copyright © Joe Zente 2022. All Rights Reserved.