We’ve all seen it – and amazingly, despite having been burned by it, we still allow it to happen on our watch.
It’s the curse of a high week-1 forecast that is decimated by week-13.
The curse means that sales leaders look silly to their peers, the company misses its target, investors get twitchy - and it shows that SalesOps is not taking control of the situation.
The Aberdeen Group reckons that a typical corporate sales forecast is usually ~20% out even at 11:59pm on the last day of the quarter.
We’d like to think that this is due to that massive deal dropping into the next quarter unexpectedly. After all, that’s what happens when you go elephant hunting. But SalesOps can handle this situation with ease – even more so if there’s more than one elephant in any given quarter.
The challenge is if the “run rate” and the renewals business gets bent out of shape, or when the new name business is wildly optimistic. And if SalesOps doesn’t have strong processes in place, it’s all too easy to get continuously blindsided, quarter after quarter (if you get that long!)
Simply put, it’s SalesOps job “to develop a forecast analysis that helps minimize the gap between the sales reps’ deal-level commit and the actual revenue expectations of the company’s investors.”
We do this by understanding the cadence of quarterly deals by specific quarter, together with building robust operational processes that measure pipeline data in meaningful ways.
An old boss of mine used a variety of methods to measure the potential success of the quarter. For example, he knew exactly how much business had to be closed in month 1 and month 2 for any given quarter to be a guaranteed success. But he also counted customer briefing room diary bookings for the coming month, as well as custom demo builds – both surprisingly successful KPIs.
He also used sets of very specific customer focused questions on the sales team -which made it extremely obvious which deals were real and correctly positioned in the funnel.
By contrast, another ex-colleague loved ambiguity in forecasts – and didn’t last long when he started calling out “BMW” – best, median and worst numbers. He also threw in stretch, hard and soft commits and back-up deals into his mix, making the forecast all but meaningless to senior management and unintelligible to investors.
Sales people know that there are only two types of activities in their world – tasks which are “priority 1” - and the rest. The same goes for SalesOps when they prepare the quarterly number. Engineer the sales forecasting process to use just two measurements - “Forecast” and “Upside”. Nothing else matters.
If you’d like to know more about sales operations and its role in data driven forecasting, contact us here.