Unlike most professions, sales has a standard that literally dictates success or failure. It’s called quota. The ability to hit quota on a consistent basis is a requirement of success, and the key is understanding how to predict what revenue number one will end up at in a specific sales period. In industry speak, this is called forecasting, and most reps fail at it because they don’t trust the pipeline their CRM presents.
This distrust is for a myriad of reasons. Sales rep know they didn’t enter a deal. Deal specifics changed but those changes weren’t reflected in the CRM. A deal is dead but hasn’t been closed/lost. The data they used to figure out their forecast isn’t accurate–and reps know it.
The hard truth is, sales leaders have it even tougher, as they’re a step or two removed from the details of the deals that make up their reps’ pipelines. In speaking with dozens of sales leaders, they all confirm forecasting today is more about gut, than it is about data. No wonder so many sales reps aren’t good at it. When it comes to coaching a sales team to effectively forecast, this begs the question: What is the strategy needed to develop forecasting into a skill, versus a game of risk?
A major tool that’s proven to successfully help reps with this is a strategic framework that exposes the risks in a rep’s pipeline, and gives them a chance to address them in order to come to a place of trust with each deal. They’re known as The four P’s, which can be broken down as follows:
- Purpose – Is the prospect’s actual intent to purchase your solution?
- People – Who are the players making the decision?
- Plan – How will the deal move forward through the sales cycle?
- Payout – How big is the deal?
Identifying answers to the four P’s builds confidence in a rep’s pipeline by effectively removing the leading factor against it: uncertainty. Uncertainty most commonly comes in two forms in sales, and they must be fully understood in order to eliminate risk from the forecast.
Area of Trust
Risk is commonly created by a sales rep having to “take the prospect’s word” for various aspects of the pending deal. Limited access to information can create a fantasy world through inference (i.e. a sales rep running what they hear from a prospect through their own optimistically-biased perspective) rather than doing the hard work of getting a prospect to reveal critical information that aligns with the realities of critical business issues, leadership/direction, timeline, and budget.
This area is aptly named — as it requires a sales rep to trust what they are hearing. Rapport, discovery, and conveying a genuine dedication to solving a customer’s challenges give a rep the best chance at eliminating Area of Trust risks. Truly great sales reps are masters of the Areas of Trust in every deal in their pipeline. They get the right people to give them honest answers to the questions proposed in the 4 P’s, they limit the inferences they make from the data they are told, and they are addicted to reality rather than a feel-good story they can stitch together from beating around the bush-style conversations.
Area of Control
Another prime culprit of risk comes from a sales rep’s noncompliance to processes and established best practices. Unlike Area of Trust, with Area of Control the sales rep is in complete control of eliminating risk. It merely requires the rep to know and follow documented internal processes and best practices. In most sales orgs, these are well defined–and great leaders help their reps understand the importance of following them. If they live up to their name as tried-and-true practices, complying will lead to more winning on all sides of the deal.
Understanding the four P’s, and consciously considering the two key areas of risk on a pipeline, are essential elements to a sales rep’s ability to hit quota. Memorize, master, and implement them into a sales team’s core DNA practices in order to ensure a successful quota – not only in this quarter, but all those that follow.
If you’d like to dive even deeper into the specific questions to ask yourself and your team around the four P’s, check out this blog. Happy selling!
Mark Kosoglow is vice president of sales at Outreach, creators of software that provides sales and marketing teams with the capabilities to drive deeper engagement with prospects and convert more opportunities into business.
