Sales forecasts impact much more than sales management – they have a direct bearing on overall performance, marketing and sales budgets, and planning for service and product delivery, to name a few.
Too often, flimsy sales forecasts increase risk in all those areas. In this context, forecasts are flimsy when they are inaccurate, lack visibility or fail to deliver the right number of correctly qualified leads needed to support target numbers.
Fortunately, there are four clear fixes that make sales forecasts more accurate and robust.
1. Use real lead definition instead of BANT
Replace BANT (budget, authority, need and timeframe) lead qualifying criteria with a focus on authority and need. DemandGen Report research says, “73% of major purchases to be made in the following 12 months are not budgeted at the beginning of the period.”
And with reports that buyers don’t engage with sales until they are 70% of the way through their journeys, reps involved in complex deals who wait until budget and timeframe criteria are satisfied will get into a deal too late or not be in it at all. Best case: you’ll be jumping through hoops and winding up column fodder for a decision maker who already favors another provider.
Focus on authority and need. Connect with the right decision maker and engage early in the processes of decision making and budgeting. Regarding need, focus on the business pain, sense of urgency and compelling events.
How this fixes the forecast: Replacing BANT with a focus on authority and need captures real prospects who may not have set budgets and timeframes, and it makes for a more robust forecast when all elements fall into place.
2. Apply the five steps in the sales cycle
Forecasts are more correctly filled with the right opportunities when marketing and sales collaborate to efficiently accomplish the following steps in sequence:
The primary problems are that marketing thinks its role starts and ends with step 1 and sales representatives begin at step 5. When reps incorrectly focus too soon on presenting their solution (step 5), they fail at relationship building by missing the importance of getting buy-in on each step.
How this fixes the forecast: Collaborative step accountability and full engagement by sales on all steps prevents prospects from dropping out of the funnel because they sense they are just being pitched to.
3. Use a dedicated lead qualifying and nurturing group
The clear and compelling way to implement the previous two fixes is to set up a hybrid marketing/sales function in the form of a dedicated group that can be either internal or an outsourced prospect development firm. This group applies qualifying and nurturing skills to assure all steps are correctly addressed, and then hands qualified opportunities to sales reps for engagement and close.
The group’s approach combines multiple touches, multiple media (outbound calls, voice mail messages, personalized email and direct mail), and multiple-cycle contact across the number of sales cycles needed until the window of opportunity is reached.
How this fixes the forecast: Sales is able to more efficiently focus on what it does best: engage with highly qualified prospects and move them toward win status.
4. Increase sales accountability
Too often, forecasts are inaccurate because there is little visibility into lead status between “sales accepted lead” and “win/loss.” Let’s say a forecast process includes 10 steps with “1” being an accepted lead and “10” being a win/loss. Chances are your forecast has lots of 1s and a handful of 10s – but little visibility into prospects in steps 2 through 9.
Having to report simply irritates sales reps, one of the ways they feel threatened on the three Cs that drive them – control, credit and compensation. But there is a sales management rule to remember: salespeople do what you pay them to do, not what you want them to do. If they close business that has been on the forecast as a “1” (accepted lead) for more than 30 days and there is no other movement noted in the forecast, they should not be paid full commission. Why? Because a salesperson who does not forecast accurately does not allow your company to plan resources in support of new client needs. The rule is simple: Record progress, get full commission. Leave us guessing, get partial commission. You choose. As contentious as this might seem, it is the only process that puts teeth into forecasting management.
How this fixes the forecast: Linking sales compensation to full reporting improves both forecast visibility and accuracy.
By implementing these four fixes, you’ll greatly improve forecast accuracy and visibility, as well as fill your forecast with the right number of more qualified opportunities.
Dan McDade is President and CEO of PointClear, LLC, a prospect development firm that helps B2B companies drive revenue by nurturing leads, engaging contacts and developing prospects until they're ready to purchase. He blogs at ViewPoint l The Truth About Lead Generation. You can contact Dan by email at email@example.com