Why does it seem to be so difficult for your sales executives to produce consistently accurately sales forecasts?
Accurate forecasts are the only way that companies can plan for the future. Accurate forecasts enable business owners to plan new hires, investments and manage cash-flow. We entrepreneurs count on the cash from those deals to fund growth and/or to plan for shortfalls ... So why is it that sales forecasts seem to be so difficult to manage and to get right?
My theory goes to a number of contributing factors, which when combined, create a scenario that results in problems.
- Most sales executives are lazy. I really don't believe this to be the case. In fact, I think that sales is a noble profession. It is not a profession for the fainthearted because most buyers say "no" more often than "yes" and continuous rejection can wear one down. When I use the word "lazy", what I mean is that many sales people are afraid to ask their prospects tough questions about the deal they are proposing. Professional sales people are not afraid to make demands on their prospects, once they convince them that the solution being offered is valuable. So if your sales executives are not getting to the real data with their prospects, they are either lazy, stupid, immature or should not be selling for you.
- Sales people are not in complete control of the deal. Unlike virtually every other aspect of a business operation, sales people must deal with prospects who have minds and ideas of their own. As much as we would love for prospects to go with our plan, they generally have other ideas in mind. Professional sales people step through this issue by focusing on building a trust relationship with and providing real value to their prospects. If I deliver value to you on a consistent basis, you will come to trust me and will also want to return the favor by creating a situation with me where you are enabled to buy from me. It's like credits in the bank which must be repaid.
- Prospects lie about their plans. Prospects don't really lie (well... some might), they just don't always fully communicate their buying plans and processes. Why? Because most of the time they haven't got one. When it comes to new technology solutions (where I spend most of my time), most buyers are fuzzy about the amount of value the solution can truly deliver and, as a result, don't have a clear understanding of how they will evaluate various possible solutions. Professional sales people learn this very fast and position themselves as the "trusted guide" for the prospect. There is a fine line between education and selling, and professional sales people understand the distinction.
- Prospects have poorly defined Buy-Cycles. When selling, most companies have a well defined sales process or cycle, generally moving from Prospecting to Solution Development to Proposal to Negotiation to Contract and either Close-Win or Close-Lost. Every prospect also have a Buy-Process. The problem is that the Buy-Process is often not well defined at all. In fact, often the prospect may not, initially, be able to clearly communicate the Buy-Cycle to the sales executive. However, professional sales people know that they absolutely must understand what the Buy-Cycle is (or they may need to define one collaboratively with the prospect) in order to control the sale. This takes a consultative communication and generally can't be pulled-off by immature sales people because they will not be taken seriously by the prospect.
These issues add up to problems for both the sales executive and the business owner. It's very difficult to run a business that does not perform to plan, regardless of whether the plan was for higher or lower sales revenues. When sales people do not execute to their forecast, doubt and anxiety set in, as can deteriorating morale.
Let me know your thoughts on this important issue and what you may be doing to solve the problem by commenting below.
