Creating Effective Sales Forecasting

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Once you have set up your competitive strategy and sales management polices & rules, you need to start monitoring the progress of your sales force with an objective, easily accessible and accurate system. This Sales Forecast system should be a customizable and powerful software application component in an overall CRM (Customer Relationship Management) environment. The forecast system needs to be easily accessible by the sales force (ie: through the web by PC, laptop, smart phone) with a business process engine that allows for approvals and data reporting all in real time. However, one must understand that no matter how powerful or technologically advanced a system or process is; it is garbage if the management doesn’t drive for accuracy and timeliness of the data that goes into it. Remember, “Garbage in, means garbage out!”

It is extremely important to condition the Sales force to diligently update their Sales forecast data and have the Sales Management check the data weekly or bi-weekly for accuracy and confirmation. If any sales lags or deliberately falsifies, boosts, sandbags their forecasts, they need to be disciplined severely.  It should be one of the Sales management’s most important tasks to enforce and drive the Sales forecast system. Once the data that goes into the sales forecast has been screened carefully, the organization can now gauge their marketplace and predict their revenue pipeline with a certain degree of accuracy. With the confidence gained through the accurate forecasted data, management can also conduct their operational planning, marketing budgets, and continue to engage in their competitive strategy. Again, depending on the type of industry, size of organization, culture and mentality, the sales forecasting process will vary significantly. However, the basic concept for the Forecast system will remain the same in that it can be broken down into a process of categories and steps with assigned percentages of closing to each level of the completed process.

In creating this Sales Forecast system, the organization needs to customize the process to fit its own organizations industry and practices. Also the sales marketplace can be an important factor in dictating the types of processes in the Sales Forecasting System. Here is an example of the Sales Forecast process I have used in the past with great success. I have the whole process broken down into 6 categories:

1.    Get Prospect’s Information
2.    Get Customer Involved
3.    Get Customer Engaged
4.    Get Customer Committed
5.    Get Customer’s Purchase Order
6.    Get 100% of the Money

With these 6 categories in mind, the Sales forecasting process can now be divided into stages within these categories and finally steps completed to form a percentage of closing the deal for that customer.

Get Prospects Information

–    Assign territory, account, & salesperson                                             5 %
–    Qualify opportunity (Company & Contact Info Gathering)                10%

Get Customer Involved

–    Compelling Event / Motivation to Change / Value Proposition            15%

•    Is there any critical business issues, if so, explain?
•    Is there motivation and value for them to change, if so, explain?
•    What is the cost of the change?
•    Is this need strategic?
•    Is there a compelling event?
•    Why would they spend money?
•    What is their current way and how could they do differently?
•    What is the priority of this project?
•    How do we see the problem?
•    Do we have a vulnerability analysis?
•    Do we know their priority?

–    Identify players, decision makers, sign-off process & draw political map        25%

•    How decisions made and what are are their criteria?
•    How many people are involved and who are they?
•    Who is the Decision Maker (DM) and are we connected?
•    Do we have a connection to the DM’s boss?
•    Who could be our champion and how do we develop them?
•    Why does he/she support us, if so are they actively selling for us?
•    What influence do he / she have with (DM)?
•    Who are our inside enemies and how do we counter them?
•    Who are the gatekeepers, beneficiaries, end-users, influencers and coaches?
•    Who else has impact on us?
•    Who signs off on this deal?

–    Account plan (including strategy of selling, influencing, & competitiveness)    30%

•    Which competitors are in this account?
•    What products do they use?
•    How can our capability and technology fit?
•    Can are vision fit with their needs?
•    Can we compete?
•    Why us and not the competition?
•    What are our strengths?
•    What are our weaknesses?
•    How will they be better off if they use our products?
•    What is the estimated closing time?
•    What economic changes can impact the deal?

Get Customer Engaged

–    Negotiate a sequence of events with customer                    35%

•    Have we negotiated sequence of events?
•    Has the proposal been defined?
•    Has implementation plan been developed and is it biased to us?
•    Are their configurations finalized?
•    Have we demonstrated the product?
•    Have we achieved the business proof?
•    Has risks been assessed and addressed and can it be minimized?
•    What is the total time frame?

–    Agree upon technical evaluation process                        40%

•    Are they willing to negotiate a process?
•    Has the technical proof been defined and addressed?
•    Are their resources adequate?
•    How long technical resources will be needed?
•    How long consulting services will be needed?
•    Has our relationship improved with them?

–    Obtain internal support & engineering resources                    45%

•    Do we have resources for evaluation?
•    Has responsibilities been assigned?
•    How much internal resources allocated?

–    Identify customer’s budget availability                        50%

•    Are they prepared to execute the sale?
•    Has funds been approved and allocated?
•    What is the ROI?
•    Has the sign-off been authorized?
•    Do they have budget and what is it?

Get Customer Committed

–    Complete technical evaluation                            55%

–    Obtain internal approval on business proposal                    60%

•    How big is the opportunity?
•    How much for product purchase?
•    How much for consulting & services?
•    What are other costs to them?
•    What are the list price and the discount level?
•    What are other add-ons?
•    What are sales terms & conditions?

–    Submit preliminary proposal & pricing quotation                    65%

Get Customer’s Purchase Order

–    Negotiate a win-win deal                            70%

•    Is “price” the only obstacle between us?
•    What’s most important to both of us?
•    What will constitute a “win-win”?

–    Achieve final agreement from customer                        80%

–    Obtain verbal commitment for PO                            90%

–    Obtain hard copy of purchase order                        99%

Get 100% of Money                                    100%

Note: For each step of the process, there are questions associated to make sure those steps have been reached. These questions only need to be answered by a “yes”, “no” or “no need” answer to move on to the next stage. You can decide on the actual qualifying amount of “Yes” to the questions to be considered completion of the stage.