The TASC Top 10 – Number 2 The local weatherman puts your forecasting to shame.

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We’ve been researching and studying and analyzing the sales process and methodology for a long time. Back in 1999, our CRM was called MODE and consisted of three modules: FIND for marketing; TASC for sales; and CARE for after-sales support and service. TASC was an acronym for Territory, Account, Sales cycle, and Contact, and it incorporated the ASPEC technology, although it wasn’t called ASPEC then.

It was, as I said, 1999, and CRM was in its infancy, not really understood as a software tool by most businesses. We wrote a series of ten vignettes illustrating various situations where CRM would solve some business problem and published them as the TASC 10. They are still relevant today, and sixteen years later, here is Number 2 – The local weatherman puts your forecasting to shame.

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Does Your Sales Forecast Help You?

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In America, it’s April 14th, (April 29th in Canada and Brazil, May 30 in Germany, and June 29 in Papua New Guinea) and your income taxes are due tomorrow. You don’t want to do them, but you have to. They will be wrong, but you don’t know how wrong. You will cheat and hope you don’t get caught. There are expensive professionals and cheap software that will do it for you and give you someone to blame. And the audit is only slightly preferable to prison.

Quick – tell me the difference between this and doing your sales forecast.

Hint – you only have to do your taxes once a year.

Yes, forecasting. The very word itself makes you cringe. Like marriage counseling or colonoscopy. But it won’t go away, no matter how much you wish.

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Stage-based Sales Forecasting – Why Won’t this Concept die?

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A popular post I wrote after the launch of the SalesWays Hub was called “Stage-Based Sales Forecasting – It Doesn’t Work.” In it I discussed specifically why it’s a terrible idea to tie probability directly to a linear sales stage. Probability isn’t necessarily, or even generally, tied to where you are in the sales process. Milestones in the sales cycle do not govern your chances of winning. Your product and your performance at those milestones do. I’d like to expand on this, taking on a new model called “High-Velocity Selling.”

High-Velocity Selling

There is a popular (within the entrepreneurial software world) new sales process for enterprise called “High-Velocity Selling.” The concept was first described in a post by a VC, Lars Leckie, back in 2010.  In it, he outlined a new model of thinking for enterprise sales and marketing which is inside sales driven and takes advantage of consumer internet technologies (i.e. marketing automation).

Sounds great – and I love it.  I think it makes a ton of sense, and I tend to agree that the days of the world travelling software sales organization are numbered. Companies such as Salesforce.com and Zendesk have adopted this model with great success.

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The Competition Is Doing Nothing

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chess-game

The competition is rarely doing nothing. It’s best to assume in any sales situation that the competition is doing at least as good as you are, and maybe better. Selling is about winning against competitors—people like you, from companies like yours, with products or services that are, in the customer’s eyes, in the running for the deal that’s currently going down.

Competition is an essential part of sales. Selling well means doing a better job of convincing the customer that you have something better to offer than someone else. On first glance the alternatives might look indistinguishable—any of them will satisfy the customer’s requirements, but the best salespeople will have an uncanny knack at singling out something that makes what they have different, different enough that the customer sees it as representing better value–standing out from the crowd.

But there is another quite different alternative in the sales opportunity, one representing a tougher competitive challenge to the salesperson—the customer may elect not to buy anything at all. It’s important to understand what I really mean here. The opportunity has been identified, the customer has expressed a legitimate need and the sales cycle is underway, often near completion. The customer decides, “after a lot of work, research, trial, and discussion, we’ve decided that we’re not going to do that—we’ll revert to status quo.”

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Bad Forecasting – My Best Excuse

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Oops

Ed. We’re bringing back one of the most original excuses for a bad forecast ever, and some discussion of the difficulties sales managers have with normalizing the forecasts of their whole team so they get an accurate overall forecast.

The most original excuse I’ve ever heard for an inaccurate forecast: the hooker wrecked it. It’s absolutely true. First-person true. It was actually my excuse.

I had a deal done with a state government, ready to spike the ball. Then the Governor got caught with a prostitute and had to resign. The Lieutenant Governor, in an act of fiscal bravado, froze all state spending until he could review the state’s finances. Thus, the purchase order that had been approved and was ready for release was history, along with about 40% of that period’s sales.

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Why Should You Care About Your Sales Forecast?

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Forecast Chart

There is no sales team or sales professional who does not have nightmares when the time for the forecast meeting arrives. Although most professionals do not treat it this way, this word is of crucial importance in the sales activity.

I could write pages about the importance of forecasts to the enterprises’ financial planning, and on their manufacturing, logistics, and HR processes. We could also talk about the forecast’s importance for the organization’s credibility and its management processes, or a myriad of other aspects that makes this practice so essential.

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Stage-based Forecasting – Why It Doesn’t Work

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Stage Based Sales Forecasting

Ed. This week we’re bringing back Chris Hamoen’s very popular article on why stage-based forecasting doesn’t work. Yes, Chris demonstrates categorically that it doesn’t work and can get you into forecasting nightmares.

Forecasting by sales cycle stage has become an epidemic of sorts – almost every CRM software company out there uses this method. So what is it, and why is it so effective that they use it?

Simply put, this type of forecasting creates a series of linear stages for the sales cycle and assigns a probability to each stage, increasing in value as the sales person moves through them. I’ve seen this referred to as ‘sales process’ in some cases.

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The Right Way To Assess Probability

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Confidence and Assurance

In a previous article, I talked about stage based forecasting, and gave some examples where it doesn’t work.  The conclusion was that probability often has little to do with where you are in the sales cycle.  In this post, I will talk about how to properly assess probability, and how time still remains relevant.

Let’s first review another method of picking probability – we’ll call it the “Pick a Number” method.  In this process, the sales person assigns a percentage probability from 0 to 100 based on their gut feel.  Let’s say they pick 80%.  What does that mean?  There is the obvious argument that this method can’t possibly work across a team, as each sales person might have a different idea of what 80% means.  Further, this “80%” number can also be based on mood that day of the individual sales person.  Finally, is there really any need to offer 100 choices in the answer?  What is the difference between 79 and 80?

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Why I Hate Forecasting

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Eyeball Telescope

Ed. – Forecasting is one of the least favorite activities of sales people and one of the most difficult tasks for sales managers. Today we’re re-publishing John Darrin’s take on why sales people hate doing forecasts.

In America, it’s April 14th, (April 29th in Canada and Brazil, May 30 in Germany, and June 29 in Papua New Guinea) and your income taxes are due tomorrow. You don’t want to do them, but you have to. They will be wrong, but you don’t know how wrong. You will cheat and hope you don’t get caught. There are expensive professionals and cheap software that will do it for you and give you someone to blame. And the audit is only slightly preferable to prison.

Quick – tell me the difference between this and doing your sales forecast.

Hint – you only have to do your taxes once a year.

Yes, forecasting. The very word itself makes you cringe. Like marriage counseling or colonoscopy. But it won’t go away, no matter how much you wish.

Continue Reading

Stage-Based Sales Forecasting – It Doesn’t Work

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Stage Based Sales Forecasting

Forecasting by sales cycle stage has become an epidemic of sorts – almost every CRM software company out there uses this method. So what is it, and why is it so effective that they use it?

Simply put, this type of sales forecasting creates a series of linear stages for the sales cycle and assigns a probability to each stage, increasing in value as the sales person moves through them. I’ve seen this referred to as ‘sales process’ in some cases.

Lets take an example of a series of sales stages. This is from a real process used by a real company to forecast their sales.

Stage 1 – Initial Contact. 10% probability.
Stage 2 – Initial Meeting. 20% probability.
Stage 3 – Needs Assessment. 25% probability.
Stage 4 – Budgetary Proposal. 35% probability.
Stage 5 – Presentation. 50% probability.
Stage 6 – Final Proposal. 75% probability.
Stage 7 – Gaining Commitment. 90% probability.
Stage 8 – Purchase Order. 100% probability.

At first glance, this appears correct. Sales people can and should follow a process as they move through the sales cycle. However, the idea of assigning a probability to a sales stage is totally wrong.

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