Forecast, project or dart board?

There is much to be said about the debate amongst operations, service and sales regarding forecasts.  All have viable arguments or points of view.   Operations and service  need accurate forecasts to ensure they have the right amount of personnel, inventory and resources to support the sales efforts.   Yet, sales hedges on putting their name on a number.  All points of view need to create a balance  to manage success between the organization and its customers.

I have spoken to numerous entrepreneurs, executives, operations personnel, managers, sales reps and been on both sides of the table.  Even though I have been on the sales side longer, I favor accurate forecasting.   The reason is logically because I care more about delivering on promises to my clients than not getting it right or avoiding accountability.  I "get it" that operations is not a never-ending money train either.  The compromise is to come up with a forecast that balance everyone's needs.  It is also important to note that  it takes significantly more expense, resources and time to generate one new customer (something like 75%) than it does to keep existing customers happy.  Yet, most organizations spend a great deal of effort on winning new customers, especially during uncertain times. 

Forecasting is particularly critical if you are focussed on gaining new customers or when economic conditions are unpredictable.  Organizations are caught between laying off employees prematurely or out of panic, leaving themselves short when a customer does need the added resources or services available.  We know that scientists have confirmed that the chicken did come before the egg.  Forecasting is the chicken and needs to be in place before anything else can be established.  Every organization, with one employee or one thousand, needs to establish where their revenue will come from.  "Forecasting" is just that.   Very few organizations have the cash flow or can survive by what I call "Field of Dreams" mentality:  build it and they will come.

Even without sales professionals on staff, setting realistic goals on attracting and retaining revenue can determine the success or health of your business. 

Unless you are in a large corporate sales environment, the culture for forecasting tends to be less of a requirement.   Yet, from formulating or guesstimating best estimate on each sales professionals predicted revenue by year, by month or even by week will help operations and support their efforts.  It is sometimes called "accountability".  Many sales professionals are uncomfortable with this as they consider it will reflect badly on them if they are off the mark.  However, not assessing their own performance will likely restrict their success anyhow.  Here are a few suggestions I would offer:

• Understand the full annual territory revenue value, then break down by customer, by month
• Record the projected new customers by annual value, by month, considering purchase date
• Assess percentage or ratio of revenue between existing customers and new customers
• You can take last three months, projected next month that includes new customers, and same month from previous year.  Total all 5 months, divide by 5 to get a forecast amount.
• Organizations should post results by week, by month or provide access by reps for cross-checking.

The above is a simplified formula to start with.  It is just as important to go back and track your success, boost or modify against actuals.  What I love about doing something like this is, it is just like golf -- you really are competing against your OWN score.  When YOU set the goal, YOU have more of a tendency to make it happen.  If you take it more seriously, you will assess your close ratio.  How accurate are you at predicting your own success rate?  Does it mean you have to make more calls to increase your success rate?  It can also prove to be one of the single most motivating tools you can have.  If your personal goals are aligned with your forecast, you will increase your chances of meeting/exceeding your forecasts.  (Remember that new car, a trip, house, marriage, baby, early retirement ..... etc.)

I won't dwell on it too long because I want to emphasise all the many advantages to forecasting, however, organizations can be their own worst enemy.  For example, they may project what the forecast has to be and then divide it amongst the sales team.  That projection could be based on operational expenses, factoring in commissions, and then profitability.   I can put forth my theory that many private organizations don't share the numbers on projections or post actuals because they don't want everyone to know those numbers ... in other words how much money the owners make.   Some share only lump sums or maybe only larger corporations emphasise profitability to leverage forecast requirements under a budget, target or plan.

What this all comes down to is accountability.  If you are a sales professional, you should have a handle on where your revenue will come from.  Sales reps should up the ante through increased activity if a customer or prospect doesn't come through.  Where the true value comes from is when you, after practice, become  more accurate with time, like golf.    Organizations would win by recognizing accurate forecasting.  Both sides benefit when there are real numbers to work from.  The customer wins the most by having the high level of service and product they envisioned. 

Accurate forecasting eliminates mistrust from sales who spin tales to save face or ease pressure of unachievable projections.  Organizations reduce buffering or stretching numbers.  If an organization feels they have to set the budget higher to stretch their sales team, then they may have a completely different issue to consider.  One might be to buy a dart board.

Feedback is learning.  Please comment, share or provide your own opinion on this Blog.

This customer is so rude!

A question was posted on LINKED IN by Desmond: "What's the most professional way of overcoming a client's professional discourtesy? i.e. Not returning phone calls, emails, or failing to follow through on committments, etc."

My response is that it is YOUR perception and not the clients that they are being discourteous. Are they really a client or are they a prospect? It sounds more to me that they are a prospect with a proposal you've provided and now they’re stalling. Why I say that is because if you have a true client/sales rep relationship, you will have gained permission to be on their active response radar.  You may not have earned the right to say they're being discourteous if you haven't established TRUST  (see earlier BLOG Who can you TRUST?).

I would turn the lack of response back on myself, asking myself why they may not be returning my calls or e-mails or whether I've established myself as an equal business partner.  That is someone with whom they are more inclined to take my calls because they associate me with "value".   It would tell me that am not yet considered someone who is there to help solve their problems or bring them information/services/products that they are looking for.

If they are a prospect, and they aren’t responding in the way you think they should, then I’d be certain that you have not given them a compelling reason for them to talk to you.  If buyers sense the only reason you are calling them is to "sell" them something, most people are programmed to avoid emails/phone calls from sales reps if they are not in the market for what you are selling or regardless if they've asked you to give them the proposal.  Face it -- circumstances can change from the time you were asked to prove the proposal.

Personally/professionally I always try to return calls and communicate that my needs are being taken care of at present, however, welcome updates to product offerings for such a time as I am researching/looking. Many buyers don't think the same way.  Consider the fact that some decision makers are simply busy, having less time to respond to every e-mail or telephone call.  Have you tried a real letter by snail mail, that shows that you've taken extra time on your end just after the meeting but before the proposal reminding them of the reasons why they considered you in the first place,  based on real results/improvements they'll have ($ or %)?

Desmond went on to highlight what perceived delays that gave cause to the perception they were being rude:

1. Agreed to pay on a certain date, and still hasn't;

2. A deposit is involved, but now they're asking for a free sample or preview

3. They agreed to call back with critical information to meet the deadline, and doesn't, but expects you to maintain your stated deadline

4. They fail to meet commitments for appointments, phone calls, follow ups, information repeatedly.

Desmond is right that they maybe stalling, however, I emphasize finding out the real reason. My first reaction, would always be direct and don’t skate around asking direct questions. There is always a logical explanation to what you perceive as a delay. An example could be to ask them if there is someone else in the organization that you should be talking to review the information with? Or come right out and ask "what is preventing them from making the deposit", or "how their schedule has changed from what was agreed on".

There are many disreputable organizations out there.  They cause viable business reasons as to why you may be asked to provide them with a sample or preview -- which can cause a stalemate or chicken/egg syndrome. Ask how the sample or preview is going to help go to the next step?  It may show that they don't have as much decision making authority as they've led you to believe and that there is someone else behind the scenes.  I would do what I could to  provide a "trial" or "sample" because hesitation on my end may communicate lack of confidence in what I'm trying to get them to buy.  If samples/previews are out of the question, then provide testimonials and references at the minimum.

If they're stalling on a deposit - that is telling you they may not have the money, have the ability to send the check or you are not dealing with the decision maker, but a gatekeeper.  You may have to face that you are wasting your time. Give yourself permission to let go.  Recognize that not every prospect is a good one and move on.  Spend  time with those you share a give/take healthy exchange.   Effective qualifying is why top performers get results (see BLOG What is Qualification in Sales?).  Be thankful to free up your time to spend with those that value what you are offering or can meet your criteria such as a deposit.

One of my first jobs in sales, I was asking questions of a veteran operations person ... and every answer came back to me that "clients lie".  (This may be a little over the top yet your support team can sometimes think this more often then they are telling you).  Relax, it is very common that people don't get back at agreed time but expect you to maintain the original deadline.

You may be forcing the issue because it is you or your organization’s target that is the deadline, not the customers. Sales gimics such as “first 100 customers” or “buy now and save” are to try to get a high conversion. I’d like to find a situation where if you have money in hand, all matters qued up, your sale will be turned away (of course, there are real circumstances, but far fewer, that actually are REAL deadlines). Give credit to buyers, consumers or decision makers that they are smart.

If you want to really establish long term relationships, I suggest you portray yourself as patient, empathetic and try understanding the real reason for the the perceived “rudeness”.  If nothing else, the customer REALLY does have a legitimate reason for 1-4.  It is your perception that they are not meeting what you need.  

Bottom line -- the CUSTOMER establishes the criteria/timelines/delays .... never the sales rep or their organization.

TWITTER:  http://twitter.com/OptioneerJM

QUALIFICATION versus RESULTS

A new sales veteran pal of mine, Mel Harding, (on LINKED IN) VP Product Development of Occulus.com and I have been exchanging and participating in discussions on qualifying.

Everyone knows that they've heard the term "qualify" or told that qualify is part of the sales process. My definition lends it as a method to identify a quality sales prospect or lead to boost success ratio. Yet, I'm of the opinion its considered just more sales jargon with only the most dedicated sales professional or sophisticated sales organizations understand.

I can certainly appreciate why a website service such as "Occulus" would be started. For many of us that have worked for major sales organizations like Xerox, Digital, IKON, etc. these tools are developed for us and are part of the process/accepted practice.

Qualifying IS the one part of sales that IS rocket science! Think of it as another tool in your tool box along with cold calling, objections, closing, relationship selling, etc. You have to be able to more than simply understand not only who you are targeting or engaged in sales with, you have to RECOGNIZE who a qualified prospect/customer is. Check out their website www.occulus.com to get a feel for what I'm talking about. This is NOT to be confused with CRM systems which capture and communicate information about prospects/customers. The various methods of qualifications are about identification, understanding you/customers/competitors, diagnostics, formulas,etc. It can be simplified by asking if you know if you are talking to the key decision maker .... who have gatekeepers who's major priority is to keep sales people away. Talk about contradiction!

When I've worked with smaller companies and try taking them down the "qualification" path they think I'm over-complicating the sales process, not getting results fast enough and what the heck am I doing all this analysis for! Fortunately, others might say "I get it" whereas they don't. The quality of your qualification process will uncover a strong identification of prospects that can save a lot of time in the long run, increase your success rate PLUS make more lucrative successes than smaller hits most consider "results". That's why some organizations distinguish sales reps from mainstream to major accounts ... meaning the larger the revenue opportunity, the longer the sales cycle.

Another compelling reason for capturing a qualification process. This other company I worked for had a Sales Director with 20-30 years industry experience. This gentleman knew how to price based on who they were competing against, the time of year, even the sales rep. What do you think happened when he left? How would others know what he had in his head?

So, get that scientific brain working and start qualifying better. Also remember, the best opportunities are the ones that are found in unchartered territories. By careful examination and identification (i.e. qualification) you will feel more confident to go down the longer, windier path where your solution, service or product will fill a void. Otherwise, you best get your call activity way way UP in order to get those results!

Please comment or keep me posted on how you're doing in the world of business "optioneering".

Jeannette

What is QUALIFICATION in sales?

It's that old selling example of selling ice to an eskimo.

I say the eskimo has not been qualified appropriately. If you "qualify" the eskimo, you would ask him where he plans to put the ice, how he plans on using it, and if it is going to be in his igloo how long does it have to last? Does the eskimo have to discuss the purchase of ice with someone else or does he have the coins in his pocket? You may also want to ask how often he needs ice (determine pricing and/or future opportunity)?

Through the qualification process -- which is asking a ton of questions -- it comes down to patience and commitment to uncover the real need or opportunity.

If I were to sell ice to an eskimo, I'd end up selling a refridgerator!

Yes, it would have been much easier and quicker to sell him ice, which would mean I did my job. Yet, if I ended up selling him a refrigerator, he'd be much happier, most likely refer me to other eskimos who have only thought of buying ice, and I'd end up looking outstanding!

To me, it isn't rocket science -- it results from clear qualification.