Each month I receive calls, questions, and inquiries asking about best practices surrounding sales forecasting and driving a sales funnel that is real. It seems there is a significant challenge in trying to produce an accurate sales forecast. Our sales operation reviews find that most fall below a 15% accuracy. Another way of putting it is – the sales forecast is 85% wrong on an ongoing basis.
Now before you decide that what I just said doesn’t pertain to you and your company let me drive a deeper point of understanding. When I ask most sales leaders to share their forecast accuracy reality, their reality is always slightly inflated or presented better than the truth (Especially if I’m asking these questions with the owners present). I believe that lease renewals are, of course, part of your forecast and important. HOWEVER, our research shares that dealers typically win about 89% of their renewals and this high percentage influences and sometimes hides how your company actually forecasts and captures NET NEW BUSINESS. We always want to consider the overall sales mix and its conversion accuracy. Understanding your sales mix breakdown can be eye opening.
We find most dealers ARE NOT typically attracting NET NEW business on a continual basis. The dealer principal must get deeply involved into the forecast process to verify they consistently attract and capture net new business.
As a matter of record, I often hear dealers share that they’re enjoying double-digit growth in revenue, but once we lift the hood, we find that the growth number has come 100% out of the account base. This may be great and mean that they’ve found their account penetration skillset, but beware; this isn’t an endless supply of business. The only healthy long-term strategy that one should employ is one that balances effective account penetration with one that also adds new clients to the fold.
Forecast accuracy isn’t just about ‘did you get the deal’; it’s equally important that you got the deal WHEN you said you were going to get the deal. Sloppy guesses at when a deal will close causes as much wasted time and effort as any other activity and can be an extreme distraction when trying to build a sustainable sales funnel.
A great exercise for any business owner would be to gather up six months of forecast data, remove the renewals, and then look at the projected close dates and revenue dollars. Calculate the stats and percentages with what was forecasted to what actually closed. It may surprise you; it surprises almost everyone.
Why am I talking about forecast accuracy when the topic of this article is creating sustainable opportunity? A sales organization’s ability to forecast correctly helps to expose the gap or delta needed to assure sales goals are reached; this in turn exposes the amount of sales activity required to manage real sustainability.
Let’s look at some of the most combative issues that seem to work against or destroy the creation of sustainable opportunity. It should be noted that creating a rock solid flow of opportunity doesn’t happen by accident and it almost always happens because an immense amount of activity is being done.
The biggest deterrent in creating sustainable opportunity is that the immense amount of work and the real expectations that must take place are seldom explained to the sales team. It takes an enormous amount of work to move a sales team forward and generate the momentum that will ultimately reward your sales reps with WINS. It takes a solid plan, just as any General would create when going to battle. Before he’d launch his attack, he’d have his soldiers prepare for the fight and he’d train them on the best approach to the target. He’d certainly help them get mentally prepared and physically fit so that they’d be ready. This type of preparation is what will create a sustainable opportunity.
I simply don’t see this type of preparation going on and thus the sales team isn’t prepared for the long haul. This is one of the key destructors in building sustainable opportunity. We have to share the complete vision of what we want and where we’re going and what it will take. Let me share with you how sustainable opportunity is created and connected to the success and/or failure of a sales team. The birth of sustainable opportunity is ACTIVITY (Making the assumption here that all activity is based on defined business objectives, a proper market strategy, and a marketing execution plan) and I’m not just speaking about sales rep activity. This is a company-wide execution plan that must be pointed at the next most closable (DEFINED) target within your marketplace. EVERYONE knows his or her part and their approach to those specific targets. But let’s consider one of the key components; the sales reps’ activity. You must have in your plan enough sales prospecting activity to generate enough opportunity which in turn generates sales WINS. Each point of the triangle supports and is also reliant on the other. If any part of the triangle is weak, then sustainable opportunity doesn’t happen.
I have yet to see a sales organization with healthy prospecting activity followed by weekly accountability meetings (most call these sales meetings), fail.
You must create a sense of discipline and understanding within your sales team. Cull out anything that isn’t in alignment with your definition of opportunity. Do this immediately and continue the process until your entire sales team aligns and begins to capture exactly what you want. I keep saying it over and over – you can’t create sustainable opportunity without knowing how much opportunity YOU REALLY HAVE. So critique each engagement very hard, look for client sponsorship, and listen for a prospect who wants what you deliver. If it’s not there, push it to an appropriate time and go find another opportunity that is real.
To create a sustainable flow of opportunity your sales leadership must be mature and regimented in the execution of whatever processes that drive strong activity and visibility toward what is real.
Activity leads to opportunity and opportunity leads to sales attainment or WINS.
Your Company’s Required Activity – Should be to drive marketing communication to your marketplace to expose opportunity, which would execute simultaneously with all other market penetration and opportunity generating activity, regardless of what your sales team is doing. You need to be in the business of pulling opportunity from your marketplace.
A similar activity pointed at your client base should also pull opportunity as you create owner to owner, C-Level to C-Level relationships that assure you that it’s YOU that carries the relationship and not your sales reps. Obviously you can’t do this with every account, but with any account that is IMPORTANT you should own those relationships. This, in itself, should create opportunities as these relationships are solidified.
You should be advertising your business in a very active way and that means you sat down and created a roadmap for the activity the company will do to contribute to a sustainable flow of opportunity. Email and direct mail marketing are some of the easiest ways to connect with your marketplace and these types of communications should be well thought out and delivered automatically on a continual basis. Pulling opportunity from this type of communication is not hard and, as a matter of fact, if done consistently, can generate a nice flow of inbound opportunity. Don’t get me wrong, it’s not a post card with your logo on it, but it’s definitely a piece that shares a timely need and has a call to action.
Sales Leader’s Required Activity – Your sales leader’s position is not an easy one, as they are the human resource that has the greatest effect on creating sustainable opportunity. They must be disciplined and regimented in their daily execution while being the master of selling the sellers. Week in and week out they must be consistently “up” and driving the educational process that ultimately creates a higher skillset in each sales rep, which drives better consistent opportunity. The Sales Leader must identify, teach, and train everything that would lead to the production of authentic sales opportunity. That would definitely include measuring everything for results and using each deal as a training ground for perfecting a sales rep’s execution. Most owners don’t want to step back down to this position. However, if you have the wrong person in this position you may never get to a sustainable opportunity flow.
Sales Rep’s Required Activity – This is the battleground. The sales reps that are worth their salt typically don’t dance to a structured environment and yet our stats share that when you apply education, process, and discipline to the best sales reps they almost always find more, high quality opportunity than when they’re allowed to wander through your marketplace.
Danger, Will Robinson – If your sales reps are just using you as a place to make good money and if you don’t really have any control or ability to guide them, you may be in trouble. They’ll stay as long as it’s good for them and when they leave they’ll typically take your accounts with them. Find out right away IF YOU HAVE A TEAM or just single players and as I mentioned previously, you must own every key relationship.
The sales reps are responsible for quota attainment; unfortunately it’s not that easy. I hear business owners say all of the time, “I don’t care what they do as long as they get quota!” This is a lazy way out. You might as well say, “I’m not really interested in managing my business.” If you have ANYONE who continually meets quota then you probably have a quota that is too low for that person. The sales rep should always be challenged and that can come in many forms. NO, I didn’t say take advantage of someone who is on your team to drive the growth of your business. I said they should always be challenged.
Sustainable opportunity isn’t impossible to create and it’s easier to create than one might guess. If your company is failing to produce sustainable opportunity, look from the top down for the missing activity elements.
