The sales funnel and sales forecasting: The most broken process in business

Posted by Tom Snyder on Mon, Aug 17, 2015
Tom Snyder
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As a sales rep, how frustrating is it to have your manager constantly asking for “what is going to close this month?” or “when is the XYZ opportunity going to close?” All the way up the sales organization everyone is demanding sales forecasting accuracy. But, it feels like we are being asked to predict things over which we have so little control. Worse yet, we are being asked to make things happen on a schedule we cannot influence.

As a manager, this frustration is compounded.  Instead of just one inaccurate forecast that a rep struggles with, your span of control dictates a greater challenges for you.  You have optimists and pessimists, pleasers and sandbaggers on your team. You have to take their individual estimates (guesses frankly) and modify each with a gut instinct of what will actually happen.  Oh yes, don’t forget that your CRM is supposed to make all of this automatic.  After all, each sales funnel stage has a preset metric that tells us how much business we will get in any given time period.  Too bad the prediction is never all that close to reality.

Is there a more broken process in business?  

For the past 11 years our research has included a careful examination of this subject.  Among the many fascinating conclusions we have been able to derive there two that we find particularly compelling.  Despite thousands of data points covering hundreds of companies, we could not find a single sales force that performs at a high level unless they consistently and accurately are able to forecast revenue. Like the canary in the miner’s helmet lack of sales forecasting accuracy is a symptom of a series shortfall in performance.  Which leads to the second and most compelling conclusion we have found: 

It is the customer’s decision process that determines where in the sales funnel any given opportunity should be placed. In other words, it is the customer’s decision process that determines everything about when an opportunity will close, why it may stall, when it should be removed from the funnel, next steps in a sales strategy, sales execution, etc.  It is the single most vital component of sales execution excellence.

The good news is that a model of buyer decision-making is easy to learn.  Nothing we have studied makes a bigger impact on close rate, funnel management, opportunity qualification and sales forecasting accuracy than being able to view each opportunity through the lens of the buyer’s decision making process/behavior.  Nothing. The bad news is that less than 7% of the sales forces we have studied have any idea how to assess buyer behavior. As a result, 93% of sales forces have a funnel larded with hopes, aspirations, wishes and dreams. Every tried to forecast a dream? Ever use a dream as the basis of executing a strategy?

Ready to make your next forecast the most accurate yet?

Sales Forecasting Fixed

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 Sales Forecasting Fixed: Take the Guesswork out of Revenue Forecasts

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Topics: Sales Process