You have a deal that is near the end of your sales process. Your CRM settings suggest that you have a 90 percent chance of winning that opportunity. You know for a fact that they are still engaged with your competitor; this means you have a 50 percent chance of winning that deal. Unless of course your prospective client chooses to do nothing, reducing your odds of winning to a dismal 33 percent.
Most of the numbers in CRMs used to indicate the likelihood of winning a deal at each stage don’t resemble the true percentages.
In the example above, how would you behave if you believed you had a 90 percent chance of winning? Would you take a different set of actions if you knew it was a coin toss between you and the competitor your prospective client is still considering? What if your primary contact said, “We’re not sure we can even pull this off this year?” How would your strategy change if you were only at 33 percent, with a “no decision” as the most likely candidate to win?
If you want more accurate numbers, you have to capture real data and study the results.
First, you have to pick a period and monitor the opportunities for a finite period. If you win 20 percent of the opportunities you competed for, that’s the real number you should use when looking at your total pipeline.
Next, you have to study deals at each stage to know what percentage you win of deals once they reach that stage. Let’s say you win 3 out of every ten deals that make it to the presentation stage in your sales process; your likelihood of winning deals in that stage isn’t anything over 30 percent, regardless of the percentage you use in your CRM (A lot of companies use 50 percent or higher).
You need to know what percentage of deals you win. You also need to know what percentage of deals you win at each stage if you are going to have a reasonably accurate forecast. Even when you have these numbers, context matters. If you have two competitors still vying for a deal and genuinely engaged with your prospect late in the process, your chances of winning aren’t greater than 33 percent—and they may be lower.
A Real Sense of Security
The error too many salespeople, sales managers, and sales leaders make is believing that they win a higher percentage of late stage deals than they do. That false sense of security is what causes you to miss your goals.
If you want to improve your sales forecasts now, start by doing better math. Then test every opportunity to ensure it is progressing the way you believe it is.