One of the reasons so many sales forecasts end up wildly off base at the end of a quarter is because the interactions between salespeople and buyers are so complex and so dynamic as to make them nonlinear. There are more people engaged in the process and more variables being introduced in large, complex, strategic deals that come with a good deal of risk. The evidence that we use to determine whether to forecast a deal is no longer up to the task.
Set aside the fact that salespeople often use end of month or quarter end dates as placeholders instead of asking the client what date it would make sense to go live with a new solution. Also set aside that many of what are called “opportunities” in the pipeline are really still leads. Also set aside the fact that many prospective clients have not really committed but are simply engaged in conversations at the early stages of exploring.
None of this is to suggest that you should not have a forecast, or that you should accept the nonlinearity of the sales process without trying to create certainty and predictability in sales. But there are some factors that should now be given more weight.
The sales process is really a series of commitments that we make with the client to engage them in the process of change. The making and keeping of these commitments provide an indication as to the progress the salesperson and their prospective client has made towards deciding to change and executing that change.
When commitments have been made but not kept repeatedly over time, it is an indication that the organization the salesperson is working with will continue to struggle to keep commitments, and later to execute. The fact that the people in the organization are struggling to keep their commitments does not necessarily mean they won’t buy, but it does mean without further evidence that they are committed to a certain timeline, it will be difficult to include them in a forecast. No matter how well you try to control the process.
Other organizations have a greater willingness and capacity to make change inside their own organization when they are aligned with their goals, and when their communication allows for the tricky and sticky conversations around change, there’s a greater likelihood that the people inside the company keep the commitments they make, and things tend to stay on track.
The willingness to make and keep the commitments that make up the process of change and that result in a better future state is one factor you have to consider when assessing whether or not to forecast a deal in your pipeline. Kept commitments over time indicate that they are more likely to be kept in the future. Unkept conversations over time increase the likelihood more will be missed. This is a generalization, and all generalizations are lies, even when they prove useful.
The increasingly nonlinear nature of sales is going to require a deeper dive into the progress made around all the commitments necessary to make change. In order to understand where your opportunity lies, and how likely it is to close on or before the date it is being forecast, you’re going to have to consult the record of commitments made and kept.
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Filed under: Sales Acumen