My sales forecasts suck!
Pardon my French, but that’s something we hear from our customers every day. The frustration they face with forecast accuracy is of course compounded by today’s economic environment, placing a big executive-level bull’s-eye on their performance.
Even in good times, big companies spend a lot of energy triangulating their sales forecasts - and with good reason: if you don’t have clear visibility into where your revenue will come from, effective resource allocation is often nothing more than a happy (or lucky) accident. The problem is that clear visibility is a pipe dream for most sales organizations these days. Sophisticated analytic models require heavy IT involvement and support and that’s just not in the cards; IT shops are hunkering down just so they can deliver the core compliance systems enterprises must have. Extra IT bandwidth and capital budget? No.
One of the trends we’re seeing is a focus on improving pipeline management practices. With better visibility into day-to-day changes, sales teams become more proactively engaged in managing risks and exploiting opportunities, the drivers for forecast accuracy. A quick check of the rep and managers forecasts against historical stage-conversions trends and off-pipe revenue trends adds to confidence in the numbers, but it’s the up-stream practices that really drive results.
To improve your forecasting accuracy, follow these three steps:
All of this is within your control - no IT required. The key takeaway is forecast accuracy is really a pipeline management challenge. Sure, use data to arrive at a verifiable patterns. Triangulation, however, is a management process, not a CRM process nor a math problem. Accurate sales forecasts are an outcome of good pipeline management practices.
As a long-time sales executive, I’ve struggled first-hand with the profound lack of tools available that actually contribute to more effective management. CRM systems are good at record keeping, and more recently they’ve even done a better job supporting more of the selling process. Indeed, these systems help my reps, but they don’t make me a better manager. And they remain woefully underleveraged as a source for real front-line enterprise learning. I know how successful companies run their sales processes, but key to a successful sales team is a manager engaged in a productive management process.
The CFO has Corporate Performance Management systems to automate the annual planning process, but the rest of the company needs management systems that are far more nimble to drive quarterly, monthly, and even weekly operating cycles. IT is stretched, infrastructure costs too much and takes way too long to get in place - most managers default to Excel as it’s the only thing they can control. Managing the operations of a business is like helming a sailing yacht: the minute you’ve got everything running smoothly, something changes and you have to react immediately. If you don’t have the controls you need to detect that change coming, you’ll be too late… every time. No one has solved this problem yet for the average operating executive, not even the BI (Business Intelligence) vendors.
It might have been on one of those long flights to Australia when the light bulb went on. It wasn’t so much that BI vendors didn’t want to solve the problem, they didn’t know how to solve it with the technology they had. And it became clear to me that it was going to take completely new technology to deliver “performance management for the rest of us” at a price point and with ease-of-use that an operating executive with no control over IT could readily embrace. It was at that moment I traded in my corporate gig for the life of an entrepreneur.
Fast-forward three years. Now, in April 2009, our first instantiation of this new breed of Operational Performance Management applications for front-line executives, the Cloud9 Dynamic Pipeline Management Suite, has been thoroughly embraced by customers all over the globe. They are seeing things in their CRM data now they never thought possible. And they’re able to get ahead of change in their pipelines - and their business - far more effectively. Sales leaders are engaged. CRM adoption is strong. Win rates are up.
This blog is about the journey Cloud9, our customers, and the industry is taking to transform front-line leadership effectiveness with Operational Performance Management for the rest of us. We’ll have conversations about pipeline management because that’s a huge pain point for so many organizations. But we’ll also have conversations about how marrying performance management best practices with automation can make operating teams more effective. We’ll talk about how cloud computing is helping to make these solutions real.
The world of possibility is changing fast and it’s going to be a fantastic ride. Hang on.