Recently I was chatting with a colleague who was down in dumps about his sales team’s inability to properly forecast the opportunities in the sales pipeline. “We have a large number of opportunities at the top of the funnel and nothing that is ready to close.”
When I asked him why he thought this was the case, he said that; “We chase anything that moves at the top end – especially when it is brought to us by our major partner. We spend a lot of time and resources in the initial qualification process and then things seem to stall.”
Stage 1 of his sales process shows $10M in opportunity at a probability of 10%. Conventional logic dictates that the current $10M is expected to eventually generate $1M in real revenue. But what is this “conventional” logic based on? The opportunities vary in size, geography, relationship etc.
When I questioned him further, I found that that the 10% probability measurement came right out of the CRM system that they are using. There is NO logical relationship between the 10% probability and his firm’s actual results. The probability number is a random one. Yet the probability has been used in their business for so long now that everyone accepts it as fact and is disappointed when it proves to be false.
A much more accurate picture can be painted by using real data in his forecasts. This will take some time and some discipline to create; but the good news is that the firm’s CRM provides a large data sample on which to base their conclusions. The use of real data that is specific to their business will give them the actual Sales Stage probabilities that will be logical and meaningful to their success. They will also be able to take the real data and make real decisions on how they will allocate valuable time and resources in the future.
Creating Sales Process stages that are real and fact-based is essential to improved sales results. Knowing the key stages and the activities required to advance the sale leads to improved internal and external communication, enhanced coaching sessions and better forecasting. It also allows for a more disciplined, factual approach to sales pursuits; freeing up valuable resources for the opportunities that have a high (REAL) probability of closing.
Many of our clients are now heading into annual planning sessions. As you start to plan, take the time to question the origin of your Sales Process steps and probabilities. When and how were they created and are they still relevant in today’s environment? This may be the perfect opportunity to step back and use Real Data in your sales process.Share