Category: Blogs & guidebooks

What Sales Forecasting & Jumbo Shrimp Have In Common

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Barry Trailer is the Research Principal and Co-Founder of CSO Insights.

The number 1 metric used to measure (and reward) the performance of sales managers is their teams making their number.  Number 5 on the list is forecast accuracy. No wonder “forecast accuracy” continues to be an oxymoron, that is, a contradiction of terms (ala jumbo shrimp).

Who cares, so long as you’re making your number? In the chart below, the performance of 2 companies (A & B) is shown over a 3-year period, versus the straight line representing quota. Company A’s performance is ±50%, while Company B’s is ±5%–which means both companies made their number. However, if these were publicly held companies, B could have 3 or 4 times the market cap of A, on the exact same revenues.  If privately held, lenders would want to lend Company B more money, for longer periods on more favorable terms. Why? B is more predictable.

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Assuming these companies were in the same industry (i.e., same seasonal variance, relatively same size deals, etc.), B would be more productive and more profitable. Company A would have more rush shipments, more overtime, more sick time, and generally higher expenses simply because of the volatility and lack of consistency.

I talked about the importance of sales process in my prior blog. It could also be said that Company B has its processes more under control; Company B has less variance.

How would you like to be the CFO of Company A? How would you give guidance prior to the end of a period? As the head of HR, would you staff for the peaks and risk overstaffing, or the valleys, risking delays and massive overtime?

If it takes 6 months to recruit, hire and train a product specialist, as CEO, would you authorize beginning that process 6 months in advance of actual sales based on the sales forecast? If not, would you risk poor customer satisfaction ratings downstream because customer implementations are delayed or poorly implemented? Poor sales forecasting takes the bat out of every other functional leader’s hands. Profitability can be lost as well.

Making the Number versus Making the Forecast

As stated above, it’s all about making the number, right? Maybe, but there’s a difference between making the number and making your forecast.

For example, a rep has a quarterly number of $400K. The forecast shows 5 deals (A, B, C, D & E) each averaging $150K and each with a 60% probability of closing (with a win). First, what does “60%” mean? Sounds better than 50/50 but the rep’s not going out on a limb and committing to 90%. Without a defined sales process and buyer evidence “toll gates,” one rep’s 60% could be another’s 30% (whatever that means). But as this rep’s manager is thinking, 5 X $150K X 60% = $450K, so we look OK.

Second, what closes is B for $75K and surprise mega-deal H for $350K. Final quarterly number: $425K. Hooray, ring the bell, made the number! This “hero” is in a flat spin, completely out of control. She made her number but blew the forecast completely.  Again, who cares?  Here’s one example.

A capital equipment manufacturer in the semiconductor industry made a test machine that sold for $2.5M. The basic box was the same but Samsung, Phillips, AMD, etc., would each have custom requirements. In January, an order would be forecast for 4 machines for Samsung to be delivered in April. In early March, Samsung says, we want those boxes but now don’t need them until August.

Sales hustles around and finds new orders for 2 machines with Phillips and 2 with AMD. The customization for Samsung is undone and the new client specs begin being built. Mid-March, Phillips says we only need 1 and AMD pushes their 2 off until Q3 at the earliest.  A new home is found for the 3 orphaned machines at Intel, which agrees to accelerate a July order for 3 machines but at a discount to take them before the end of April. Again, sales’ heroic efforts are celebrated but all the profit from the 3 machines has been eroded. Sales made their number but blew their forecast.

There are other ways that “forecast” inaccuracies can hurt the bottom line. For now, look closely at your sales process, how your managers reinforce/enforce this process, and how their review uses this to improve “forecast accuracy” beyond numeric mumbo jumbo—or shrimp gumbo.

Degreed Pipeline Data Spikes 400% Leveraging TopOPPS “Rep Assistant”

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Jeff Lamb has been involved in sales ever since receiving an MBA from Gonzaga University, and has since worked in multiple sales roles before joining Degreed in 2014.

Degreed is an education technology company that is engaged in the measurement, tracking, and validation of all the learning individuals do throughout their lives. Jeff currently serves as the Director of Sales Operations and Enablement. Jeff loves working in sales. He enjoys solving sales problems, working with great people and learning the psychology behind the scenes. He’s a sales leader and has been a TopOPPS customer since April 2015. This case study will illustrate the benefit TopOPPS provides Jeff and his team.

The Story

In early 2015, Jeff Lamb was determined to better align the sales reps to their sales process. Manually building CRM reports and analyzing data to identify bottlenecks in the pipeline was a daunting task. “We found a lot of our deals would get through the pipeline, then stall out. I needed a better way to enforce milestones within the sales process to improve execution.” For his initiative to be successful, Jeff wanted a tool to easily implement to avoid aversion from their veteran sales reps and new sales reps alike. Jeff also said he “wanted a tool that would direct sales reps to what they needed to do to win deals.” After researching solutions in the predictive sales analytics space, Jeff ultimately selected TopOPPS.

Following the completion of training, sales managers found the coaching insights and dashboard helpful, as it allows them to see how each rep executes their sales process a little differently and where there’s room for improvement. In reference to the Pipeline View, Jeff notes, “I like having everything in one place. I used to have to build multiple CRM reports, put them in a Dashboard and then click into each one to see detail. Now I can see everything in one view, which is something I really enjoy. And I like the suggestions, because it doesn’t just provide data, but also actionable recommendations, which saves me and everybody else a lot of time manipulating the data and making sense of it.”

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TopOPPS “Rep Assistant” helped the sales team adopt the sales process, proven by the 400% increase in their CRM data and frequency of updates. Now that Jeff’s sales reps have adopted the process and more data is being captured about each of their deals, the pipeline analytics and insights direct reps throughout the process for more wins. The improved adoption, data and analytics contribute to Degreed’s forecast accuracy. On the first day of the sales period, TopOPPS’s prediction is 86% accurate compared to actual bookings on the last day. As their quarter progresses, TopOPPS forecast accuracy continues to grow because it is on autopilot. “We have significantly more confidence in our forecast early in the quarter because we know the pipeline is real and quotas are attainable.”

Exceeding Quota with Data-Driven Sales Management

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Maximizing Reps Sales performance is the number one objective for Sales Leaders. We have published a step-by-step guidebook that does just this – Maximize Sales Performance. But in short, the following details what every Sales Leader needs to know like the back of their hand.

Prior 1:1s with the reps, I did what I could in pulling as much pipeline information and history as I could – this was a lot of work and I didn’t trust the information. The various ways deals were closed or manipulated or the lack of sufficient information always seemed to be a problem for my reports. Without a consistent process, what one rep said was a 50%, another might say is 75% – there was a lot to adjust to. With so little time and so many reps to strategize with – it left out the potential to really maximize the chance of winning the deals and to help develop the non A-players. That 1:1 time could have been spent so much better if the rep and I had a head-start.

Having the proper sales management is a great way to increase sales opportunities. Which breaks down into the following 5 steps:

  1. 1. The Number
    1. a) Predict what will close in the pipeline
    2. b) Predict any additional pipe that is yet to be generated and closed within this sales period
  2. 2. Cycle Time & ASP
    1. a) Determine how long does it take to win a deal and what is the Average Selling Price (ASP)
  3. 3. Confirm the Pipeline
    1. a) Build practices that will allow you to look upon past quarters and find consistency
    2. b) Know the composition of the pipeline and what happened to it each quarter
  4. 4. Metrics to Help Reps Improve Performance
    1. a) Look up certain metrics to set benchmarks for your team
    2. b) Example: Are we winning commits?
  5. 5. Tracking Status
    1. a) Follow up, consistency is key!

These strategies will help blow out your number and get the entire team exceeding quota. Using these data-driven best practices, you’ll be able to keep score, react in time and have confidence as you guide your team. Again, there is a free guidebook on this here – I encourage you to download it. Side note – CSO Insight’s, Barry Trailer has an incredibly insightful blog with research that identifies the “Silver Bullet” to increase quota attainment.

Sales Process… “Remarkably Absent in Day-to-Day Execution”

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Barry Trailer is the Research Principal and Co-Founder of CSO Insights.

Want a silver bullet to increased quota attainment? The magic pill to making your number year after year? The bottom lineon more than two decades of research with more than 40,000 survey respondents?Wait for it…Short answer. Quick answer. Honest answer. Sales process. Yup.

Not sexy but absolutely freaking true. Not kidding. What’s interesting is this really doesn’t come as news to anyone and, yet, it is remarkably absent in day-to-day consistency of execution. And, that’s the word, consistency.

Sales process? Yeah, we’ve got that. Sort of. Use it, measure with and against this standard on a regular, ongoing basis? Reinforce, enforce and continually improve it? Yeah, no; not so much.

What’s interesting is the same sales managers that are such fans of, and recognize the value of, persistence in their reps, lose their love for persistence when implementing sales process. And yet, our research has been consistent for over a decade now: higher levels of relationship (from Approved Vendor up to Trusted Partner) and higher levels of sale process implementation increase (from Random to Dynamic) correlate with higher levels of revenue plan and rep quota attainment, and more.

So, if this isn’t news (it’s not) and it’s true (it is), why the resistance? What is it that keeps sales managers/management from seriously and consistently implementing sales process?

An early observation we’ve made of many sales managers is that the process is “interesting” but what’s of interest are the results. This strikes us as exactly backwards; that a more helpful orientation is having the results being interesting but what is/should really be of interest is the process. This may seem like we’re just playing word games—we’re not.

You can be intensely interested in the results but, no matter how much you study results, they’re not going to change—by definition, results are already done. However, by being intensely interested in the process, you can identify patterns that are early predictors (leading indicators) of things going well, or poorly. You can manage process steps but you can only monitor results. Again, because “in process” means things are still happening, whereas, results are, well, done.

SRP Matrix.pngSRP Performance Metrics.png

For 10 years, CSO Insights has been tracking sales performance using the Sales Relationship Process (SRP) Matrix. We’ve defined 3 performance levels (see illustration) across the matrix. Suffice to say, the red zone is generally a low performing, no man’s land, where you’ll find yourself scraping for low margin, hyper-competitive, scraps of business. Moving UP and OVER on the matrix translates to moving up in performance and success. Here’s the key takeaway for today’s discussion: moving over, that is, implementing higher levels of sales process, is wholly with in your organization’s hands. Creating, sustaining, andexpanding a culture of transparency, and continuing process improvement is the success formula (see: “magic pill,” “silver bullet” above) you are seeking.

Sales management is always looking for a “lever” they can use to improve performance. Sales process is that lever. However, a lever without a fulcrum is just a stick. Your front-line sales managers are the fulcrum to consistent process implementation, process-based (i.e., data-driven) coaching and professional development to take your organization to the next level.

Join us on Thursday, August 24th for our “Sales Process or Die” webinar with Barry and other industry leading sales leaders – Register here!

TopOPPS has helped hundreds of Sales Leaders increase their team’s performance level through enforcing sales process rigor that enables Sales Reps to focus on selling to their best deals. To learn if we can help you, contact us!

What is Sales Pipeline Analytics?

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Most sales leaders analyze their pipeline the same way they’ve done it for years – this is why sales is still a grind, forecasting is still a struggle, and there are still surprises and disappointments at the end of the sales period. Your pipeline analytics should answer these questions with precision:

1. How much new and total pipeline do we need – and will we have enough?
2. Is the pipeline filling at the appropriate rate?
3. Where are deals getting stuck in the pipeline so I can change or coach on those sales activities?
4. Am I converting what’s in the pipeline at the necessary rate?
These questions have to be answered for the whole company, the region or division and for the sales reps. If I don’t know the answers to these questions (and some follow on questions), I may be caught flat footed at the end of the sales period and miss the number. But more importantly, without good answers to these questions throughout the sales period, I can’t make good decisions to improve my process and my reps – costing the company millions in lost deals. Another blog we have related pipeline anatlytics, which is about finding the right sales forecasting tool can be found here.

What’s needed is the ability to understand more about your pipeline – where it came from, what happened to it, and ultimately, to understand and predict if I’ll have enough to hit my number. The fundamental components of understanding your pipeline to see if you’ll hit your number are:

  1. Composition of the Pipeline
  2. Pipeline Prediction
  3. Accuracy of the Pipeline
  4. What Happened in Previous Periods
  5. Conversion Rates

To learn in greater detail how to understand your pipeline better, download the full guidebook “Analyzing the Pipeline”.  A nice follow up to this download is our recent post about increasing conversions through the sales process.

Sales analytics with artificial intelligence is helpful because it can predict the outcome in time for you to make an impact. CSO Insights reports that 94% of their World Class sales performers use sales analytics technologies for better decision making and less digging.

Gluing Together the Sales Process

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Today, there’s a tool for everything. Technology is helping us find deals faster, and expediting necessary steps of the sales process so they close quicker. Most of them integrate into your CRM where you can access the information. Even still, you may need to be a Salesforce guru in order to piece it all together and there is no way everyone feels 100% confident that all the technology ties together seamlessly.

Sales Stack GlueStack process

… Continue reading

How To Validate Close Dates

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Internally, you are familiar with the Expected Close Date (sometimes simply referred to as Close Date) that sales reps keep updated. Sometimes a sales team can have difficulty keeping these dates accurate; perhaps simply because of the volume of deals occurring, or because predicting the future is hard! … Continue reading