When people think about working in sales the mind often jumps to the grind of prospecting, winning over, and singing customers. The nonstop hustle of getting people willing to hear about what you’re offering and sincerely settle in for the ride. But there’s a part that gets overlooked unless you exist within this world. It’s a quarterly, monthly, sometimes weekly and possibly daily task that everyone who has ever been in a sales organization has been forced to endure: sales forecasting.
For those of you not in the know, sales forecasting is where everyone carrying a quota reports up on what they expect to sell by the end of a given time frame. The quarter is the holy grail of all companies, but monthly forecasts are almost as emphasized so people can be aware of the pacing; those simply aren’t as intense. One maxim remains true throughout all sales forecasting however– it’s all completely made up.
The problem with accurate sales forecasting is that its success relies on alignment of front line reps with the top of the food chain in their specific sales organization, and that simply is never the case. I’m not against sales forecasting in any way. I understand it’s a very important process for upper leadership to understand the business. The problem is that accurate forecasting means absolutely nothing to an account executive who is just trying to get deals done. The incentive to nail this number simply doesn’t exist. In fact, sales reps typically find themselves better off by obfuscating the number as much as possible. The are simply so many forces working against sales forecasting.
Customers don’t share your urgency
Obviously signing business requires the cooperation of the prospect. At the smaller end of the scale they aren’t often operating with a ton of discipline in their buying process. People involved in the evaluation usually handle several responsibilities so can have their priorities reshuffled on a whim. You can send them a reverse timeline and order of events, but since these are not binding documents in any way they are effectively meaningless.
We all know the preferred method to get customers to sign by end of month / end of quarter: expiring discounts. You trot out old reliable: “Buddy, we’d love to earn your business by the end of the month. To do so our leadership has approved this never before seen discount that definitely expires in a few days and won’t ever be seen again.” Everyone who’s ever bought or sold technology knows this is a total fabrication.
I’m honestly shocked people still do this. From all the companies I’ve heard of, the rumor is that only Salesforce holds customers accountable to signature dates and that’s usually spelled out quite clearly throughout the process. Every organization is simply lying, and 99% of customers know it. Possibly more. I always love seeing this bluff called, except when my manager is the one that pulled it and I have to deal with the consequences.
Prospects make baseless promises all the time, or commit to things freely without realizing the ramifications of that commitment. You can ask them for a signature by Friday today, and they say yes not realizing they don’t have the necessary pull to ram something through vendor review. They can guarantee a Wednesday signature and then their biggest client could throw them a fire drill and it’s all hands on deck. There’s simply so much beyond everyone’s control, and even the most experienced reps can end up blindsided by these events.
The thing that sales leaders sometimes forget is that on the customer side of the deals they are people as well. Their entire job is not dedicated to evaluating our product and making a timely decision. They have an entire slate of responsibilities– projects that are due, reports to file, their own deals to work on, their own customers to service. On their list of priorities could end up falling very low, and if they don’t have firm compelling event it means absolutely nothing to them to sign a contract a few days later. Somehow in the sprawl of sales organizations and the need for urgency this is often a lost concept.
Sales reps are incentivized to hide close dates
For a sales rep there is literally zero incentive to keep an accurate close date for a deal. All it does is invite unwanted scrutiny from sales leaders counting on your deals to reach the number they likely lied about a few weeks prior. I work in a role where our entire team holds a weekly deal review where the sales leader will call on random people holding opportunities that are in the forecast to close in the near future. Depending on how thorough you are at taking notes the tone can be anywhere from jovial to daunting.
There’s one guaranteed way to not get called up for deal review: have all your opportunities set to close in the distant future. I haven’t perfected the formula yet, but I’ve so far found that keeping things a few months out will keep me safe. Nothing is ever set to close this quarter until the signature comes in.
Another place I was at had as trying to forecast at the height of coronavirus when customers did everything they could to delay decisions, and justifiably so. This was a role that was highly transactional, so rather than three or four big deals per quarter I was doing five to ten per month. People would often guarantee signature by the end of the month and then magically vanish until a few days into the next one. They still signed, just a few days later. The lectures were endless.
“Why didn’t they sign?”
I don’t know, they haven’t answered any emails or calls in a few days.
“Didn’t they guarantee signature by Wednesday?”
Yes.
“So why didn’t they sign?”
*soft sigh*
It’s worth noting this frequent exchange was with a boss I hated to begin with which made it that much worse. This was usually followed by a lecture on how it’s one thing to miss quota, but it was another to miss a forecast.
What lesson did I take from all this? Never forecast anything. I’d forecast zero dollars every quarter if they let me. One thing has remained constant– no one ever gets mad if you close a didn’t you didn’t forecast. In fact, you’re usually regarded as a hero because you can guarantee some buffoon committed a deal that never had a chance and your boss’s boss has to make up that revenue somehow.
A pure guessing game
What it all comes down to is every layer from bottom to top understanding what the next step is going to do with it. As I mentioned, I’ll forecast absolutely nothing at any point now or in the future. My boss knows me well enough to know that I have deals in play, and can look at my pipeline and figure out there’s a few things that will close; he does this for the whole team. Then he figures out how much shit he’ll get if the number is too far off pace, and add whatever fluff is needed to keep the heat off then urge us to work a little harder to make up that gap.
I don’t know enough about what goes on in the upper layers of sales orgs to know how much reality they apply to those forecasts, but I know that accounting for the wild variance among the dozens of sales reps alone has to be utterly maddening. Our daily motivation is making the most money possible with the least amount of meddling, and the way to guarantee this is to make our deals invisible until the moment they close.
You take the sales reps’ incentive to hide everything and the customers’ complete indifference to our process and you have what amounts to an impossible task.
