Sales Forecasting

When managing a sales force, the most difficult process is forecasting sales. The more pressure you place on the sales force, the lower the quality of opportunities that show up in their pipeline and with unrealistic probabilities. Only qualified opportunities should be foretasted.

What is a qualified sales opportunity. No, it is not one just because they agreed to a meeting or a demonstration! You need to regularly do a line by line audit of a sales pipeline to sort out fact from fluff. There are some simple questions to be asked about each opportunity to validate that it is qualified:

1. Is there a budget? Most tire kickers love to meet with sales people to gather intelligence. Vendors are a great source of competitive information, gossip, and price metrics. A qualified buyer has a budget already approved to so something. The salesperson must determine whether there is an approved budget and for what. It will be difficult to pin down an actual amount but it is important to get a definitive yes or no.
2. Is there a definitive mandate to enter into a contract for something like you are selling? You may feel that you provide a better option than what was budgeted, but what was mandated will almost always prevail.
3. Have you determined that there is an acknowledged need for what you provide? You may be selling benefits but do they agree that they need those benefits? Assuming interest because of ongoing dialogue does not cut it. You have to get them to fully acknowledge they have the need.
4. Have they acknowledged you have a potential solution that matches what they are seeking. Too often you will get later surprises if you do not specifically ask. Bravado and assumptions lose the deal.
   

Helping buyers make informed purchase decisions is the primary sales function but proper qualification is the key success factor for your organization at large. Too much energy is wasted and wrong decisions made based upon unqualified sales forecast data. The first phases of the sales cycle are Interest Development and Education and these phases earn the right to ask the above four qualification questions before investing your professional time and organization time further. If you do not have an affirmative on all four, the salesperson must continue to work on the first two phases until you do or you walk away. Forecasting anything until you have qualified opportunities is putting your head in the sand with wishful thinking. Using a forecast to measure salesperson productivity is also a poor metric. Audit each forecast one-on-one with the salesperson and you will see improvement not only in your own forecasting but with salesperson productivity.