Sales: are you looking at it all wrong?
It’s time to get real on sales forecasting. Logan Wedgwood turns traditional thinking around setting sales targets upside down. The end of the financial year is almost upon us which, as well as wrapping up the year that’s been, also means a fresh start in terms of business results. It’s the time of growth and […]
It’s time to get real on sales forecasting. Logan Wedgwood turns traditional thinking around setting sales targets upside down.
The end of the financial year is almost upon us which, as well as wrapping up the year that’s been, also means a fresh start in terms of business results.
It’s the time of growth and opportunity when new sales targets are set. Exciting!
If you’re celebrating the completion of a good year, now is when staff lurch forward with their energy (and budgets) renewed!
However, it often doesn’t stick. Instead, it’s common for businesses to lose momentum within the first 90 days of the new financial year as the initial quarterly targets are missed.
Success breeds success and makes us feel good about what we’re chasing. However, the reverse is also true, and it’s an age-old story, that’s told time and again.
So, what can we do about it?
Proceed with realism
In my opinion, sales forecasting is often being done wrong. Sales targets are based on aspirational numbers, as opposed to being grounded in reality. They’re a projection, not a promise – but what if you could take away the guesswork and get some measure of certainty over positive results?
It’s great to say “let’s raise our targets by 20 percent this year” and you may even get yourself and your team fired up about that – but a whole heap of action needs to happen to build the momentum required to achieve those new, higher targets.
It can be done, but it’s the clearly defined and measurable activity that grounds it in reality.
Focus on activities, not the numbers
More often than not, end-of-month and quarterly reporting is driven by the accountant, as opposed to the team. As well as being solely based on what has already happened, it’s focused on the numbers or the result, as opposed to the actions that could change the result.
It’s time to flip the focus.
Look instead at what you and your team can be doing weekly, and even daily, to affect your sales outcomes. Your accountant may want certain numbers to give certainty around cashflow, but motivation and momentum for your team comes from different numbers – ones that focus on the actions they can take to succeed.
You and your salespeople need to know exactly what to do daily in order to reach the targets, not because you are hoping you can, but because your efforts are in the right place to influence positive outcomes.
Define your buying stages
The easiest way to do that is to define the stages of your buying process – what do your prospects need to know to purchase from you and how are you delivering that information?
Are all your activities aligned to the stages you need to take someone through to get a sale?
Forecasts of sales results are often based on hunches. “Oh, we had a great meeting, I really liked them; I’m sure this will become a sale…” Or “She said she’s definitely keen and that she would come back to me…”
“Know your conversion rate and consider the number of new prospects you need to contact to reach your targets.”
Know your conversion rate and consider the number of new prospects you need to contact to reach your targets. What channels can you best use to do this? How many marketing campaigns have you sent out this month, and how have you leveraged those?
Is there an opportunity to re-engage past prospects that never converted, or to put new ideas in front of past and present clients? What are you planning to execute next?
Relying on a hunch is no good for anyone. If you know exactly how many meetings or engagements you need to have with a prospect before they are ready to buy (which is probably five or six – not one or two by the way!) then you can map out the exact activities you need to do daily to get results.
Your forecast becomes grounded in the reality of knowing exactly what activities are left to perform, within what timeframe, and when the deal is likely to close. And that proactive approach is far more empowering!
Logan Wedgwood is an Auckland-based management consultant specialising in marketing and sales.