Best Practices for B2B Sales - Sales Forecast Call

This blog focuses on the second part of the Sales Management Process, the sales forecast calls.  The last three blogs focused on Sales Coaching and One-on-Ones, the first part of four parts that make up the Sales Management Process.    

A Word of Caution

Both One-on-Ones and Forecast Calls are weekly meetings, but don’t make your One-on-Ones the forecast call.  One-on-One time is for the sales rep.  This is the sales rep’s  sales development time.  It is your time to help them become  A-players.  The Sales Forecast Call is all  about the sales forecast, which deals can be counted on closing this sales period and what has changed since the last meeting.  Typically it is managed by the sales manager and includes the sales reps that report to him/her.

The following table is a summary of this best practice.

Foundation of the Sales Forecast

Weekly sales forecast calls are the foundation of an aligned sales forecasting process.  They are a series of meetings that bubble up through the sales organization every week.  First is the forecast call that is the topic of this blog, sales managers meet with their sales teams.  That is followed by meetings with all the sales managers and their leaders and that is followed by the leaders meeting with the CSO and his/her direct reports to finalize the number.

Although the sales manager leads the weekly sales forecast call, each sales rep, in turn should provide updates to their pipeline and answer any questions from the sales manager or other members of the sales team.  The function of the sales forecast call is to “manage the gap”.  That is the difference between the sales target and sold-to-date for this sales period.  The purpose is  to objectively assess opportunity amounts, appropriateness of sales stages, forecast categories and close dates to understand how to fill the “gap” and probability of achieving the sales target..  All participants should update both their committed and best case scenarios and opportunities that make up those scenarios prior to the meeting.  The sales manager should leave the forecast call with an understanding of each sales rep’s commit, best case and next step for each of the opportunities used to achieve that commit.

At the next level of Forecast Call meeting sales managers communicate the information, updated with their own assessment up the management chain.  Similarly, the next higher levels of the sales management, update and communicate their information, with their own assessment of achievability to the next management level.  Through these regular forecast meetings, sales managers and leaders interpret the buyer/seller interactions, clarify them with the sales reps and guide the CSO to an accurate sales forecast.

The sales forecast call process of meetings becomes increasingly complex with each level of sales management.  Initially, this could start out as a pen and paper exercise, but it quickly moves to spreadsheet and beyond to a salesforce automation application[SFA].  

Challenges with the Sales Forecast Call

One of the biggest challenges with this process  is the sales pipeline information is rarely perfect.  Sales forecast calls need to be data driven and they rarely are.  Ideally, the CRM system and sales management and leadership identify data imperfections, assess the character of the opportunity based on the data, historical insight, and sanity checks  and adjust the amount, positive or negative to sum where the data suggests the forecast is.

However, this often results in a tug of war.  Sales rep calls a number, sales manager adjusts the number down because they feel it is too optimistic and the sales manager’s manager adjusts it up.  In order to increase the accuracy of the sales forecast, sales reps, sales managers and sales leadership need feedback during and after every sales period on how their assessments and judgements impacted the sales forecast accuracy.  Many times the number is “smoothed” toward management’s wishes vs the reality of the opportunities in the sales pipeline.

A second challenge with this process, especially when there is inadequate information to assess opportunity status is opportunity assessment is very biased by the sales rep’s disposition (happy ears or sandbagger), and it is hard to objectively understand the status of the opportunity when you can only look at it through the lens of the sales rep and don’t have objective information to interpret.  

The third challenge is there is no feedback for sales rep’s, sales managers and sales leadership to understand how their gut assessments impact the accuracy of the sales forecast.  Imagine selecting a number and being told it is wrong, without knowing anything else.  There would be no ability to learn how to be more accurate.

Overestimating sales forecasts happens in these sales forecast calls when we rely on people’s judgement in an absence of information and under high-pressure to hit their number. Without data, an unbiased assessment of opportunities and a feedback of actual vs forecast the whole system is broken. 

Best Practices, Baseline, Good, Better, Best

The baseline level is the status quo we’ve had for the last 20 years.  It is informal and ad hoc.  They go something like this:  

• “Hey Ric, are you going to hit your number for this quarter?”  
• Ric replies: “Yep!, may even go a little higher, I feel really good about XYZ Corp”
• Sales manager asks: “XYZ Corp, are they new, I don’t see them on the pipeline.”
• Ric replies: “Uhm, yeah, they are pretty new, I’ll get them in”.
• Then the sales manager goes on to the next person.

The problem is it is all “gut-feel” pyramided on top of more “gut-feel”.  There is no data to back it up.  Worse yet, there is no capturing of the sales process to know what works and what doesn’t in the future.  Scaling the sales team relying on hiring good sales reps who just “do it”.

At the good level, the sales manager works from a sales pipeline report produced by the SFA/CRM system.  The sales pipeline view reflects the current status of all opportunities in the system for the sales rep and is the starting point for the discussion with the sales rep.  “All good” is not a response available to the sales rep.  The sales manager asks questions regarding the opportunities most likely to close.  The sales manager has done some “pen and paper” calculations and understands the “gap” the sales rep is working with between their sales target and closed-to-date.  The sales manager guides the discussion to understand the quality of the opportunities used to fill the gap.  The accuracy in the meeting starts to break down when asking questions about specific opportunities, their status and next steps.  In many cases, that doesn’t exist in the CRM, but only in the sales rep’s head and that is biased by their disposition and where they are in quota attainment.  

At the better level, the sales forecast call is reviewed from the sales pipeline view.  The system provides the “gap” analysis for each sales rep and categorizes the opportunities most likely to close, next most likely to close, opportunities in trouble, etc.  The view also prioritizes the opportunities by “health score” so the most likely to close opportunities are at the top of the view.  The view also supports drilling into all the sales interactions and all the metrics for the sales opportunities.  The system also supports “health and hygiene” alerts and categorizing of opportunities so the sales manager can see those deals that may have been progressing nicely through the sales funnel but are now hitting some resistance.  

This screen below provides an example of “gap” analysis.  The “gap” is in the difference between items (1) and (2), the total is shown in (3).  It identifies the difference between the target and Won-to-date, this sales period.  The second row (4) shows different categories of opportunity totals based on their likelihood of closing.  Clicking on the cross hair icon(5) displays the opportunities that make up the total (6) and allows the sales manager and sales leadership to override the forecast amount(7).  These overrides are saved with each change by user.  Clicking on the opportunity name displays all the sales activity for this opportunity.

At the best level the sales manager has all the information available described at the better level, but the system provides the ability to track accuracy of the “judgement adjustments” that happen at every level within the sales organization as the forecast bubbles up to the CRO.   The overrides identified in the prior image(7) are captured by role.  clicking the "Deal Overrides" displays the changes made across the sales hierarchy.

This provides the feedback necessary for the entire team to become better at forecasting.