Dec 06 2007
What about forecasting?
Now we really get into the “art vs science” —but don’t believe this for a minute. Forecasting is one area where math applied does give you some real data to match against the revenue plan.
First, put a scoring system in place so that every possible deal has an objective frame. Match it to your sales cycle. For example, when the first conversation is had with a potential customer, and it goes well, it’s natural to give this deal a lot of attention and a high “score”. If you break down the things that need to happen before this opportunity actually becomes a sale, a more realistic picture emerges. OK, the prospect is interested. Good, let’s assign that interest level one point. When they have seen a demo, or some other proof source, and they remain interested, let’s give them another point. When they have indicated that they have budget that can be used for our product, another. And so on. As positive “sell” indicators take place, points are assigned. By the same token, points are lost if certain things happen. As an example, let’s say your sponsor gets fired. Or a competitor enters the scene where none existed, or an RFP is issued. These things usually lower the score, and may change the momentum that this particular deal has.
Ultimately, each opportunity has a numerical score that tells sales and management how strong the opportunity is, and there is a minimum score required to advance the deal onto the forecast and through the stages of the sales cycle. This takes a lot of the guesswork (“art”) out of the process. It’s not a lot of work; many SFA systems support it, but it’s also very easy to set up manually.
And it means you can control how sales time is spent—on the opportunities that have the best chance of closing!