Why you need to stop asking your sales managers for the revenue forecast

"...“61% of executives admit their sales managers have not been adequately trained in pipeline management strategies and techniques and the average sales manager is not able to tell the difference between pipeline management and forecasting. That is a real shame when companies that master pipeline management practices sees 28% higher revenue growth”

Far from the frontline
Working with many B2B sales organisations over the years I have stumbled across many things that have caught my interest and curiosity. One of them, is how first line sales managers rarely get to work with the elements of sales management that has proven effective.

Although quite the paradox, sales managers very often seems caught up in activities far from the front line. A study from 2015 showed that 62% of sales management time was spent on a variety of administrative tasks not directly related to revenue creation. There is a great deal of reasons for this but one of the bigger sinners in my experience, is a misconception around what constitutes pipeline management, resulting in a not uncommon, but quite unproductive, practice among some CCOs.

The riddle effect
If you are a CCO or a CEO and you regularly send an email or walk to the sales managers office to get an update on the revenue forecast to satisfy your own or someone else´s control gene, you are very likely impeding her ability to make the numbers. Many sales organisations and managers believe that they are spending time managing their pipelines when in fact they are managing forecasts. Maybe you think it is just semantics. A detail in management lingo not worth spending time on, but allow me to challenge.

Indirectly forcing your sales organisation to spend time on predicting revenue on behalf of spending time managing pipelines is unfortunate, as forecasting adds very little value from a revenue creation perspective. The big issue is not those 5 minutes it takes you to get the actual update from the sales manager. The big issue is that it takes focus and attention away from the actions that really matter in terms of growing the business as well as the riddle effect it creates down through the organisation. Sales people being asked up to several times a week to update all the numbers on all of their 50 deals, estimate when deals will close, how much revenue by when etc. Don´t get me wrong, I am not claiming that forecasting is not important. It has it´s time and place - but it is a standard procedure and it should be automated.

Asking for the forecast? Try this instead
If you feel just slightly guilty and can recognize yourself in above and want to try something else, then have a go at testing a simple version of pipeline management practice in your sales organisation:

• Create a Buyer-Aligned Sales Process: Gather your team and identify your buyers buying process (eg.: status quo, identify new needs, define solution, identify viable vendors, review approaches, make decision) and match each phase with the steps and actions your sales reps need to take to match what is going on the buying side.
• Define Stage Gates: Define a stage gate or a verifier per sales rep step, including either closing probability or opportunity category, that will serve as a sort of “handshake” with the buyer, only allowing the opportunity to move forward when achieved (eg.: "business issue confirmed" or "decision maker confirms potential value of solution"). If enforced, this will help ensure that the right sales activity is conducted timely and improved accuracy of numbers in pipeline.
• Create a sales management rhythm: Design and install a firm cadence revolving around one (eg. bi-weekly) pipeline acceleration meeting in which the ability to reach target is reviewed and client-orientated actions defined. Pipeline Management is supposed to be much more an exercise in communication and conversation than mathematics. Prior to this meeting all sales people are obliged to update individual sales pipelines to ensure all new and existing sales opportunities have been captured and updated. Note, it is not allowed to ask sales people to update at any other times.
• Align with forecasting and assign ownership: Define at what point in the sales process you will view sales opportunities as ready to be included in the forecast and align this with Finance and/or Delivery. To ensure focus, a possibility is to have pipeline practice owned by sales and forecasting process owned by for example finance - with automated input at designated times from the sales pipeline. Be aware of other forecast sources such as external factors and historical data. There is a wealth of exciting predictive forecasting solutions available that potentially could be of use.

“If you are a CCO or a CEO and you regularly send an email or walk to the sales managers office to get an update on the revenue forecast to satisfy your own or someone else´s control gene you are very likely impeding her ability to make the numbers. Too many sales organisations and managers believe that they are managing their pipelines when in fact they are managing forecasts” 

So, asking your sales manager to once again approximate how much revenue will be be brought in by when is just yet another symptom that many sales managers has lost control of their calendars and are being sucked into non-revenue driving activities. Forecasting revenue is basically not really the job of a Sales Manager. Taking part in building and managing an accurate sales pipeline is. A robust process and toolbox for pipeline coaching built on modern pipeline management technology with automated input for forecasting will leave adequate time for the sales manager to be conducting pipeline coaching and increase likelihood of hitting revenue targets without causing capacity issues in other parts of the organisation.

What do you think? Are you experiencing this issue as well? Do you have a different perspective? Please comment below.

By Thomas Børve,

Managing Partner, kvadrant

tbj@kvadrant.dk, +4540410043