Should Sales Reps Be Required To Predict The Future?
Forecasting is the task of predicting, to the best of your abilities, what your performance is going to be for a given month, quarter, or year. While some companies don't put much emphasis on forecasting, others rely heavily on forecasts for post-sales planning, future goal-setting, and even published market guidance. Amongst reps, however, the debate rages about whether planning is critical to keeping the engine in tune or a colossal waste of time.
Some reps feel that having their finger on the pulse of their own performance; how many leads they have in the pipeline, how many cold calls it takes to get a pitch, how much a deal is worth, helps keep them at the top of their game and working like "clockwork" to make their commissions. Others argue that they are "paid to sell, not to predict" and any time spent not focusing on making the sale is time wasted.
Above and beyond the question of whether time should be spent on forecasting, some managers are also concerned about the accuracy of those forecasts. So should salespeople be tasked with predicting the future or is it more important to focus on the things they can control? And is it better to under-promise and over-deliver when it comes to forecasting, or is being as accurate as possible in your forecast equally as important for the company and the salesperson?
To put it in perspective, imagine that you have two sales reps: one is closing $50,000 worth of business every month and forecasts to within 10% of actual numbers, the other is closing $100,000 worth of business but forecasts to within 30% of actual production. It's difficult for most reps to see how the rep bringing in 100K isn't the more valuable employee but, to the company, the minute that rep falters from his or her number, he or she is considered less "predictable" and suddenly a lot more scrutinized than the rep who's consistently issuing accurate forecasts.
A similar dilemma arises when a forecast is too high or too low. Sneaking in a "bluebird" deal (a deal that you haven't told management about or entered into the system) may elicit grumbles from the corner office, but you can bet that your sales manager will be smiling on the inside when it hits the board. But forecasting too high (or low) can get dicey when a company needs a run time to deliver on a sale and is either unable to fulfill orders due to inventory (or people) shortages or overwhelmed with excess inventory or understaffed team members. It's safe to say that no sales rep has ever gotten fired for closing too many deals, but the company can suffer if it's growing too fast and unable to keep up with the growth.
Regardless of who's right -- those who believe strongly in forecasting or those who don't, it's only a small part of the sales process and should be treated as such. Modern CRM systems are meant to take some of the burden off of reps and allow them to focus time on selling. So if your company puts an emphasis on forecasting, don't ignore the activity outright, but make sure you don't spend so much time forecasting that you take your eye off the ball!
Thanks to Dan Toner (via Facebook) for the image.
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