Hidden Relationships Don’t Have to Derail Your Sales Opportunities

While virtually all salespeople want to understand the competitive landscape within each opportunity they pursue, few actually ask the right questions to uncover the right information to facilitate a candid, productive conversation with their buyers. In this video we share four questions every sales person should ask every buyer they meet. When they do, they will better understand the alternatives the buyer is considering, any favored alternative they may have, and possibly even uncover hidden relationships that will affect the buyer’s decision.

No matter what they learn, this information will allow buyer and seller to have a more candid conversation about the buyer’s true decision criteria. Win more, waste less time, experience less frustration.

This video will help people better understand:

  • Why salespeople don’t uncover alternatives and favored alternatives.
  • How the absence of this information can derail sales opportunities.
  • Four questions to uncover alternatives, favored alternatives, and begin developing differentiating criteria.


Click here for complimentary access to our online learning content on how to uncover alternatives and favored alternatives.

Frustrating Shopping

‘Tis the Season: The Key to Fixing Sales Forecasting Forever

For many companies, the holiday season is also the “create next year’s forecast” season. And often times, the exercise of creating that forecast can involve even more emotion and energy than battling mall crowds to find the perfect gift for a loved one. Unfortunately, there’s no magic bullet to developing a forecast that is 100% accurate. However, most companies can produce significantly more accurate forecasts with less negative energy surrounding the exercise. 

Let’s take a look at why forecasts matter, why they are so often inaccurate, and a few approaches that can help dramatically improve the result.

Why Do Sales Forecasts Matter?

Every company wants a way to predict results, drive performance, and promote accountability, which is why creating a forecast remains an important activity despite the pain and suffering. But when the sales forecasts are perpetually inaccurate, several groups are negatively impacted:

  • Investors and senior leaders can’t plan

  • Managers and sellers expend time and energy for nothing

  • Customers suffer because they’re pressured by sales reps trying to hit the forecast 

To put it simply, most companies need to improve their sales forecasting ability.

Forecast or Target?

Before we talk about common forecasting methods and ways to make them more effective, a quick word about what may be the most significant challenge to developing an accurate forecast – confusing an aggressive sales target with a sales forecast.

While it is certainly true that organizations across the spectrum face pressures to achieve targets that will please investors, building a forecast by having leadership pick a number that will appeal to investors is arguably the most fundamental reason for inaccurate forecasts. When sales leaders are given a number and told to make it happen, or that forecasting anything lower than this target would be considered failure, bad behaviors often ensue. This isn’t to say leaders shouldn’t challenge the sales organization to produce better results by establishing aggressive target.

However, goals and forecasts are not, and should not be the same thing. It is entirely acceptable to set an aggressive sales goal and work our way backward to see what we need to produce in terms of our predictive metrics in order to achieve a given target. (More on this below.)

We just don’t want to confuse what we want to accomplish with what we know we will accomplish. Since the sales forecast often drives a variety of other decision including the expense budget, we want to predict as accurately as we can, not as optimistically as we can.

Forecasting Methods

So, how do we create accurate forecasts without exhausting the organization? Here are three of the most common approaches to sales forecasting. None are completely right or wrong, but a given organization may need to apply more than one method to increase their accuracy.

1. Weighted Funnel 

The Weighted Funnel is used when organizations have no way of knowing with 100% certainty when a sale will close. Therefore, a sales rep selects deals that are supposed to close within a specific timeframe and have a particular value. A “win probability” is used to create a weighted value. 

The Pitfalls:

The close dates are often guesses and missing the close date by just a few days can result in missing the forecast by thousands or even millions of dollars.

The win probability isn’t determined using any metric that’s related to how the customer makes decisions. Often the win probability is based on the sales stage, such that later stage opportunities automatically have higher win probabilities. However, this can be wildly inaccurate for a given opportunity.

The Fix:

  • Base the win probabilities for each unique opportunity on the confirmed knowledge of the customer’s business issues, their decision criteria, their alternatives/options, and the compelling reason the customer must act. 

  • Test the customer’s evaluation and decision timeline and the date they need to commit to determine the close date. 

  • Don’t add a sale to the forecast unless it has a win probability of 35% to 50% and the decision timeline has been validated.

2. Rep Generated Forecast

This is the most common forecasting method, but it’s hard to manage. Typically, with this approach, each sales person provides their manager with a number they will “commit” to closing in the current period. Often times, they are also expected to provide an “upside” and/or “best case” number that represents what they may achieve if things go their way.

The Pitfalls

There are three perspectives to consider when sales forecasting: The sales rep, the sales manager, and the customer. Which one of these is usually left out of the forecasting discussion? If you said the customer, you’re exactly right. Too often, forecasting problems occur because there is too little consideration given to when and how the customer will make their decision.

Another challenge occurs when the sales rep and the manager aren’t in alignment on the objective of the forecast. The sales reps may think the objective is to provide an accurate forecast and therefore provide numbers they believe they can close in the forecast period. Meanwhile, the sales managers think the objective is to hit the previously established goals and pushes reps to commit to more sales because “it’s unacceptable to forecast failure”.

Finally, sales reps, especially those who are NOT achieving their objectives, can be notoriously optimistic. Meanwhile, some star performers can be well accomplished sand baggers. The combination requires a level of interpretation from sales managers that borders on divination as they try to balance their experiences against what reps have submitted.

Overtime, these challenges can produce a variety of dysfunctional behaviors and perpetually inaccurate forecasts that often get adjusted down dramatically in the final weeks or days in a given period.

The Fix

  • Reward accuracy in commitments.

  • Solicit input from sales reps using anonymous surveys to boost accuracy, objectivity, and credibility.

3. Mathematical Model

Sales is ultimately a production business. Performance can be predicted, and it can be predicted mathematically using five predictive metrics. The formula is simple: Activity X Proficiency = Sales.

Activity is measured in two ways:

  • The number of NEW opportunities required

  • The number of NEW proposals required

Proficiency is measured by:

  • The proposal ratio: The % of new opportunities converting to proposals

  • The close ratio: The % of proposals that turn into closed sales

  • Average sale value per opportunity

As discussed here, these predictive metrics can be used to create more attainable sales goals, something we refer to as the Sales Success Plan. However, they can also be used to predict future sales results. In order to achieve a given sales target, the appropriate combination of predictive metrics must be achieved. If they are not, the sales target cannot be achieved … mathematically impossible. Put another way, any miss in sales performance will be preceded by a miss in one or more of the predictive metrics.

Using these predictive metrics to generate a forecast can be particularly effective in an environment where we have a very large number of sellers and opportunities as the law of large numbers will ultimately help improve the mathematical accuracy of the forecast. This is also helpful in scenarios where the sales cycle is so short that sellers have difficulty delivering a forecast based on defined opportunities as they haven’t even met with some of them yet.

The Pitfalls

Many companies make the calculation too complicated with many variables, and the data set is insufficient.

The Fix

  • Keep it simple. Don’t use too many variables; continuously improve your model as you gather more data.

  • The mathematical model is an excellent choice to pair with another model to ensure forecasting accuracy. 

Next Steps

Armed with an understanding of some of the most common approaches to effective, accurate sales forecasting, teams can begin to transform the exercise from one of frustrating fantasy to a consistent and effective business process that improves profitability and efficiency. One final thought if you work for an organization that needs to make this transformation: you are about to align on a change initiative and there are a few keys to making the change stick: 

  • Management must align their objectives to the initiative

  • Objectives must be tied to rewards and consequences

  • You must demand data integrity! 

Select the forecasting method that meshes with your values. If you value accuracy, the rep-generated method is not a good choice since sales reps tend to overestimate their future performance. Continuously improve whatever method you choose with new data as it is received, then use that data to drive salespeople and managers to better results. With the correct approach, you can develop more accurate forecasts with less overall effort.

Want help creating more accurate forecasts and better sales performance? Axiom provides a unique alternative to traditional sales training. Unlike traditional sales training events,we embed our methodologyinto your sales cadence, delivering dramatically better results. To learn more about our Mindful Selling Methodology, Kinetics Sales Effectiveness Platform, or our unique, guaranteed approach, please visit us at www.axiomsaleskinetics.com.

Sales Metrics

Video and White Paper: The Truth About Sales Performance Metrics

Many organizations struggle to optimize sales performance – largely because they don’t have clear, meaningful metrics – but it doesn’t have to be this way.

As highlighted in three recent research journal articles, the unfortunate truth about sales performance metrics is that sales organizations typically focus most of their energy on the wrong metrics and generally use the metrics they are tracking in the wrong way. This results in a variety of associated dysfunctional selling behaviors that lead to missed objectives, decreased margins, and customer and sales team churn. In this paper we will examine the underlying challenges associated with many of the commonly used metrics and provide a framework for defining and leveraging improved sales performance measures. Readers will also be provided a list of sample metrics and recommended steps to implementing more effective sales performance measures in their organizations.

This white paper will help readers:

  • Better evaluate the quality of their sales performance metrics.

  • Guide the organization on how to properly use sales performance metrics to improve sales effectiveness.

  • Secure organizational alignment around the predictive metrics that can help them drive sales excellence.

Click here to review and download the white paper.