Tuesday, 19 July 2011
Friday, 15 July 2011
The difference between the Good Sales Guys, the Bad and the Ugly
The Good, The Bad and The Ugly Sales Guys
What’s the difference between good and bad sales people,and how can you assess them. Is it activity rates, close rates, total sales, or margin, or customer satisfaction? Maybe it’s just making target quarter after quarter.
The red meat issue, for those who don’t know about selling, is activity. It’s a simple measure, and easy to use when pushing the sales team to work harder. It makes sense doesn’t it – the more calls you make the more business you’ll take.
Does that mean the one making the most calls is the best of the bunch? Not in my book. There are far too many variables, and too often the bad sales rep will win business while the good professional doesn’t.
The best way to assess sales reps’ skills is how they use your sales process. That process is designed to bring in quality business, with good margins and an expectation the customer will be satisfied with what’s delivered; and it should do all that at a reasonable cost of sale.
Sales Probability Performance Management shows managers how well the reps use their sales process. We’ve built Fayol’s management principles into the workflow with milestones, and added colour coding to make the review element intuitive.
Here are examples of prospect lists from the Good, the Bad, and the Ugly sales people. The list is ordered by expected close date with next to close at the top. Probability is calculated based on the number of milestones completed. Deals under 50% probability are presented in red. Those between 50% and 70% are presented in amber while deals over 70% are presented in green.
We’ve kept the customers and values the same for each example to help illustrate the differences.
The Good
The good, or professional, sales rep’s prospect list shows how deals progress through the probability curve as the close date nears. Sales opportunities at the top of the list are shown in green whilst those further away need more work.
The Bad
The bad, or unprofessional, sales rep’s prospect list shows a different story. At the top of the list the deals are showing little or no probability whilst a couple in the middle are at 60%. This rep isn’t using the process to control the sale. Any success will be down to luck, not expertise and application.
The Ugly
The ugly is what you’ll find in most prospect lists – a mixed bag of deals at various levels of probability, with little correlation to close date. This rep uses the process at times but not always. The opportunities in red at the top just shouldn’t be there. S/he should have decided to give up on those and spend the sales time progressing the ones shown in amber. Instead s/he’s left them in the prospect list to pad out the total.
The Sales Manager
This methodology for forecasting sales helps managers identify reps who need support in the sale, or additional training, or a different job.
When the team’s aggregated prospect list looks like the Bad or the Ugly there are problems with the product and the sales strategy. Effective sales operations management will get the whole team’s list looking the Good. That’s how you’ll know the strategy, product, process are right for the business.
Successful Sales Management
Check out our Sales Management tutorials for more coaching in strategy, tactics, processes, systems and tools; all explained in short courses to help you improve the performance of your sales operations.
Thursday, 14 July 2011
5 Ways to Forecast Sales – Which One is Yours?
5 Ways to Forecast Sales – Which One is Yours?
How many methods or techniques are there for sales forecasting? There are 5, in my experience, offering varying accuracy and utility. Here’s the background and a short explanation of each.
We all know forecasting sales is a tricky business. It always involves some element of hope, combines a little fear, and is based on some level of confidence. And it always goes wrong. Accurate forecast is an oxymoron – a combination of words contradicting each other.
Nevertheless forecasting sales, revenue, profit and cash flow is the most fundamental of business processes. Everybody has to do it, so all the other business decisions can get made.
Quite how it gets done varies, depending on who does it, and decisions to be made based on the results. For example, the under performing sales rep is hardly likely to forecast no sales and keep the job for long. Likely response to forecasts results can have as much influence on the numbers as can the facts.
Here are the 5 methods I’ve seen used.
1 – Hope
Of course trying to do anything requires a degree of optimism – some combination of aspiration and hope. If you’re selling stuff, or employing somebody else to do that for you, aspiring to reach a given level and hoping to achieve it is an admiral approach to setting targets. But its no way to set a forecast, on which you or anybody else will base decisions. Aspirations are targets not forecasts.
2 – Fear
Fear of the consequences of forecasting is a powerful incentive to self delusion. The under performing sales rep will keep her job for another quarter if the forecast promises to make up for past failings. The struggling business owner will get an extension to his credit line for another six months if the cash flow is positive in the future. Both will have to face reality one day, but at least not today. Forecasts based on fear only delay the inevitable by making matters worse.
3 – Guesswork
Accurate forecasting is impossible, so the only sensible approach is a simple guess. Will that customer buy? Will the competition do something silly with price? Will the CFO provide the budget. Most sales people don’t know the answers to these questions, so they guess – yes, no, or maybe.
4 – Confidence
Most professional sales operations use Confidence as the basis of sales forecasts. Recognising nobody gets every deal on the prospect list, sales managers will apply a factor to the estimated value of each sale to get to a weighted probability adjustment. For example Customer A has a proposal for $100k. The sales rep is 70% confident of winning so the estimated value is adjusted to $70k. The aggregate of weighted probability adjusted values is more likely to be accurate than the other three methods. But it’s still based on a guess. The adjusting Confidence factor is a guess, so the result must be equally a guess. It just sounds more scientific.
5 – Process
Our Process method adds real science to the preparation of sales forecasts. It can be standardised across all sales opportunities and improved through closed loop feedback. It’s more accurate than any other method, and actually adds value to sales operations, being tightly aligned with the sales strategy and process. It becomes a competitive advantage for teams adopting the concept.
Breaking the sales process down into milestones creates a logical progression from first call to contract. Assigning a percentage value to each milestone, and adjusting the forecast value by that percentage as the milestone is reached, increases the weighted value of the forecast. The only way the sales rep can get an higher forecast is by achieving the milestones, each of which make the successful sale more likely.
In this example the list is ordered by close date – next to close at the top – and colour coded for probability. As deals move up the list they should progress from Red, through Amber to Green. This colour coding draws attention to the at risk deals. Any red at the top of the list tells you to get to work on the deal or get ready to lose it.
We’ve built on 30 years experience managing sales operations by adding management science to develop our sales forecasting methodology. Our Sales Probability Performance Management method can be adjusted to suit any business, and improved as managers learn from what it tells them about sales reps, prospects and processes.
Successful Sales Management
Check out our Sales Management tutorials for more coaching in strategy, tactics, processes, systems and tools; all explained in short courses to help you improve the performance of your sales operations.
Wednesday, 13 July 2011
What is sales forecasting which methods work
What is sales forecasting to you? What does it for your business? How do you calculate your forecasts and act on the results?
Most people don’t understand the point of it, because usually it doesn’t work, for them at least. But with the right techniques, sales forecasting can make a big difference in any business. Here’s how.
To me sales forecasting is fundamental to any business plan, and business owners, investors, accountants and bank managers all agree. Without some understanding of future sales, planning cash flow is impossible. Planning customer service is likewise difficult. Deciding how much to spend on variable costs – wages, materials and equipment – is gambling without a form book.
There’s another, and equally important, reason to forecast sales. Figuring out who will buy what and when, then checking what actually happens is the best way owners, managers and representatives can figure out what works for their business, and what doesn’t. And that includes just how good the sales people really are.
To summarise – without sales forecasting the business is like a ship without a rudder. There’s no way of controlling where it goes, and the wind usually blows ships onto the rocks.
Disaster is ever present for any business, or sales person, who doesn’t forecast sales. Regardless of whether the planning works out, or whether the forecast turns out to be accurate, or the type of business, failure to plan future income with sales forecasting is planning to fail.
Interested in finding out more about what sales forecasting is and how to use it to your competitive advantage, and business success? Our tutorial Sales Probability Process Management will lift your game in the race against competition.
We’ve developed sales forecasting from art into science and embedded in a total philosophy for sales management, including philosophy, strategy, tactics, processes, systems and tools all explained in our Success in Sales Management series.
Monday, 11 July 2011
Sales Forecasting as a Competitive Advantage
Can sales forecasting be a competitive advantage in your sales team operations? It can if you adopt the principles we explain in our Sales Probability and Process Management theory.
Most people use sales forecasting as a tool for estimating future income, without a great deal of confidence it has to be said. They’ll also use it for pressurising sales representatives to work harder, make more calls, push more prospects, put it on the line.
Limiting the use of forecasting to these obvious, if somewhat simplistic, ends is missing a major trick first recognised by Henri Fayol over a hundred years ago. In his technical thesis on management theory Fayol recognised the functions of management as forecasting, planning, organising, commanding, coordinating and monitoring.
Today we can shorten the description as Forecast, Plan, Act and Review.
Applying Fayol’s concept to sales forecasting simplifies the process whilst simultaneously improving the accuracy of the forecast, and also showing where the sales process can be improved in what the Japanese would describe as a continuous improvement loop.
Of course no two businesses are the same and so it’s unlikely a simplified process can be optimal for all of them. However, once you’ve understood the concept of your sales process, Sales Probability and Process management will equip you to adapt the theory to fit your own style.
Making the forecast, planning what’s needed to improve chances of winning each deal, implementing that plan and reviewing the results makes the feedback loop for understanding what works and what doesn’t. Learning the lessons and making changes gives any sales team a competitive advantage over the opposition.
Find out more about the technique, why it works and how to us it on our sales management tutorials page.
Of course it involves extra work, but so does any improvement in a business’ bottom line.
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Tagged as: Business, Competitive advantage, forecasting, Henri Fayol, Management, Probability, sale, Sales process
Thursday, 30 June 2011
Tutorials
Want to know all about Sales Management? – Well you’re in the right place for real insight with individual tutorials costing less than cup of coffee and which you can read in the time it takes to drink your chosen brew.
Download these tutorials now and get started on perhaps the biggest competitive advantage you can have – a sales management process which helps you spend more time ensuring you get the deals you should by spending less on the deals you won’t.
Our series of lessons is written by sales professionals with many years experience of how to manage sales and sales teams. There’s no theory here – it’s all proven philosophy and theory embedded in strategy, tactics and tools.
Principles of Professional Selling – Preview
Sales Management Processes and Tools – Preview
Sales Probability and Process Management – Preview
Sales Qualification the Secret Sauce – Preview
Learn to Love Your Price – Preview
You can buy the complete series here – click the Buy Now button, or for individual tutorials visit the Preview page.
Wednesday, 22 June 2011
Agree Whatever Price and Negotiate the Scope
