Do you have an impression that effort you put into sales don’t translate into financial results? Or maybe the strategy you implement doesn’t bring results you’ve expected? Learn proven methods to increase the repeatability of transactions, so that your sales forecasts will be more accurate.
According to Peter Drucker: “If you can’t measure, you can’t manage” – also when forecasting and planning sales, everything begins with knowing and measuring the sales cycle. This means that without data to analyze and CRM system with a decent analytical module you can’t create sustainable strategy (in Casbeg we use Pipedrive, but there are dozens of other equally good solutions on the market).
Is forecasting a necessity?
It is worth noting that there are businesses in which the forecasting process isn’t so crucial (of course, if the sale is so large that the company doesn’t generate losses). These are high scalability businesses that have achieved the right size of operations. Most businesses guess instead of forecasting. So if you don’t hit at least 50 leads monthly with more-less the same quality over time then don’t bother to forecast for now. Just focus on making money short term. There will be fires but you will be able to throw money at them – if you do it right.
Example:
Slack at the beginning of 2015, every 11 days increased annual recurring revenues by additional million dollars. The company’s revenues increased 33 x during those 12 months, which was unprecedented. Unprecedented phenomena are difficult to plan.
On the polish market Audioteka is a great example of high scalability – if the same number of audiobooks were sold during one day, which usually are sold in a month, probably the only change that e-store managers would have to make, would be to pay a slightly higher invoice from their cloud hosting provider and their payments provider. In case of really big spikes they would probably engage several additional people in the service department customer, with whom they could easily handle it.
However, if the fate of the example presented by Audioteka met any business dealing in a physical commodity, there would be many additional problems related to the management of inventory, packaging, etc., which would significantly hamper the implementation of orders on time.
How such situations end in case of completely unscalable businesses, you could see when a barber from Łódź sold 1626 discount coupons for his services. The clients waited for a visit to his parlour for half a year. The effect of the promotion was a lot of negative opinions and a 24/7 working week for next to nothing. And what should the vast majority of companies that should plan and forecast have to do?
Count and repeat
You will need repeatability. If the months from which you draw conclusions differ radically from others, you won’t be able to predict the results in the forthcoming period. The more future looks like the past, the more accurate your predictions will be– simple as that. To some extent, each forecast and plan are the outcomes of past experience. If you don’t have any data which you base your assumptions on, you can’t plan anything. What you do is pure guessing. That’s an activity that il benefits managers. Repeatability consists of 4 elements:
1. Consistent client path
From my experience it is clear that customers whose first contact with the company was performed by Facebook behave differently than those who came from newsletter. Both will differ from those who came from recommendation of another client. They will all behave differently from those who responded positively to an e-mail sent to an external database of people. This diversification of customer behavior means that the ways to reach finalization will vary – in spite of the length of the sales cycle. This lack of consistency of client paths effectively hinders planning and forecasting.
2. Similar quality of leads
The more companies you work with are similar, the easier it will be to predict if, when and for how much they will buy a product or service from you. The problem is that every customer can pay attention to other factors crucial in the purchasing process. The most common determinants of quality are: industry, size, position of the decision maker, the budget, rush, and how big the customer need is or how strong is the salesperson’s argumentation. In addition there are many factors specific to a particular company that don’t have to be relevant in other industries
3. The appropriate volume of new leads every month
The third factor that contributes to repeatability is the number of leads. Usually, the larger the volume of leads, the faster you can draw conclusions.
Example:
The American giant Amazon can predict demand even in the hot pre-holiday season – it has a long-standing purchasing history of a huge number of people (today Amazon Prime subscribers are more numerous in the US than the owners of weapons).
Most companies don’t need such detailed analyzes. For businesses with a homogeneous target group, which comes to the company only through one unchangeable marketing channel, it is often possible to forecast sales with a small margin of error even on the basis of several dozens new queries a month.
4. Repetitive sales process
No one will be able to accurately predict future cooperation with a client when his salespeople don’t have sales scripts.The last element of repeatability is the planned sales process, which isn’t only well known to salespeople but also practiced by them. There is no chance that you will achieve repeatable results if salespeople’s conversations aren’t even similar to each other. It isn’t enough to declare that the conversations are comparable – they actually have to be alike.
When you take care of repeatability, forecasting and planning will be easier. That will be useful for transferring phenomena from the past into the future and adding the assumed growth rate of sales. Your job will be to precisely determine sales targets for the upcoming period.
