I want to revisit a topic that I wrote about a few years ago about a very dangerous sales forecasting practice, that at its worst can be a terminal illness for a sales person or a sales manager. This disease is still as commonplace as it was when I first wrote about it, but with the advent of smart sales systems that can largely provide a fairly painless cure, the continued practice is alarming. Let me first describe the illness, and then propose a possible cure.
Commit / Upside / Pipeline: The ‘Commit Theory’ of sales forecasting is as old as the hills and about as useful as an astray on a motorbike. The theory goes that at the start of a quarter (or at some other arbitrary point within the quarter) the sales person ‘commits’ a certain deal to the sales forecast. He is guaranteeing that the deal is going to close in the quarter. In its worst manifestation, this commitment is an unbreakable contract between the sales person and his or her manager that this deal will close. The theory is that the resultant pressure is enough to ensure that the sales person will get the deal. That’s a pretty flawed theory.
Now, I’m all for holding people accountable, but there is so much wrong with the Commit Theory approach that, unfettered, it is dangerous. It can be the enemy of good sales practice, alienate good sales people and damage customer relationships.
Some words I could use as synonyms for ‘commitment’ are: promise, pledge, oath, contract, pact, deal, decision, and resolution. Nowhere in here is there a reference to a plan, a process, or any measure of confidence in the ability of an individual to deliver on the commitment.
Making a commitment, without knowing how you can deliver on the commitment, is counterproductive. Expectations are misaligned and subsequent actions that are taken – based on the commitment – are built on a flawed foundation.
Here’s an analogy – and a true story.
I remember a few years ago driving in the southwest of Ireland. If you have not been to Ireland, and in particular the southwest of Ireland, you need to get this on your bucket-list. The views, people, the colors – shimmering purples and resplendent greens – we had 40 Shades of Green long before there were 50 Shades of Gray, though with the frequent rains in Ireland on a ‘soft day’ we have our fair share of grays as well – and the light and the dark, are of a texture that you will not see elsewhere in the world. It is simply a slice of heaven. Though, it is important to remember, and you may not already know this, but heaven does not have a well-established road network, and that will become apparent shortly.
I was due to pick up a colleague at Shannon airport at 11am. I had committed that I would be there when the flight landed.
It was 9:00am when I set out on my journey. I had spent the weekend with friends in Waterville in Kerry beside one of the greatest golf courses in the world. Having not taken the route from Waterville to Shannon before, I decided I might need help from my GPS system. Imagine my horror when I learned that the expected journey time was 2 hours and 43 minutes. That had me arriving at the airport at 11:43am. I had made a commitment to be there at 11:00am. I was going to be a full 43 minutes late.
Now, I’m not averse to occasionally driving a little fast and I’ve been known to pick up the occasional speeding ticket, but in this case I would have to do some pretty unnatural things to make up that 43 minutes. We are not talking multi-lane highway here. If I tried to deliver on my commitment I would likely end up going off the road, having a bad accident, or doing some real damage. The reality was, even though I had made a commitment, there was nothing I could really do about it. I could not deliver on my promise.
Like Google Maps today, the GPS system had the valuable combination of knowledge, context, data and smart reasoning. It knew where I was starting from (there’s the context), I told it where I needed to be (the data), it had all of the maps that it needed (a whole lot of knowledge), and it could apply some pretty sophisticated algorithms (the smart reasoning) to plot out the journey and figure out how long it was likely to take – and it could do so clearly much more effectively that I could).
My friendly GPS system – with a slightly fawning female voice, that at first I thought was intriguing, but then found irritating when she told me I was going to fail in my quest – knew each step of the journey.
It knew that to get to Shannon, I had to go to Cahirciveen, then take the beautiful (and winding) coast road to Killorglin before I drove to the market town of Castleisland, on to Limerick before completing the final stage to Shannon. It had the knowledge that I didn’t have. It knew how long each stage of the trip would take. It had a map, the sequence of twist and turns, and an approximate measure of the speed at which I should expect to progress through each stage. (Sound a little like a sales cycle, doesn’t it?)
All I had was a flight arriving at 11:00am and a commitment I had made.
Of course I should have planned better. I could have consulted my GPS the day before. But that would have meant that I would have had to have a plan! Certainly, before I made the commitment, I should have had some basis for confidence that I could make it on time.
And so it is with sales forecasts. Opportunities close when the customer is ready – emotionally, intellectually, and commercially – to sign the deal. You can certainly influence the outcome, but you can’t dictate it. The customer only signs the deal when the customer is ready to sign the deal, and the customer should be completely oblivious as to whether you marked them as a ‘Commit’ deal for the quarter. You will get your deal when you and your customer are aligned on the final destination, the journey to get there, and each of the checkpoints along the way.
A smart sales process, well defined and mapped to the customer’s buying activities is your GPS system to accurate arrival times and I’ve written about that in my eBook 12 Elements of a Great Sales Playbook. Follow the steps I have outlined there and you will get a much better estimate of when you will get to your destination of a closed deal.
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Donal Daly is Executive Chairman of Altify having founded the company in 2005. He is author of numerous books and ebooks including the Amazon #1 Best-sellers Account Planning in Salesforce and Tomorrow | Today: How AI Impacts How We Work, Live, and Think. Altify is Donal’s fifth global business enterprise.