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Sales and Revenue Forecast Meetings: Common Mistakes to Avoid

Author: David Brock

A friend and I were sharing our experiences in forecast meetings. Each of us has participated in hundreds of these, and there seems to be a consistent pattern.

It goes something like this:

Sales Manager: Are the deals you’ve committed to the forecast going to come in as forecast?”

Sales Person: “Sorry boss, this $1M (fill in your amount) deal with X corporation is going to fall out….”

Sales Manager:  “We need to backfill that $1M, we have to make the number, what do you have to backfill the $1M you just de committed to?”

Sales Person:  “Well boss………”

Sales Manager:  “We need to backfill $1M, what can you bring in to make up the gap?”

Sales Person:  “Well……  I guess I can bring in the deals with Y and Z.  That would cover us….”

Sales Manager:  “Make it happen, I’ve locked you in for that number!”

Sound like the forecast meetings you’ve sat in–either as the manager or sales person?

There are at least three or four huge problems with what has happened in this very short exchange, can you identify them?

Here’s my take:

1. What happened to the deal with X corporation?  There is absolutely no discussion about what happened, there’s no discussion of any kind of recovery strategy with that deal, and why are we seeing there is a problem with this deal in the forecast meeting?  Shouldn’t we have had some visibility about the exposure when it arose–particularly since it had already been forecast, so it should get high attention.  The total absence of discussion and development of a recovery strategy is a major error.

2. What about the deals that were brought in to the forecast–Y and Z? Why weren’t they in the forecast anyway?  If the sales person felt confident enough to commit them to the forecast in this review, what’s changed, why couldn’t they have been committed earlier–for a much better overall number?  Our job as sales people is to do everything we can to compress the sales cycle and accelerate our ability to generate revenue.  It doesn’t make sense to hold things out of the forecast, to defer the order if we have good confidence we can bring in during this period.

3. Yeah, some of you disagree with 2, perhaps there’s another explanation, the poor sales person felt bullied by the manager and just folded, committing 2 deals to the forecast to get the manager off her back.  There’s no chance the deals will come in, so the forecast will be missed–but she’ll deal with that next month.  Hmmm, what happened to forecast accuracy?  We don’t to ourselves or the company any favors by committing to numbers we have no chance of making.  We have to be honest with ourselves and management about what is really going to happen.  And managers can’t bully people into making bad commitments.

4. Maybe things will go down as agreed in the forecast.  The sales team is high-fiving about pulling it off and making the forecast number.  But this could create havoc within the company.  Let’s imagine that $1 M deal was for a lot of “purple widgets.”  In their planning, manufacturing made sure they would have the supply and manufacturing capability for $1M of purple widgets.  But the two deals the sales person committed to replace that $1M deal aren’t for widgets!  The manufacturing plan has been turned upside down.  They have parts and have scheduled for purple widgets and may not have the parts or manufacturing capacity for the orders that are in the revised forecast.  It might create extra effort (read cost) to solve that problem, or there may be shipping delays which will defer revenue recognition, not to say, upset the customer.  The rest of the company depends on the accuracy of our forecasts.  It drives resource planning, procurement, manufacturing, and so forth.  Let’s imagine these are professional services deals.  The original $1M was for people with CRM skills.  The two new deals may be for people with HRM skills.  Now we have a huge problem.  Those CRM people are now on the bench and their utilization plummets.  There may be no HRM people available to deliver the project–we might have to go outside to contract more expense people, or slip our project commitments to the customer.

It seemed like such a simple discussion, but so much was wrong with it!

The forecast isn’t just about hitting a number.  It’s about managing the business as effectively as possible—whether it’s managing our deals and deal flow aggressively, or helping the rest of the company plan and fulfill the orders we have gotten.

What else went wrong in this discussion? How often have you lived through just this scenario.

Forecasting isn’t easy, but we have to be responsible to ourselves, our management, our company and our customers.


David Brock is president of Partners in EXCELLENCE, a management consulting firm focused on sales productivity, channel development, strategic alliances and more. Read more blogs from Brock here.

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