Let's run it back with forecasting

Part 2 of 3

Welcome back! It's time to keep the forecasting gravy train going. Last week we went over six critical questions. This week we'll go through #7 - #12.

Here are the 17 questions:

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Forecasting Considerations

1. How often do you forecast? Daily? Weekly? Monthly?

2. Do you use a weighted forecast?

3. If you do, what do you weight on? (Stage, forecast category, other)

4. Do you snapshot your call each week?

5. Do you use a roll-up forecast? (Each rep makes a call and you take the sum)

6. Do you allow managers to apply judgment atop the roll-up forecast?

The questions crossed out were discussed in this article.

https://revengine.substack.com/p/lets-run-it-back-with-forecasting

7. Is the judgment typically a haircut or a bump?

8. Do you send a pre-communication to improve deal hygiene heading into the forecast?

9. If so, how many business days do you grant?

10. Do you have a team standard for hygiene quality?

11. If so, tell me more.

12. Do you "lock" or "snapshot" the forecast or allow a living, breathing data input for forecast?

13. Do you a Big Deals Forecast?

14. Are the big deals removed from the normal forecast?

15. Do you provide insights to your stakeholders before going into the forecast call?

16. Do you provide questions-to-consider for your stakeholders before going into the forecast call?

17. If your sales leader is out, do you run the forecast in their absence?

7. Forecasting Judgment

Is the judgment typically a haircut or a bump?

Most forecasting software allow for a sales leader to add or subtract an amount from what they receive from their team. This is known as judgment.

But why do we need this?

Theoretically, if all reps forecast uniformly then the sales manager can simply apply a historical weighted forecast to the pipeline. It should yield a very reliable forecast.

But that's not how the real world works unfortunately. Take for example three different sales reps.

Sales Rep A came from a company where a deal could only be given the “commit” label if they were in contract and a clear path to signature was determined.

Sales Rep B came from another company. In their previous company a “commit” deal was one where they received the word they were the “VOC”, vendor of choice.

Sales Rep C committed four deals last quarter but three of the four deals slipped to the current quarter. Disappointed by the quarterly results, the sales manager reprimanded the rep for poor forecasting. This quarter this rep is now dropping the forecast category down to Best Case instead of Commit. He's not going to risk a high tension conversation again so he's going to hide behind the safety blanket of “Best Case”. It's safer to not draw attention.

Under these scenarios do you expect the sales manager to receive a uniform forecasting submission?

One way to work around this is to create a definition internally and continually train the team until the new forecasting methodology is ingrained into the day to day.

Let's find out with a quick poll which camp you fall into.

So as you can see there's good reason for why tools allow sales manager judgment. Knowing the pitfalls of rep submitted forecasts aka bottoms up forecasts, sales operations teams try to find a ‘True North’ forecast. This comes in the form of a mechanical model. Often this is referred to as a weighted forecast. Each stage has a weighted probability. Then you simply multiply the data in one column (amount or number of deals) against a second column (stage probability). Simple right?

With these two forecasts you have the ability to compare over time which one yields a better result against actuals. The beauty is that hindsight is 20/20. If your forecast isn't crisp one quarter, you have an opportunity to do a post mortem to refine your forecasting methodology. For the sales manager, they also get a chance to refine how they apply judgment.

8. Do you send a pre-communication to improve deal hygiene heading into the forecast?

9. If so, how many business days do you grant?

Let's say for example that your forecast calls are on Mondays. Working backwards, we'll want to have a solid pipeline walking into that call. If your reps fill out the data an hour before then that gives little time for operations and management to review the data and prepare questions for the forecast.

A smarter way of having a more productive forecast call is to have a more hygienic pipeline. The team should have their forecast “🔒 locked” one or two business days earlier. Meaning, Thursday EOD (end of day) or Friday at noon. If you've been to school and the teacher says *pencils up” then students stop writing in the exam. The test is done.

Same for your forecast.

Pencils up.

Forecast lock.

It's that simple. To make this work, operations communicate to the team the schedule for the week.

• Monday: forecast call and recap sent

• Tuesday: action items followed up on

• Thursday: reminder to submit forecast

• Friday noon: final reminder and forecast locked

• Friday afternoon: operations reviews forecast and sends notes to leadership

• Monday: rinse and repeat

The pre-communication is key to keeping the team running like a well oiled machine.

I'll go through 10-13 for paid members.

10. Do you have a team standard for hygiene quality?

11. If so, tell me more.

12. Do you "lock" or "snapshot" the forecast or allow a living, breathing data input for forecast?

But first…

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