Sales projections are among the most common challenges for sales people and their managers. Why? What causes these forecasts to be so far off the mark? There are a few reasons. Some of which include:
- Over optimism: People think it’s about about being positive.
- Sales people need to buy some time and keep their managers off their backs, so they tell their managers what they want to hear.
- The team and the manager collectively lack an understanding of the business and their sales cycle.
- The deadliest culprit of all: Carrying over prospects who push month after month and keeping them on your projections report.
The Path to Accurate Sales Projections
1. Be Honest with Yourself
It’s interesting to watch sales people. We get so excited about how much the prospect loved our product, and of course, we love to pat ourselves on the back about how much, “the prospect loved ME!”
It’s good to be optimistic, but when it comes to projections, it’s better to be realistic, and better yet, to be accurate! The first step in accurate projections is to look at your pipeline and get real.
2. Know Your Sales Cycle
The second key to successful projections is understanding where your prospects are in the sales cycle. As an example, much of it depends on the size of the account. Larger accounts typically take longer, while smaller accounts may close after the initial meeting.
Here’s another example: We’ve all been in situations where our prospect is fired up about how great our product looks, only to find out they were full of hot air. Ironically, the prospect who held their cards close ends up being the real buyer!
Never assume that someone is going to buy before they’ve gone through the natural progression of your sales process. Prior to adding a prospect to your projections, you need to have a strong verbal or written confirmation that you are the top choice and you have a timeline for a decision.
3. Know Your Closing Ratio
We are now in touch with reality and have a clear picture of which prospects are at the closing stages of the sales cycle. There is one step left to decide who makes it on the projections report: What is your typical closing rate?
Deciding Who's Hot and Who's Not
Once you've narrowed it down to your strongest prospects, the following truths should apply:
- The prospect has an explicit need.
- You have a clear understanding of that need and your solution meets the need.
- You’ve had direct access to the decision maker throughout the sales process.
- You have specific knowledge of projects, budgets, and other factors that influence this buyer’s timeline.
You weakest prospects fall under the following categories:
- Something unexpected comes up and they are forced to put the project on hold.
- They decided to stay with their current vendor; they think it’s easier to keep the status quo.
- Your product really didn’t meet the needs of the prospect. It just wasn’t a good fit.
- You got beat; another sales person out sold you on this one. It burns me up what that happens.
Accurate projections aren’t rocket science. It comes down to being honest with yourself and knowing your business.
Remember this: You gain a lot more credibility with your manager and the executive team when you are consistently on target.
What other techniques do you apply to ensure your projections are accurate?