If there's one thing salespeople can't seem to escape, it's the drudgery of forecasting. Sales organizations almost universally forecast sales, at the request of upper management, or to satisfy their own curiosity about next month's numbers.
In my experience, forecasting is not only useless - because it's rarely accurate - but it's detrimental to sales results.
The reason is simple: Any time that is taken away from actual selling, and devoted to non-productive activities instead, is going to cost sales.
Salespeople have enough burdens on their time as it is. The job of selling, alone, is very time-consuming and demanding for most. When you add in all of the extraneous activities that go with it - meetings, mandatory training, commute time, driving time, and more - time management becomes a crucial factor in success. Throwing a useless activity like forecasting into the mix only serves to waste even more time.
Sales forecasting is a masturbatory practice - it causes one to sit around trying to predict what he or she will sell, instead of simply going out and selling something! How the hell is that supposed to be beneficial to anyone?
I know the management types reading this are objecting right now, stating that they need forecasts in order to tell their superiors what next month's numbers will be.
And I can tell you right now that forecasts will never give you an accurate picture of that. Here's why:
No salesperson wants to submit a forecast that falls short. So what do they do? They leave accounts on the forecast that have already said "no" or have stopped returning their calls. They add accounts that have shown the tiniest amount of interest, but are nowhere near being truly qualified prospects.
In my own experience, I used to leave good accounts off the forecast because I got sick and tired of sales managers, who had nothing better to do, asking me five times a day when those accounts were going to close.
Regardless of whether forecasts are artificially inflated, or left unrealistically low to avoid managerial pressure to "close more," the bottom line is that they're never correct. And then you as a manager have to answer as to why your forecasts are way off the mark.
Here's a great way to forecast future sales: Base it on your historical sales data. Barring any unforeseen economic disasters or huge changes to your products or pricing, it's a pretty safe bet to say that next month's sales will equal last month's, plus your average monthly growth.
This is a lot more reliable and accurate than asking sales reps, who already have enough pressure and stress, to predict what they're going to sell next month.
And here's where it gets even better: If you stop asking them to magically predict their sales, they'll suddenly start selling more! There are two reasons for this:
1. Recovering the lost time that was previously wasted on forecasting opens up more free time for your reps to actually do their real jobs: Selling.
2. Removing the burden of forecasting and the pressure and stress associated with it will brighten their attitudes and their disposition. This enables them to be more favorable with prospects, and we all know that a positive mental attitude in selling, alone, can spell the difference between success and failure.
So give up the sales forecast addiction, and begin focusing on sales results - because results are the one and only thing we're paid for.