17 Sep The Best of the Best Practices Used by Best-in-Class Companies to Forecast
McKesson Corporation devised a Dynamic Opportunity Scorecard[1] whereby they objectively score opportunities above a certain value to determine an objective score for that opportunity.
A while ago the Miller Heiman Group published a paper that I authored titled The 13 Must-Knows For Sales Leaders, and in it we identified a set of best practices that Best-in-Class companies employ to accurately forecast their sales. These are:
- Development of a cadence, methodology and discipline around sales forecasting
- Using Key Predictive Indicators, objectively, to improve consistency and accuracy
- Relentless inspection and scrutiny of the quality and quantity in the pipeline
For the balance of this blog we will dissect each of these three best practices:
Cadence, Methodology and Discipline – The last word in this phrase, discipline, is almost always perceived as a dirty word in Sales, conjuring up the notion of rigidity that is contrary to the “art” of selling. What we mean here is that forecasting should be seen as a strategic activity by salespeople, not simply as reporting that will reign endless attention, seen by some as the wrong kind of attention, by sales leaders on salespeople. The best firms avoid sandbagging through establishment of a collaborative view of a Standard Operating Procedure (SOP) for the forecasting process[2], where sales leaders and managers work with the salespeople to create strategies to move deals through the pipeline.
Using Key Predictive Indicators to Improve Accuracy – The key word here is Predictive. Normally KPI might be an abbreviation for Key Performance Indicators – however we know that KPI in most sales organizations contain more lagging indicators than are prudent. As an example, McKesson Corporation devised a Dynamic Opportunity Scorecard[3] whereby they objectively score opportunities above a certain value to determine an objective score for that opportunity. The important aspect of this exercise is that it informs salespeople, and sales leaders, of what they don’t know about an opportunity but need to know in order to gain confidence that the opportunity will progress to a successful outcome. As an aside, the Miller Heiman Group conducted a study of opportunity outcomes correlated to their opportunity scores and found that 66% of all “won” opportunities scored 80 out of 100 points, or higher, on their scorecards. This effectively addresses the “hope is not a strategy” concerns raised in Part Two of this series.
Relentless Inspection of the Quality and Quantity in the Pipeline – The key here is for salespeople to have the same rigor and objectivity to inspect their own pipelines and to anticipate the kinds of questions that sales leaders may ask in a regularly cadenced collaboration. Unfortunately we raised the concern in Part Two of this series that Sales Process and Pipeline Process can differ in material ways. Best-in-Class organizations mirror the pipeline to the selling process, which is an actual reflection of the way top performers sell in the organization. Only when this happens does the inspection process occur consistently and at all levels of the organization, starting with the salesperson.
While we know every firm is seen by their leaders as different in the way they sell, some form of these best practices are commonplace in Best-in-Class companies across many industries in the B2B world.
[1] Sales Executive Council (now Gartner), McKesson’s Dynamic Opportunity Scorecard
[2] CSO Insights, How to Get a Grip on Forecast Accuracy
[3] Sales Executive Council (now Gartner), McKesson’s Dynamic Opportunity Scorecard