Over many years, I have reviewed sales forecasts of many small companies, including my own sales forecast. There are thousands of books on sales techniques and the life cycle of a sales prospect. However the most difficult prospects to qualify for a small company, are the ones in the early stage. A company can say they have a great sales forecast by volume of prospects and the outlook is looking great, and then over the months conversions do not happen. The company suffers financially, as they were geared up to a bigger forecast than happened in reality.
A common problem is over optimism of early prospects!
You can ask a salesperson about a sales meeting, and they will relay what a great meeting they had with a sales prospect, the salesperson fully understood the business problem. The salesperson then relays the prospect does not want to do business imminently, or does not have an immediate compelling event, and hence want to put the prospect on the sales forecast system, with a low probability of conversion with the sales occurring in many months time. Then the salesperson has a meeting that did not go that well, and will put a very low percentage on the prospect turning into a sale or not put the prospect onto the sales forecasting system.
However after discussing the meeting with the salesperson and being more rigorous in the sales qualification processes, both meetings, in reality should have equal low percentage forecast.
Many businesses have many meetings with potential prospects, and the size of the sales hopper/pipeline and overall sales forecast, is dramatically altered if these early meetings are well qualified or not.
A very simplified solution to this problem, is be very pessimistic after every initial prospect meeting. Perhaps only allowing a revenue and percentage to be put on the sales forecast system, after a second event has occurred, either another meeting, a serious telephone conversation, detailed e-mail contact etc
I apologise if “I am teaching my Grandmother to suck eggs” however if you would like a second opinion on your sales forecasting techniques, please contact myself Tim Jenner email@example.com or any of my fellow SGBA colleagues.