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Forecasting Why forecasting is Inaccurate & How You Fix It.

CSO Insights: 2014 Sales Management Optimization Study* Forecasting Accuracy v1.1 3 *Over 2,500 companies participated in this study.

Barriers to Forecasting Accuracy According to CSO Insights the biggest single reason for inaccurate forecasts is: “Sales Reps are too optimistic about close possibilities.” But why are SR’s ‘too’ optimistic? Forecasting Accuracy v1.1 4

Why Are SR’s ‘Too Optimistic”? To understand why SR’s are overly optimistic about the deals they’re working on and the impact on forecasting we first need to review how the deals are being sold. Forecasting Accuracy v1.1 5

The Complex Sale! (Also applies to Solution Selling, Enterprise Sales, etc.) In any Complex Sales situation, the SR MUST; Work with the prospect to understand the business problem and craft a solution Ensure that the prospect’s needs, not the solution, form the basis of the dialog Identify the needs through a combination of preparation and effective probing to drill down into customer answers Characteristics: Value, not price is the deciding factor Longer sales cycle Competitive Prospect is emotionally engaged Significant pre & post-sales support Examples: Consulting sales Software solutions Service sales Forecasting Accuracy v1.1 6

There are 5 Areas To the Complex Sale. The Sales Rep must: 1. Have deep insights and knowledge of Industry & Prospect’s needs 2. Understand how the solution satisfies the Prospect’s needs (Value Proposition), how it impacts their business and create a business case (ROI). 3. Understand the Prospect’s Buying Process & Buyer Motivations 4. Develop relationships with key individuals and leverage them. 5. Obtain a realistic assessment of how their solution compares against the competition’s. Timing – Complete understanding of impending events that will trigger buying necessity If your sales teams have not covered these 5 critical areas in depth, then they lack a complete (and true) picture of the opportunity and their chances of winning it. Forecasting Accuracy v1.1 7

5 Key Areas of a Complex Sale Forecasting Accuracy v1.1 8 WINNING Opportunity Description How well the deal is defined and if SR knows and understands what the prospect is trying to do and why. Proposed Solution How closely the proposed solution matches the prospect’s requirements. Decision Process How well the SR knows and understands the prospect’s Buying Process, who is involved and their influence. Relationship How strong & deep of a relationship the SR has with the KEY individuals who are part of the project. Competition How well the SR’s solution (& Value Proposition) stacks up against the 3 types of competition and how he will beat them.

What Often Happens…. The SR realizes their offering is a good fit for the Prospect’s requirements and focuses on that aspect of the sale to develop a relationship; at the expense of the other areas. The SR has not done enough ‘due-diligence’ in the other 4 areas. This results in the SR having an overly optimistic assessment of their chances of winning the deal and of it closing by the forecasted Close Date. Result: Missed Forecasts & Other Surprises Forecasting Accuracy v1.1 9

What If: Forecasting Accuracy v % 0% DESCDESC SOL‘NSOL‘N DECISIONDECISION RELATIONRELATION COMPCOMP 50% High Low Score Uncertainty Measure Relative Strength in the 5 Areas of a Complex Sale Relative Strength Create a Bar Chart that measures how well the SR is performing (Relative Strength). You Could Graph the SR’s Perception of a Deal? Score:Give a Score, which represents the positional strength in a specific area Range:Provide a High and Low value for the Score that reflects the uncertainty in it’s value. This is the Occulus SWOT Chart. The SWOT Chart identifies the Strengths & Weaknesses of the SR’s sales efforts & strategy.

Forecasting Accuracy v % 0% What Does the SR Think? (Based on multiple real-life situations) 50% Product/service is an excellent fit with the requirements. Based on the ‘excellent’ Product fit and everything else, SR is confident of winning the deal. DescriptionSolutionRelationshipCompetitionTimingWIN SR believes he understands the customer Cust Buying Cycle. And has met the key people. SR feels he has a great relationship with the prospect. Decision Based on feedback form the Key contact, the SR believes he can beat the competition. SR’s main contact believes the timing is solid!!!

Forecasting Accuracy v % 0% What is Reality? DescriptionSolutionDecisionRelationshipCompetitionTiming 50% WIN The product/service fits the prospect’s requirements to a very high degree SR built his entire relationship around one individual at the expense of developing relationships with other key influencers. Either he doesn’t have the skill to expand his contacts or is concerned about alienating his prime supporter and remains ‘trapped’ at this level of the organization. Because the SR can not navigate through the Org. his knowledge of the Buying Process is weak and what he suspects or thinks he can not easily confirm SR has not confirmed the Close Date with other key individuals. Many things can wrong. The SR is trapped at his current contact level and can not easily go around him. SR lacks relationships with key individuals in the Decision Process and does not have a clear picture of how he stands against the competition. Prob of winning is much lower than he expected and there is a lot of uncertainty in whether or not he will actually win the deal SR’s contact believes he needn’t worry about the competition and SR did not confirm with others in the Decision Process that his Value Proposition is superior, therefore he is not expecting a competitive threat and has not performed any analysis. But in actual fact he is at risk of losing to the competition. This deal is “NOT Qualified”, much remains to be done! If the SR has forecast this deal, it should be removed as it introduces an unacceptably high level of risk into the forecast.

What Happened? The SR has not completed the full due-diligence to identify and capture all the information required to obtain a realistic assessment of the opportunity? Consequently… The opportunity is NOT well-qualified and the SR’s perception of whether or not he/she will win the deal is based on incomplete/faulty data, therefore the forecast will also be based on incomplete/faulty data. Forecasting Accuracy v1.1 13

Forecasting Accuracy v % 0% Compare them! 50% DescriptionSolutionRelationshipCompetitionTimingWINDecision What the SR believesReality

How Do You Fix The Problem? You have 2 options: 1. More Sales Training 2. Sales Coaching The problem with more training is that it doesn’t always work. According to statistics most sales people forget >75% of what they learned in the first 30 days and revert back to their old ways. That leaves you with coaching! Forecasting Accuracy v1.1 15

Sales Coaching It has been shown through numerous studies that sales coaching can have an immediate and lasting impact on how SR’s sell. If: 1. The SR problem area can be identified 2. The magnitude of the problem can be measured (Before & After performance levels) 3. The SM has a Platform to coach the SR’s in real-time with real opportunities. Forecasting Accuracy v1.1 16

Sales Coaching Occulus, specifically the Occulus SWOT Analysis Chart, is the ideal Platform to assist the SM coach his/her SR’s to immediate success and improve their selling abilities on a long-term basis. Click Here Click Here to download a short description on how Occulus helps SM’s coach their sales teams. Forecasting Accuracy v1.1 17

Business Intelligence for Sales Forecasting Accuracy v1.1 18