Quiz Time! Here are two outcomes:
- An opportunity in the sales pipeline was at an 80% probability that it would be won, and it was lost.
- Another opportunity in the sales pipeline (all other aspects including the value, the customer type, the timing, etc., are the same) was only at a 20% probability of winning and was won.
Which outcome is worse?
Most of the people I ask this question to quickly look at me with a quizzical frown and ask, “Is this a trick question?” I respond, “No, no tricks.” They then confidently say the first situation is worse. I understand why they give that answer, and I’d certainly have to agree that when it comes to revenue, profit, commissions and things like that, the first is definitely worse.
The reality is that both are equally bad because both forecasts were equally wrong. If you’re looking to scale growth sustainably, you must have the ability to create a meaningful degree of predictability for that growth; to do that well, your organization’s ability to forecast must be an area of strength.
In addition to the obvious reason that strong forecasting, in and of itself, creates a level of predictability, an individual sales rep’s ability to forecast individual opportunities makes them far more effective at utilizing their time and enhances their effectiveness.
I often compare selling to playing poker. In both situations, you’re forced to utilize imperfect information to make bets (forecasts) about future outcomes within dynamic situations, and you must put your money where your forecast is. In poker, that means staying in the game and putting more money at risk. In sales, it means investing more time and resources.
While we could literally write a book on how to forecast effectively, improving your forecasting ability and improving your tactical sales decision-making doesn’t have to be complex or hard. Implement two simple ideas, regardless of the level of your forecasting proficiency, and you’ll be sure to succeed.