Steve Schilling is a friend from within the telecom industry. He is currently the President and CEO of Cypress Communications and prior to that he was founder and president of Netifice Communications, which merged with Megapath Networks a couple years ago. Steve is also a MFS Communications alumni, though we didn’t know each other in those days.
Steve sent me an email about my blog series on sales funnel management. When I asked Steve if I could post his comment on the blog, he said “Have at it….Forecasting accuracy is a religion [at Cypress]… and I am a preacher!”
Steve’s email was:
Dan – I had to laugh… I never have understood organizations who present sales forecast based on sales step (although that is what Cypress was doing before I showed up as well). I too learned years ago that sales step and probability are two completely different things, and I have always felt you need both. Given the complex nature of most of the sales environments I have typically lived in, as a rule I don’t allow a deal to be forecasted in the 30 day bucket if we haven’t already begun contract negotiations. It never ceases to amaze me reps who say… “they have committed to make a decision this month…” and thus want to forecast it in that month. Inevitably, if they do get the deal, it turns out to be the last week of the month, leaving no time to work through contract details.
Our term around here is “Blood Oath” … we find it sets the right tone.
Thank you Steve. This reinforces why I am so passionate on the topic. Your comment will help bearonbusiness readers.
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Could you explain what Sales Step is? Is that something SalesForce.com moves the sales teammates through? Is that the process that Landslide.com would follow? Thanks!
Peter, sales “step” refers to the multiple different steps most orders need to go through prior to be signed. Examples of steps: “opportunity identified”, “confirmation of budget”, “quote provided”, “contract submitted”, “verbal confirmation”. Many companies break down an order into 5-10 steps, with the idea that an account executive should track which steps have been completed, and what steps still remain. This provides visibility as to how potential orders are flowing through the sales process, and also reinforces to account executives as to all that needs to happen prior to getting signature.
Steve’s point is that it is unlikely a contract will be signed prior to month’s end (if late in month already) if contract negotiations have not yet begun.
I think it is healthy to use steps to track sales activity. My issue is when probabilities are applied to various steps. For example, 10% of “quotes” + 70% of “verbal confirmation” = forecasted sales for the month. I think this is inferior to asking account executives what they will get to the finish line, by order. They should use the sales steps to derive and defend their commits.