What is forecasting? It’s about creating predictable revenue model—you need a plan, it needs to be concrete, and it needs to have a strategy behind it.
The Master Sales Series tackles the pain points of constructing a revenue model for a new year. We take a look at the three different personas of forecasting; the sandbagger, the sharp shooter, and the optimist. George shares from his own struggles and the times when he has missed his projected revenue. After doing extensive research and having conversations with industry experts George has developed a new approach to forecasting.
George is responsible for business development with Vendasta’s large channel partners, as well as managing our in-house sales team. As the host of the Conquer Local Podcast, George’s personal mandate is to make local sales better. A digital interpreter, George has preached the gospel of online reputation management directly to the local businesses of hundreds of cities across North America. He translates his knowledge of the digital landscape into accessible information for those still stuck in the rut of traditional media. With nearly three decades of experience in marketing, sales and promotion, George is a highly compelling speaker, always in demand across North America — vital content and emphatic delivery are combined for an enlightening presentation. George’s expertise in sales, training, networking, management and marketing comes from the numerous executive and ownership positions he has held across multiple media and service-related businesses. His track record of success is continued here at Vendasta.
George: One of the things we’ve been speaking a lot about over the last three seasons of the Conquer Local podcast is coming up with teaching episodes that can help you improve your day-to-day life as a revenue leader, as a revenue doer, as a street-level sales rep, as an inside sales rep. And this topic is coming from my personal experience over the last few years and it’s the bane of my existence a lot of times. I do recognize that it’s super important. We’re going to talk today about a guide to effective forecasting and I will pull out a whole bunch of mistakes that I’ve made in this case. We’ve done a bunch of research around it and we’re hoping to give you some tools and some best practices as to how you might be able to improve this very important part of the sales process and revenue motions. So the latest edition of the Conquer Local podcast, some of George’s top tips. We’re going to dig into forecasting and how you can maybe not make some of the same mistakes that I’ve made. It’s all coming up next.
George: So what is a forecast? Your leadership is going to ask you where you’re going to end the month or where you’re going to end a quarter or where you’re going to end the year. And unfortunately, we’re not able to just pull out of our ass anymore and make a best guess. We need to have some proof points as to why we came up with that number and why we feel confident that we’re going to be able to deliver that revenue. And that’s what the goal is. And I think that in the, you know, in the early days we’d able just be able to go out and pound the pavement and do the hard work and find some money, and then magically show up at the end of the month and like, Hey, I made my number again. But not really know how you did it or was there any science or was there any process behind it?
George: And it’s not going to work. Number one, no one’s going to fund your startup if you can’t put some forecast dollars around it, your sales teams are just going to run around and bounce off the walls. And I’ve done this. And probably done it even in the last few months, where you know, you really need to have a concrete strategy and you know, I give a lot of credit to some of the mentors that I have the privilege of working with on a day-to-day basis. We’ve identified that, for me, this is a problem, and I believe it’s a problem for lots of folks. So let’s dig into forecasting, and I want to talk a little bit about the pain that comes with this. So the first pain is when you realize that you don’t have a forecast or you realize that you can’t trust your forecast or you realize that you know it’s not going to be enough. You don’t have enough in the pipe to fill the commitment that you’ve made to deliver a number. And you’re going to have a bunch of meetings and meetings suck.
George: Let’s face it, if I get invited to one more meeting where there’s no agenda, no clear deliverable and everybody in the studio now is laughing and nodding because we’ve all been in those and what ends up happening is you get to spend some real quality time scrolling to the bottom of some interesting social media app because you’re completely disengaged and you’ve got this bloody meeting that’s been called. The other thing that’s going to happen when you have forecasting pain is you have spreadsheets from hell. Just like Excel overload. And you know, I work with some folks every day. I’ve got this one young gentleman and I’ll ask him for some data and he’s like, “Yeah, another manual process from George Leith that I have to produce that takes me away from talking to my customers.” So you know, we, if we had a proper forecast with some science put behind it, imagine all of the time that we would save where we’re running around trying to cover our ass and keep our jobs.
George: And at revenue leadership, a lot of what we’re doing is running around covering our ass, trying to keep our jobs. The next one is a line by line, I call it. And what a line by line is when you have to interrogate the sales rep and go through every single opportunity, every single account that they have. And you know, I’ve done this ad nauseam with reps. I think that it’s a really good test to see if that rep understands their book of business. And I actually had somebody do this on me the other day where they’re like, okay, you got 27 that you brought across the line. Tell me about each one of them. And I was embarrassed that I couldn’t tell them about two of them. I didn’t know them as well as I could. And I’m like, ah God, this came back to bite me in the ass.
Forecasting: A Vital Process to Interrogate the Opportunity
George: I’ve done this with millions of sales reps and now it just got done with me. And again, because I didn’t have a proper forecast and I didn’t have a forecast that I could trust. Now one of the things is, it’s painful. You’re going to put your ass in the line, you’re going to put a number up there, and in the back of your mind, you’re like, I don’t know if I’m actually going to be able to deliver that. So what forecasting really is, is where you have a process in place where you can interrogate the opportunity, you can put your best guess forward. And then here’s where we fall, and I always like to put some, you know, you probably have remembered the podcast where I have the personalities of salespeople, where you get the landlord and the cynic. Well, I have one for forecasting as well.
George: You’ve got the sandbagger. This is the person that says, “I’m going to deliver $20,000,” and then magically at the end of the month, they bring in 40. And that actually is starting to be a negative, where it’s like you don’t have a bloody clue as to what you’re doing or you’re just a consistent sandbagger. And a lot of organizations, and I mean right at the investment level, they’re saying if you’re running a proper revenue organization, you’ve got to be coming within X percent. And when we look at startups, they’re all moving towards some sort of an exit. You want to get bought by Google or Oracle or Salesforce, you know, that’s the dream, right? We want to build a unicorn. And there are all sorts of podcasts around that where we talk about it. And when we look at any of those companies that got bought, they had predictable revenue. They had forecasts within a percent or two, they didn’t have 50 different deals all over the place.
George: So, you know, I’m telling you from my personal experience that being a cowboy and just going out and doing deals and shooting stuff and bringing it back to the ranch, as you get bigger, it’s just not going to work. And I think actually you can get bigger quicker if you have some processes. Now the other piece is this, looking at the data and having a probability-weighted pipeline that basically where the rep can go in and say, this is 99%, this is 10%. It was the original functionality inside CRMs and I’ve moved away from that in my thinking. We did a bunch of research around it. I give a lot of credit to our CMO, Jeff Tomlin. He dug in and found this thing, where we’re going to say that when you move from one stage in the pipeline to another stage based upon the revenue motion.
George: So remember we talk a lot about we got these different teams and they’re doing different stuff. They each have a different pipeline. And that pipeline has different stages. I’m sitting across from my longtime friend, Mr. T-bone, who has the sound lounge. He has a pipeline to. He has people that are coming into his pipeline that want to get sound engineering, and there are some stages he has to take them through. They might want a demo and they might want to see portfolio and they might, you know, there’s all these things that we do. And he knows that if he follows these steps inside the pipeline, they’re more likely to close. But then you’ve got to spend a ton of time going in and digging through all of those opportunities to say, okay, well here’s how this one worked, and you’ve got to measure it and you got to put it into personas and you got to figure out what the value of the deal was because the big deal that you got last year that took you all year to deliver, that one was a lot longer in the pipeline.
George: Oh, I could keep going and going. I’m already out of breath and I was only talking for about 90 seconds. So that’s some of the struggles that we have in building out pipelines. There are different ones for every revenue motion. And when you have investments that are being made, and maybe those investments, some of it’s coming from your pocket if you’re a founder and you’ve got some skin in the game. But also you’ve gone out and convinced a bunch of people to give you money, they’re going to interrogate the hell out of that and they’re going to want to know the answers. So as a revenue leader, it is your responsibility to know these answers. And there may come a day where you’re like, I didn’t sign up for this. This is not what I want to do. I don’t want to be a quant.
George: You know, I want to go out and talk to customers, and there’s space for that as well. But what I’m saying is that you know, you need to be able to look at the data. You need to be able to look at it and say, okay, based upon this segment and this persona, here’s how they close, usually 90 days. The deal size is this. If we increase the deal size, it moves to 120 to six months. So here are some of the questions that get asked as we’re sitting down and going through this pain, what I call, you’re building a forecast because you have to cover your ass. So you’ve been asked for forecast and you’re like, oh, I don’t really have one. Now you got to go back and do all this work. So here are the questions you ask.
Changing Your Thought Process
George: Sit down with sales rep, he goes, “So how did the demo go? Did we get a verbal. Did we send out the proposal? Have we heard back on the proposal? How many times did you reach out to see if they’re interested in the proposal? What are the objections that they have? When’s the next meeting that you’re going to have? Have we lined up another time where you could bring me in to help you close the deal? What are the red lines? Have you got that over to the lawyer? Have they got them back to us? Is this deal still set to close this month?” That’s the question that gets asked on the 28th. You walked up to every rep, you got five deals you told me you’re going to deliver. You delivered two. What about these three? Oh, I’m going to have to move them. They’re not ready. They didn’t do these things.
George: Now they’ve set another set of red lines. They want to renegotiate the price. They’ve now introduced another buyer into the equation, another decision-maker. And I could go on and on. I’ve got all the excuses. I’ve used them for over 30 years. We should do an episode just on excuses ’cause I got a million of them. So here’s the other thing, and this was one of the pivots that I made in my career years ago where I said, “I got stop making excuses. I got to take ownership.” So now what I have a problem is when I go into explain my forecast and how I didn’t hit it or how I overshot it, cause I’m a sandbagger, I’ve got to now give excuses. And it’s not an excuse if you say, “Here’s why it didn’t close and here are the things I’m going to do to adjust it that I think might tweak that and here’s three that I made the changes on in our sales process that actually got them across the line.”
George: So we can’t go in and say, “Oh, here’s all the reasons that I didn’t hit it,” and just give them that because that’s making an excuse. But if you go in and say, “Here’s the reason why we didn’t hit our forecast this month and here’s what I’m doing about it,” that’s a really important step that you need to take. Oh, let’s go back to those personas again. We’ve got the sandbagger, always surprises of last-minute deals to make himself look good that weren’t in the forecast. The sharpshooter, they hit the number every month. And then you’ve got the optimist. This is me. I’m always trying to impress people. I’m like, “How much you think you can deliver this year?” “Oh, I’m going to deliver $2.8 million,” and I don’t put the effort in to figure out if I really can get that number or not. And then it comes back to bite me in the ass because I look like I can’t forecast to save my life.
George: Now, if the worst problem that you have is you’re overly optimistic, but yet you’re still delivering numbers and outperforming last year or you’re making the investment that’s been made pay off, you may be able to negotiate yourself out of the fact that you are being the optimist. But I’m telling you, none of these three, except maybe the sharpshooter, I do like the sharpshooter because it shows that you’re putting the effort into interrogating the opportunities. You really understand your line of business. Now on the sharpshooter, sometimes I think they might be playing it safe too. So I don’t mind if you miss by a little bit and you’re taking a couple of big swings, you need to move some deals, things like that. And maybe you’re adjusting. If you’re adjusting the forecast during a quarter and that makes you the sharpshooter, that’s fantastic.
Paving the Way for New Forecasting Methods
George: So those are some of the pains that we deal with in forecasting. And to my experience, it’s usually been we’re covering our ass where we’ve been asked to give a forecast or we report on last month’s revenue and we missed by 10%. Now we call all these bloody meetings and interrupt the entire go to revenue motion because we didn’t put enough work in at the beginning. So here’s my new forecasting approach and I’ve researched this and asked a lot of experts. Here’s the number one item that I’m going to call out. You need to be connected with real-time data to your sales teams. Meaning they’re writing in some sort of system where the deal is at. And then you need to figure out the items that they just need to know. I think that’s the stages of the pipeline. And you need to be involved as the revenue leader in building that.
George: So you know, I like the medic approach where you’ve got a stage and then you measure the pieces of the stage and you say, okay, that thing’s ready to move on. And it’s not based upon some arbitrary percentage where you’re like, oh, I’ve got to fill my pipeline so I’m just going to move that to 50%. God, we’ve all done that. I probably did it last month. What I’m saying is the stage. So the stage is tied to what you did. And not that I changed the CRM, it’s I presented to the customer, I sent the NDA, they signed the NDA, I sent the credit app with a proposed contract, and now they’ve come back asking for a 90 day pilot or they’ve come back asking for a proof of concept or they set red lines back and I’ve had to went to the lawyer and see if we’re okay with what they’ve asked for.
George: And you know, those are buying signals that you’re getting down the line that you’ve done the right things. And if you know that a large value deal takes five presentations and you’ve only given two, you’re not ready to move that to the next stage. It’s a really important piece. I was sitting at a meeting last night with a young gentleman and his wife that have started a business and they have a fledgling sales organization. And we were talking about filling the funnel and they’re doing a great job of getting leads in the top of the funnel. And then I started to ask questions. I’m like, so what do you put your salespeople through for training? Have you done role-playing? And it was really interesting. They said, Oh yeah, every time we’re in the showroom and she’s doing a presentation, she screws something up. I’m like, it’s because she doesn’t understand it well enough to pitch in front of her bosses.
George: That’s a very, very intimidating process. And then as we started dating, I’m like, so where does she keep track of your deals? What do the stages of the pipeline look like? If you were to sell it, what do you go through? Oh, I do this, this, this and this, and I know that if I skip a few of these things, it’s going to go bad. And I’m like, Oh, this, here we go again. That woman that’s doing, it’s not that it’s a woman, a woman, man, whatever it might be. She has no possibility of putting a forecast together because there’s no intelligence, no process has been put together for it. So that brings me to number two. We need to have an intelligent forecast that accounts for historic seasonality. If you know that all the buyers go on holidays for the first two weeks of July, how do you expect to increase the number by 40% over last year?
George: You look at it and you go, bullshit. I’m calling it, you just have a bullshit meter. You look in that and you say, that’s not a good forecast. You tell me that you’re going to grow December by 200% and you’ve never done it for six years? You’ve only got 10 selling days in December and you’re hungover for half of those. So here, here’s where we need to go back into history and seasonality and say, here are the variables that are coming in. We’re not going to hit July. It’s not going to be an up and to the right. It might be flat, and then in August we’re going to go up, or in September. You know, there are historical things that come in. And then rep variability. I’m adding five new reps and I’m going to get them up to speed in 30 days.
George: Nope, not going to happen. You know that again, there’s another piece you’ve got to look at. It’s usually a slower ramp and you might have to fire one of the new reps that you hired because they’re not going to cross the line and pass probation. So again, that intelligence of your historical data is so important to show that you know how to build a proper forecast. And then efficiency, and this comes by having a pipeline that you can interrogate quickly. You need quick pipeline reviews so that you can re-forecast at the drop of a hat. Something happens to the economy, something happens where your top seller is, you know, sick or goes on parental leave or something like that. Then you’re able to go in and say, Oh, this happened. Here’s where I’m adjusting my pipeline. Or I lost this huge customer and now I have to go over here and apply some effort to get that revenue back.
George: So quick pipeline review, some efficiency inside the forecast, a really important piece because you set the forecast and you’re going to have to go in and re-forecast. You need a single source of truth so you can get information without daily rep reports. That sitting down and doing the line by line should be something that you do maybe once a month or once a quarter, or if something bad happens, or maybe you want to do it if something good happens. Show me these three deals, how you got them across the line, let’s get you to train the rest of the reps. You come up with a new way to close the deal. But I need that information at my fingertips. I need to be able to look at it while I’m riding the bike doing my morning cardio or you know, while I’m waiting in the waiting room at the dentist or something like that so that I don’t have to sit across from the rep.
George: Especially, we live in a society now where people work remote and we need to be able to look somewhere to see that information. And then we need it to be reliable. It’s just the days of the cowboy aren’t going to work for you anymore. You need to have reliable information. It’s the expectation of the industry now, is to have that reliable information.
George: I hope that these items have helped you in looking at the way you’re forecasting, looking at a new approach to forecasting. And I can think of a few guests that we’ve had in the past. Donny Dye had a fantastic episode around quotas and you know, if you interrogate the quota of your reps, you’re going to figure out why you’re not hitting your revenue numbers because they’re not putting enough effort into building out the quarter. That’s what this is.
George: Forecasting, quotas, expectations, pipeline. Sam Jacobs had some great items in his podcast around forecasting. Butch Langlois had some great takeaways inside his episode around pipeline and forecasting. This is a really important piece and I’d like to thank our listeners that brought it to our attention that we should bring some information forward on. And listen, I got broad shoulders. Here are all the places that I’ve been screwing up on forecasting. I went to like 50 different places. I talked to five different mentors to come up with this idea around a new simple forecasting approach. Five things that you could do. Be connected, have intelligence, have efficiency so you can get to the review quicker, be informed without having to sit face to face with a rep and interrogate them. Just have it sitting in a single source of truth. And then you need that reliability behind it because let’s face it, your job is on the line to deliver an accurate forecast to your investors and if it’s just you and it’s your money, to yourself. You owe it to yourself to have this as part of your revenue motions.
George: Thanks for joining us for the Conquer Local podcast this week. We have all of these episodes online on our website at conquerlocal.com and we have built out the new Conquer Local community. Tell your friends to sign up and we’re always looking for that feedback on LinkedIn. Just reach out to me, George Leith on LinkedIn, and go into the messages and send me a note. Say I hated that episode, or say I love that episode, or say, here are some things I’d like you to come up with because we’re always looking for new podcast content here on the Conquer Local podcast. My name is George Leith. I’ll see you when I see you.