Forecasting

One month from today you will meet a tall, dark, handsome stranger and they will hand you an order for one hundred units at a value of €1m. If we all had a crystal ball wouldn’t forecasting be so much easier?

Forecasting is saying what you expect to happen and when you expect it to happen, it’s predicting the future. Forecasts and predictions of the future are found everywhere we look, weather, economic, traffic, gambling, astrology and most of all in sales teams

Sales forecasts can be based on judgmental methods; they can be based on reviewing events over a period of time, by statistical analysis and with equations. Mathematical models, simulations, averages and linear projections can create forecasts and behavioural, cultural and personal opinions can challenge them.

Movie mogul Samuel Goldwyn’s quote “never make forecasts, especially about the future,” might be wise advice. However, if you work in sales, Sam’s quote is unlikely to be an escape route from having to say, “What you expect to happen in the future” when it applies to your order pipeline.

It’s impossible to get a forecast one hundred percent correct every time, but does that mean it’s not worth trying to get it right at all, or are there things you can do to improve your odds of an accurate sales forecast? Here are five things that might just help in getting your forecast closer to right than wrong.

Measurement; If you work in an environment where your forecast accuracy is measured be grateful that someone (or something) is helping you improve your forecasting ability. If you don’t, start to measure it yourself. Give yourself a (very quick) pat on the back for what you got right and then turn your attention to what you got wrong. Take out any emotion or defence mechanisms around the things that were “out of your control” and rationally analyse what you would have done differently if you could turn back time to when you last updated your forecast.

It matters; A forecast is not an administration exercise, if you say you’re “doing your admin” when updating your forecast you may want to reassess your priorities. Growth plans; share prices and your and your colleagues’ future employment are all based on your company’s ability to obtain orders from your customers. Being able to forecast when these orders will arrive, how much they will be worth and when they will be invoiced matters immensely.

Be honest; An accurate forecast depends on an honest appraisal of your sales pipeline, the less honest view you take, and the less accuracy you will be rewarded with. If you want to make your sale pipeline look better than it is, it’s not very difficult to achieve, just be over optimistic about when your orders will arrive and what value they will be. It will keep “the management” away from you, albeit for a very short period of time. If your pipeline doesn’t look great, be honest and focus on making it better.

Learn: Accurate forecasting is a skill, there is no foolproof methodology or perfect model, if there was we would all know about it, I wouldn’t have written this and you wouldn’t be reading it. Like any skill, the more we learn from our past successes and our past mistakes and the harder we work at it, the better we get. So apply the learning techniques to forecasting that you would to any other skill you want to improve your abilities in.

Responsibility: It’s your forecast, you own it and you’re responsible for it’s accuracy, it can’t be delegated, allocated or transferred to someone else. This is particularly true for those in the sales leadership positions. It doesn’t matter if your forecast is an aggregation of ten, a hundred or even a thousand other peoples’ forecasts; it is still your responsibility. Of all the factors involved in accurate forecasting, buying into the fact that you are one hundred percent responsible for your own is probably the most important.

Forecasting accurately is hard work, it demands time and attention and a real desire to get it right.

Samuel Goldwyn might not have been interested in forecasting the future, but then again he was in the movies, he could make the future whatever he wanted it to be!

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