What purpose does sales forecasting serve any way ?

As part of my ongoing statistics education ( data science of you want to make it sound really important)  , I had the opportunity to analyze historic sales forecast vs actual sales of a company recently to find out optimization models . Since managing sales is something I have done and continue to do – it was all the more fascinating for me to understand what the data was “supposedly” pointing out . 

And then an old buddy called me out of the blue and while talking shop – he mentioned that despite extra focus on accurate forecasting , the new CEO of his company was constantly frustrated with his sales leaders . A month before quarter close he accused them of sandbagging the forecast – and he got the numbers he liked as a result . Two days after quarter closed , the results didn’t look anywhere close to forecast and he yelled at sales management for bad forecasting . We both found it funny and sad as he was recounting this story – it’s all too common a scenario .
Let’s get tools issue out of the way . Although they won’t admit it publicly – companies that build sales management and planning tools also mostly do sales forecasting on a series of spreadsheets . Some put a fancy UI on top for C levels to see the results . Essentially – very few companies have figured out a tool to enable end to end sales forecast management  . Tools are all great – just that tools are not the problem this business function is low in effectiveness. Tools can help somewhat with efficiency – but not effectiveness .

Why do people bother with forecasting to begin with ? I will tell you my view – others might have their own opinions. The ideal reason for me is making prioritizations on resource allocation, followed by predictability . 

I like my sales reps to be “selfish” resource hoggers who do everything they can to win the deal (ethically etc of course). I want my sales managers on the other hand to provide the company view and prioritize which deals get what resources . This provides healthy tension in the system and gives me enough information to make executive decisions ( hiring , changing structures , discounting principles etc). 

Predictability is only a second aspect for me – but it is a close second . For good or bad – investors need predictability every quarter whether it is public or private capital markets the company operates in . And this causes a lot of “tail wags the dog” scenarios in sales forecasting . 

Pipeline management is a perfect casualty . Qualified pipeline is what we as sales leaders think drives sales . That is possibly true too – but what the sales system tells you as qualified might not be real in most cases . Which brings us to this thing called “coverage”. Conventional wisdom in my indistry is that to close $1 in sales , you need somewhere between $2.5 to $4 in “qualified” pipeline . We even.        pay some teams directly for drumming up demand to make sure our reps have such coverage . Plus the reps bring in their own opportunities . 

More often than not – reps won’t have the coverage their upline managers expect . There starts the exercise of low quality opportunities getting created to make the numbers up . Some times it is done with best of intentions – overly optimistic reps just think they have a real opportunity and their managers either share their optimism or just are too lazy to test for qualification till they get too many questions . End result is that a wrong pipeline number is set and published that is 3X the expected sales number from the CFO . And when sales doesn’t come close to that – or when sales exceeds the “call” by a lot , no one knows why. Should anyone really be surprised ?

Let’s look at the evil effect on resource allocation too before we wrap this up for today. Two thirds of way into a quarter , experienced managers will know whether they have a prayer of hitting quota for their team. This usually starts the process of parading top execs from the company in front of top execs at customer . The CEO of a vendor who goes before the CEO of a customer at end of quarter very rarely has the ability to say no to unreasonable asks . So they end up “buying” business at high cost of sales . Some Sales reps and sales managers who have a lot of experience know how this game plays out and occasionally do set up things this way for the top executives . You can’t blame them – your poor forecasting process and the metrics you use to compensate sales people are now working against the best interests of your company . 

Bottom line – before sales managers over invest in sales forecasting , they need to think through the holistic picture of what they want to achieve as end result . Situation differs for all of us and hence I don’t think there is a prescriptive one size fits all solution . I definitely will be rethinking this all over from scratch over the holidays . 

Is my cup of green tea frappucino half full or half empty ? 


If you are interviewing with me …

A good part of my time is spent spotting new talent and grooming leaders in my team . And since we have a lot of demand for talent at the moment – I am spending a lot of time interviewing candidates . Several folks have reached out in private to ask me what it takes to do well in such interviews .

First – it is easy to impress me . So don’t stress out on that  . I don’t bite (and very rarely even bark) . Second – impressing me alone doesn’t get you a job . We have a systematic screening process to eliminate bias . It’s not perfect perhaps – but it lets me be me and my colleagues be themselves and yet we end up collectively as a good evaluation team . And third – because we know each other through social media doesn’t automatically make you more qualified . 
So here we go 

1. Be pleasant 

We hunt in packs normally – whether it is sales or delivery . If you are not pleasant to be around on interview day , I doubt you will survive in a high stress customer engagement where several of us need to depend on each other to get to a successful end result . Dress for the job you are interviewing for – there are no bonus points for looking extra sharp . 

If you prefer working alone – do tell me upfront . Occasionally there are jobs that can work with people working in a lone wolf fashion . But it’s better we discuss that upfront because vast majority of roles in my team will need you to be part of a team .

2. Be honest 

Don’t tell me anything you can’t back up if I push back . Especially on your actual project experience . I am a hands on techie myself . If you claim that you are an expert programmer , I might push my MacBook to you and ask you to debug a piece of code , or write a small program or something . My intention is not to get you to a “gotcha” moment – it is more about understanding if you can debate back and forth with me on a topic , technical or otherwise . But in the process if you prove to be dishonest – you won’t get hired by me ever again . 

I don’t expect you to be an expert in all aspects of the job . But I do expect you to know enough on the key skills and prove to me that you have a willingness to keep learning all the time . 

I once interviewed a programmer who claimed to have done some complex program for a customer I knew . He explained clearly every design point and I really liked him . I asked him if he wrote the code or if he just maintained it . He assured me that he wrote the original code . I didn’t hire him despite his excellent tech chops – because he was being dishonest. I wrote that original code ! It was just his bad luck that he ran into me with that story – but that is what happens when you are dishonest .

3. Explain with examples 

For example – If I am hiring you for sales , I expect you to tell me exact figures of past accomplishment . Don’t just tell me “I killed it” ! Explain to me how you overcame specific buyer objections . Tell me about your good years and bad years in terms of quota coverage and explain what made them good or bad . 

If you are a developer or Ops person – show me your code contributions and give me specific examples of both good and boring stuff you have done . 

Do expect me to challenge your claims and I might choose to role play as a customer . I will need you to provide references and I do check all references . 

Many years ago – I was interviewing a young lady for a BI Architect job in my team. She had impressive tech skills . And then she told me “I will need to work from home when I have my periods . I cramp a lot at that time and I will get easily irritated”. I didn’t exactly know what to say ( my wife was pretty stunned too when I told her about it later) , but I hired her . I did set the expectation with customer and my team about this and she totally hit it out of the park . 

4. Explain what makes you interested in the job 
Do some research before you talk to me on interview day  . What is it about the job and the company that interest you ? What are your apprehensions ? What support will you need in terms of training , Presales support etc ? Why is this different from your last job ? What makes you excited and what makes you bored ? Are there things like travel restrictions etc that I should know ? What is the growth you expect drive for yourself , the company and the customer ?

Remember – the more information you give me , the more is my ability to find a suitable position for you . You might not be the best fit for my team – but at any given point I know other open positions that I can refer you to. 

Couple of months ago , a young technologist from Silicon Valley was interviewing with me . His skills were such that I really thought he would not take up a job in my team and would join one of the local startups . I asked him about that and he replied “I don’t want to build consumer toys – I want to change the world of enterprise data”. I hired him ! 

5. If you have questions, ask me 

You should be evaluating me and other evaluators just as we are evaluating you . If you have questions for me – please ask me . Interview days are penalty free zones with me . Ask me anything . I will tell you everything I know about that – and if I cannot say something for confidentiality reasons or something , I will let you know . 

Don’t ask me questions you can find out answers by yourself easily by looking at company’s website or on Internet in general . Also if my answers are not satisfactory – push back on me . If we need to work together well – we need to hold each other accountable and this is a good test for you and me both .

The more senior the role – the more are my expectations on what questions you should be asking . For executive hires – it’s mostly going to be you asking me great questions and less about you answering my questions . 

6. Don’t take the job if you are not FULLY sure this is what you really want

If you join my team, I expect you to do so with full excitement with little to no apprehension . So use the interview and hiring process as the time to get rid of your apprehensions . Talk to your family and friends before you take the job to make sure your job is aligned to your personal life and goals .  If you have even a tiny bit of doubt that this is not the right team for you – do yourself and the team a favor and don’t join .