Thanks for the comment. I agree that “quality is in the eye of the beholder” and that a sales rep’s optimism can mask an opportunity’s true likelihood of closing. There are two ways of addressing this…

One method would be to hold salespeople accountable by reporting back to them how well they are rating the quality of their opportunities. If they are consistently optimistic, they can be coached to be more realistic. Likewise if they are consistently pessimistic. This approach has the virtue of being a simple and quick solution. It’s downside is that management intervention (i.e., coaching) is required.

The other alternative eliminates the requirement to do reporting and coaching, but it is more complex. This involves using the CRM system to calculate each rep’s historical performance as far as how they rank their opportunities. A coefficient can then be developed that adjusts for individual optimism/pessimism. This latter approach only makes sense if you’ve got a relatively stable workforce and enough historical data to compute meaningful coefficients.

Regarding velocity… Your point about clients having the ultimate say on when they buy is well taken — I’ve never been a fan of artificially rushing the sales process. The point of using velocity as a pipeline metric is that a given company’s sales process will have an average velocity. Factoring that into the computation of a forecast is, therefore, always going to improve your accuracy, particularly if you take into account variability that is due to seasonality or product line. While there will always be end-of-quarter attempts to pull in deals that are close to closing, I see velocity as something that should never be manipulated as part of the forecasting process; it’s merely one of those variables that must be factored in to improve accuracy.

Any attempt at improving pipeline velocity should be done independently of the forecasting process, as part of a systematic effort to improve the efficiency of the sales process. While this is a good goal (IDC research indicates that most IT customers wish that purchase cycles were shorter), it is not something that can be done quickly and must be done in a manner that does not damage customer relationships – just as you point out. If efforts to shorten the sales cycle are successful, the velocity variable in forecast calculation can then be adjusted accordingly.

Marci Reynolds:
I agree with both positions….. Selling is a science and I have been involved in several experiments which proved that by completing certain actions at the right time, with the right person, with the right approach- you will close more sales. At the same time- automation can take the guesswork out of the sales process- and make it easier and faster for Salespeople to follow best practices.To get the best results, combine both sales documentation and sales automation. Great post!

Marci Reynolds
The Sales Operations Blog

‘completing certain actions at the right time, with the right person, with the right approach- you will close more sales’ – all this requires judgment …. which sounds like more of an art to me!

Marci Reynolds
The Sales Operations Blog

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Helen S.

You raise excellent points. Forecast accuracy is an elusive goal that must be tackled from multiple angles. While intelligently extracting and using data from your CRM system is a great starting point, improvement can only come with ongoing examination of what causes inaccuracy to creep into the picture. Sandbagging and “rolling garbage” are definite culprits in this regard.

Your suggested solution, investigation on the part of sales operations professionals overseeing the forecasting process, is spot on. This is why we’ve always considered good pipeline reports that are understood and used by first-line sales managers (FLSMs) to be a vital part of successful CRM implementations. A pipeline review process that is a standard part of how sales teams operate not only raises team member accountability, it also provides an easy way to spot irregularities over time.

When opportunities never die (the “rolling garbage” problem you point out) or sales reps engage in sandbagging, the velocity metric will suffer. Looking for opportunities that have a long “time-in-stage” will reveal the former, while a velocity metric that always goes down near month or quarter end is a clear sign of the latter. It still requires a diligent sales operations professional to sniff out these problems, but regular reports that are read and used by FLSMs can provide an excellent way to engage them in resolving these issues when they are identified.

- Tom