Are sales projections fact or fantasy?

May 17, 2022

Dr Jana Matthews | 4 min read | Sales projections – fact or fantasy?

Sales people are optimists— and they need to be to withstand the number of times potential customers say ‘no’. If they weren’t optimists, they’d internalise rejection, crawl into a hole, and stop selling!

Is your sales report fact or fantasy?

As a CEO, it’s sometimes difficult to tell whether sales reports reflect facts or fantasies. The absence of accurate sales projections makes predicting revenue—by month, quarter, or year—extremely difficult. Your sales team is fantasising if they believe they can close every sale. And, if your products aren’t selling, you need to know. Is it because the team has poor sales skills, the product needs to be modified to make it more saleable, or the sales team hasn’t figured out the right market-product fit?

Suspects, prospects, leads and customers

CEOs need to track how long it takes to close different types of sales. If you are an airline offering a 24-hour flight sale on the web, you should be able to predict how many prospects will come to your website each hour to check it out, how many of them begin the booking process, and what percentage actually hit the ‘buy’ button. If your team is engaged in a more complicated area of sales—like selling to other businesses, or doing enterprise sales—the cycle will be longer, because more people will be involved. These types of sales often require the sales person to build a relationship—and that takes time. But don’t let your sales team confuse ‘time to build a relationship’ with ‘time to close a sale’.

Even an outstanding relationship with the buyer does not guarantee they will automatically give you the sale. Make sure your sales team is brutally honest about the probability of getting the sale—and the time needed to close the sale and bring in revenue.

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Know your customer

Companies buy products and services for a variety of reasons—the most obvious one being to achieve their internal goals and plans. Companies may have a budget, or they may want to bring forward a purchase previously planned for the following year. Sometimes, the need is personal. If the CEO has just told the director of engineering that he needs to improve his people skills, he will suddenly have need for a coach. The point is: a sales team must know what ‘need’ is driving the sale, and figure out the value this sale will provide for the organisation and customer. This means your team needs to understand what they have to sell and, equally important, know what the customer wants to buy!

Sharpen your sales team

CEOs can sharpen a sales team’s skills in this regard by simply asking the right questions. For example, do they know whether the sale will go to the company with the lowest bid, the highest quality, the best service, or quickest delivery? The CEO needs to encourage the sales team to ask questions about the decision-making process. Will a single person make the decision, or will a committee make a recommendation to someone? Will that someone then need to justify the recommendation to the CFO? Make sure your sales team understands the difference between ‘influencers’ and the ultimate decision makers (UDM).

Make sure your sales team is brutally honest about the probability of getting the sale—and the time needed to close the sale and bring in revenue.

Know your competition

Your team is never selling in a vacuum. There are always other companies who are selling similar products or services. It’s essential that you know your competition, what they are selling, how they have priced their products or services, and their reputation in the market. Are they the ones who always come in with the lowest prices. Or are they the ‘gold standard’ for the industry? It’s really important to decide, early on, whether or not you have a solution that meets the customer’s needs. And whether you have a reasonable probability of getting the sale. If the sale is going to require a lot of custom tailoring of the product, or deep discounts—or if the customer is going to expect a lot of service for free—then you need to ask whether or not the return on investment is worth it. Sometimes, it’s better to walk away.

It’s essential that you know your competition, what they are selling, how they have priced their products or services, and their reputation in the market.

10 questions to help the CEO separate fact from fantasy

So, based on my experience, I’ve found that these questions help:

  1. Tell me about the top 10 companies on your sales report. I assume they are in order of probability of closing. Can you tell me whether each person is a suspect, prospect, or lead?
  2. What’s the probability that each company listed will decide to buy and pay for our product or service within the next six months? Three months? One month?
  3. For each of the top 10 leads, tell me the NEED our potential customer has that is prompting them to be interested in our product or service? Based on your conversations, what VALUE does this product, service or sale provide to them?
  4. What BUDGET has our potential client set aside for this product or service? Is the money in the current year’s budget, or next year’s budget— or both?
  5. What are the PERFORMANCE REQUIREMENTS or FACTORS we need to build into our bid?
  6. What is the decision-making PROCESS? Do we know who the ultimate decision maker is? Do we know the people who will influence the decision as opposed to who will make the final decision?
  7. What is the DEADLINE for EXECUTION of the sales decision? How quickly do they want to close the deal? Do they want results?
  8. Who are our key competitors, and what are they charging for similar products or services?
  9. Do we really have a solution that’s right for the customer? Or will we need to do a lot of custom tailoring of the product to make it what they want?
  10. Does our ROIST (return on investment of sales time) justify the sales effort that will be required?
Original article: The CEO Magazine

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