Being Accurate and consistent reporting when we expect to close a deal, and its sales value is sales forecasting.
Managing sales leads through the sales pipeline towards closure. Making sure they are satisfied with the outcome and maximising our outcome. Achieving customer satisfaction and maximising our own outcome goals is pipeline management.
Here is another way to look at the difference, consider our:
- Sales pipeline as the beating heart of our business.
- Accurate sales forecasting is the health of our business, our cash flow.
- Sales pipeline reviews are our regular health checks. To check, we are healthy, and there are no hidden issues that could impact our health.
Just in case, here is another way to consider the difference between sales forecasting and pipeline management. You are the captain of a ship; that ship is your sales team.
- Sales Pipeline Management is all the things the captain does to oversee leading the ship to its destination. It is the same for the sales leader and sales team to make sure their sales leads stay on course to closure.
- Sales Forecasting is estimating the ship’s time of arrival with its valuable cargo. The captain does this by looking out at the horizon and reviewing his navigation instruments – monitoring milestones and guiding the ship’s progress towards its destination.
There is one other important consideration we need to take on board. The value of the ship’s cargo changes throughout the voyage to its destination.
The game plan is to make sure the cargo value keeps rising, so it is at its highest value when it reaches its destination. Its value on the day the ship arrives at its destination is what the captain’s shipping company will get for their efforts.
If the captain and his officers kept looking at the horizon, there would be little to no progress made increasing the value of their cargo during its passage. The cargo value will not increase and they will probably drift off course.
Being obsessed with the end is no different to sales leaders working with their teams and spending too much time staring at the horizon. Predicting when the sales opportunity will close.
Timing is everything within a sales forecast
Time is everything when managing a sales pipeline and forecast. If we spend too much time focusing on the end destination, that time will have passed. We should be using it more wisely, planning and managing our sales pipeline activities. Being effective managing time is why sales pipeline reviews are so important to maintaining the health of our business.
If we fall into this same trap looking out at the horizon, we can expect rough seas ahead that could sink our ship. We will miss important milestones we rely on prompting us to act or change course and our behaviour.
When we miss these milestones and do not take proactive action, we become reactive to avoid hitting the rocks. Avoiding rocks means we will achieve this quarter’s revenue quota plans. Our behaviour becomes myopic, focused on today’s execution to achieve quota target. The next quarter quota target is a challenge for tomorrow. So we bring deals forward to achieve this quarter’s target.
If that sounds familiar, you have steered your ship directly into rough seas. Sadly those seas hide rocks that you would have seen in good time if the waters were calmer allowing you to navigate around them. Rocks sink ships.
It is no different to managing your sales pipeline and forecast accuracy. Reactive behaviour delays our sales leads arriving when we forecast it. We also devalue our cargo, throwing away and missing valuable chances to secure a higher price for our cargo. Sometimes we never arrive because we have hit the rocks hidden by the rough seas and sunk.
What dials should the sales leader be monitoring?
I mentioned the captain and his officers looking at the sales pipeline management dials. Here are some of the more important dials I was referring that will help increase the value of the cargo and steer the ship to arrive on time at his destination.
- Lead Indicators and Experience – Experienced sales leaders and reps look within the sales lead to check the right conversations are taking place. Looking within the sales lead allows them to confirm the sales lead is where we say it is. Many sales pipelines are set up to serve the seller’s internal reporting needs. There are no leading indicators telling the seller where the sales lead is on the buyers’ journey. Without this information, we could be heading directly into rough seas and towards hidden rocks.
- Time-based Milestones – Our own and the sales leads’ behaviour changes depending upon where we are. We need to track the Beginning, Middle and End of the sales lead’s project.
If we are at the beginning, we are more open-minded. It is also the time our sales lead contacts are also more open-minded. They are primed to support us discover the information we need to position ourselves competitively.
The middle is when they realise time is running out and become more focused. Realising time is running is the point we should move to becoming more consultative working with the information we have discovered.
The end is all about execution. If we are not having meaningful conversations that help our sales leads to achieve their end goal, we become irrelevant and will probably be disqualified.
- Task-Based Milestones – These are the tasks we must cover off if we are to keep our sales leads on track moving through the sales pipeline to close when forecast. Focusing on managing each activity milestone means we can be more confident in managing our sales lead through the sales pipeline. This confidence taking the right actions at the right time improves our sales forecast accuracy.
We need to approach our sales pipeline reviews with more vigilance. Use them to take out the uncertainty trapped in our sales forecast. Sales pipeline reviews represent regular and brief pauses that help us guard against judgement errors.
They allow us to guide and coach. They also give us the confidence to accelerate sales leads moving through the sales pipeline stages to close quicker.
This is the reason why we must manage sales pipelines and our forecast as two separate tasks. It is no different why a captain manages his ship’s operations and forecasting its safe arrival as two separate tasks.
Blur the lines between the two tasks, and we risk drifting off course and devaluing what we have to offer. It is often the reason for sales leads to slip or be lost in a sales forecast.
We have created two Guides that will help you take great control of your Sales Pipeline and Sales Forecast Management.
Download The Sales Pipeline Guide for Sales Teams & Business Owners.
Download The Sales Forecast Guide for Sales Teams & Business Owners.