Why Forecasting?

As a great advocate of forecasting and the importance that a good forecast is to a company’s planning, I honestly don’t understand how someone can run any business without a forecast consisting of their current customers and how much business they will bring to their company in the next month, quarter, and year. Then, and this is my favorite part of a forecast, they add in the new potential accounts, the accounts your sales team is targeting and how much possible business can be gained by successfully adding these accounts to your forecast.  To me it is only…well it’s only common sense that every company, and every salesperson, in that company should be required to develop an annual forecast and then make the necessary month by month updates to that forecast.

Operating without a forecast is like playing a basketball game without a score board or setting out on a trip without a map/GPS. How are you going to get there if you don’t know where you’re going?

For most people developing a good solid forecast is daunting at best and boring at worst. For me it is one of the most fun and exciting parts of doing business. A forecast is actually a planned insight into where your company is heading, it’s a glimpse into the future. 

The best thing about forecasting is that it forces the forecaster to review every customer and evaluate how his company is performing with that customer. It’s a true report card of your company’s performance with that customer, not to mention an icy cold stare into whether or not they are performing well enough to grow with that customer, something we all need to be doing at all times.

Forecasting potential accounts is the most fun of all because you’re actually setting out on an adventure to win those accounts, talk about fun and excitement! I love the idea of strategizing on how you are going to land that big fish, that whale! Man, that is as close to an adventure as you can get in the business world.

Good forecasting is not just to hold salespeople accountable, that is only one of the many benefits of a company’s forecast. The true value of a forecast is that it defines your company’s direction. A good forecast will show the company what direction they should go in when it comes to technology, capital investments, and manpower. In order for operations to plan for the coming year they need to have a good understanding of the business that will be coming in the door including answering the questions:  How much business? What technology business? When will it be coming in the door? What will the lead times be? And how many extra people is it going to take to handle this business? In most  cases an honest and accurate forecast will dictate the overall direction of the company.

So why are so many salespeople aghast when you ask them to do a forecast? Why do so many salespeople, have a knee jerk, negative response, when asked to put together a forecast?

I am always amused at all of the reasons people give me why they cannot possibly put together a forecast.  Here are some of my personal favorites:

  • How do I know what a customer is going to do? They don’t even know.
  • I have found over the years that forecasts are a complete waste of time because we never meet them. (hmmm, I wonder why?)
  • I don’t have the time for doing a forecast, I’m out there selling. Do you want me doing paperwork all day or selling?
  • The reason I became a rep was to avoid all of the bureaucratic BS, I’m sure not going to start doing it now.
  • I don’t believe in forecasting and I don’t want to do it.

Or my favorite when the salesperson comes up with a very long and I have to say very tenuous philosophy on all of the reasons that he does not forecast. This will include all kinds of true-life examples supporting his non-forecast stance.

Look if you are going to run a successful company you have to know who your customers are and how much business they have done annually for the past couple of years, and how much business you can expect from them this year. It’s not that complicated. I’ll say it in plain English, if you can’t do that, you don’t know your customers well enough. 

When it comes to new customers, target accounts, a salesperson should have a complete understanding of what business they are in, how much of her type of business they have and what it’s going to take to win that business. This is called developing and implementing an account strategy and it’s an integral part of being a good salesperson.

I have been teaching salespeople, and companies, how to forecast for over 25 years. During that time I have worked with many companies,  showing them how to develop account plans and forecasts and in every single case the companies have been better off for it. Forecasting works, I can guarantee that.

In the end it all boils down to this. If you ain’t forecasting you ain’t selling! It’s only common sense.

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