Using mathmatics for accurate forecasting

This article describes the importance of monitoring Age of an opportunity against the Average Sales Cycle of the product line/service in question. In an effort to clarify the point 2 different methods forecasting are described below:

a) Closing date based: This relates to a forecast in which we use the closing date validated by the QBS as the determining factor in the sales forecast. In this we rely on the QBS PREDCTING accurately the week, month, quarter, and/or year as to WHEN the deal closes. The accuracy of the forecast is dependent on the skill in predicting, and becomes more accurate as we approach a delayed closing date. With a change of staff the accuracy level is mostly reset.

b) Mathematical based: Using the age against the average sales cycle (per product line/service) of an opportunity is the determining factor in the sales forecast and provides the WHEN based on the number of days from when an opportunity. In this we rely on the QBS ENTERING TIMELY their data within a CRM based system. The accuracy increases as more data is entered into the funnel. Minor changes are experienced with a change-over of staff as long as data is entered timely in the CRM of choice.

EXAMPLE: A new sales person in the team is told by the prospective buyer that a decision will be made by March 1 (60 days into a sales cycle) in an effort to have the solution tested by April 11. If he does not make the decision by end of March he will loose his budget. Seems valid enough right?.

Well the experienced QBS having dealt with this many times before, knows the deal will get stuck in legal and that as a result a senior executive will approve budget re-alignment, he also knows that engineering can already start testing the product to ensure April 11 date is met.

In effect the experienced QBS is aware of the average sales cycle and it taking into account constants such as average time it takes legal to agree, time it takes the proposal team to write the offer up, etc.

In my opinion there is far more constants in a sales cycle than well compensated sales staff like to let a company belief, here are some of them:

MOST CONSTANT PARTS OF THE SALES PROCESS

• Time it takes from first meeting to proper follow-up
  
• Time it takes to get an NDA established
• Time it takes to put a proposal together
• Time it takes for a response to a proposal
  
• Time it takes to work an agreement through legal
• Time it takes to do a DnB/Financial analysis
  

LEAST CONSTANT PARTS OF THE SALES PROCESS

• Time it takes for the prospective buyer to make decisions

End.