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November 2002 ISSUE: The Forecasting Nightmare
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Strategic Software Partners Ltd. SSP House, The Old Bakery, 44b Commercial Way, Woking, Surrey, GU21 6HW,
Tel: +44 (0)1483 747 812 Website: www.sspltd.com
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Established in 1995, Strategic Software Partners specialises in helping enterprise software companies grow locally and globally, by providing consultancy, market research, business planning and finding partners in the UK, Europe, the USA and beyond.
SSP has the resources, expertise, knowledge and practical experience to enhance, complement or even replace your business development capabilities.
We have decided to use the knowledge that we have gained in a newsletter to perhaps eradicate some of the myths relating to technological issues.
If you would like to know more about SSP then please visit our website, www.sspltd.com or contact us on +44 (0)1483 747812
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Company Focus
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This newsletter is read by an audience of 15,000 key decision-makers in the IT software industry.
In this space we are offering you the chance to be included in future newsletters.
For more information on how you can reach potential new partners in the UK, France, Germany, Italy, Spain, Benelux, Nordic region, USA and Middle east email us at newsletter@sspltd.com or phone +44 (0) 1483 747812 and ask for Graham Swallow.
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Sysmetric Solutions are a multinational software development house with a wealth of experience. With offices in the UK and USA, with their development headquarters in India, Sysmetric boast an impressive array of development skills including MS SQL, NT, .Net, Delphi, Magic, Sybase, Oracle, Javascript, Visual Basic, ASP. Sysmetric are committed to delivering projects on-time, within budget and to exacting standards.
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The Database Group. To implement data-based marketing, you need an expert, independent partner with a proven track record. Independence frees you from reliance on any single targeting system. Independence releases you from being tied into any one software application. Independence gives you the tools which work best for you. The Database Group is just such an independent service business, and its success has been built on the reputation of its employees and the satisfaction of its customers.
Artemis International Solutions Corporation is one of the world's leading providers of enterprise-based project and resource collaboration software solutions. The company's 26 years of success are built on its proven ability to execute customer-driven applications for all levels of the enterprise -- from the executive to the knowledge worker.
SSP are currently undertaking the search for business partners in Ireland and the Middle East, on behalf of Artemis.
Convera's advanced technologies, products and services enable organizations to leverage the value of all their content providing the industry's fastest, most accurate access to media within the enterprise. Convera's unique blend of vision, ingenuity and expertise enables it to deliver the solutions that permit many of the world's largest and most successful organizations to tap their information resources for quicker, better informed decision-making, increased productivity and new revenue streams in a fast-moving business environment.
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In recent months we have been meeting with several well-known distributors of software products and services in such diverse countries as Russia, Italy, France, UK, and the UAE and the topic of sales forecasting arose with the owners of these companies. The responses we received ranged from amusing to indifferent.
One owner said that he factored all forecasts by 25% as he fundamentally never believed or relied upon the credibility of most of his sales staff. Indeed, he often took the word of his technical staff involved in these accounts as having more validity and accuracy!!
Another owner worked purely on numbers. If there were ten sales to close this month then two would. When he was asked if there had been any changes in this method of forecasting in the current economic downturn he had to admit that for some months there had been one and zero.
We then discussed the cash flow implications to their business. Most only considered making redundancies and reducing marketing budgets as possible solutions to overcoming the cash shortfall.
When it was pointed out that they were addressing the wrong problem they were somewhat staggered. Their problem was they did not understand their customers and how they bought. Their internal sales and forecasting processes were reinforcing the widening gulf between what they wanted to believe, and reality.
Is your Sales Force Self-Serving?
Most salespeople are, by nature, optimists. They have to be. They usually confront rejection more often than success, but the promise of success enables them to handle the "failures" in a rationalised manner. In a buoyant economy the successes for the majority of salespeople enable the failures to be ignored or at best written off, as "we cannot win them all".
But, in a depressed market, the need to appear successful is as important as closing the business. So salespeople will often do anything to create the impression of imminent success and hence the optimistic forecasts that can create the reactions mentioned earlier.
So, blame the salespeople?
Or are salespeople more often victims of forces beyond their control? Furthermore, is it that in the current market the buyer is exercising more caution and control over expenditure?
Let’s examine these questions. At the distributors discussed earlier we arranged to meet with any of the prospects about to "close" this month, chosen by the salesperson. For most of these salespeople this was forecast as between 75%-90% probability. We had no previous knowledge of the accounts or the extent of any relationship between the salesperson and the potential customer.
What we discovered in one account was the following:
The buyer had articulated no actual need
Timescales for a solution were not critical
No contact had been made with all the influencers and the decision makers
There was tremendous interest in the technology by both parties
Clearly there was a mutual self-interest taking place between the ‘buyer’ and the salesperson. The salesperson feels comfortable with someone who will willingly listen and the ‘buyer’ (who has no actual authority), is keen to understand the latest technology.
Sound familiar?
In another account we were introduced to the technical evaluator and it was also agreed that we would "meet the decision maker". To the surprise of the salesperson, it was very evident that the real decision maker was in fact the technical evaluator as all decisions were made by him and merely rubber-stamped by the so-called decision maker. To get the deal we did not reduce the price but threatened an increase if they did not buy that month. It worked.
Is this also familiar?
Understand the Buyer
In both instances, the salesperson's view of the world is exactly that. Theirs. They simply forgot to try to understand the reasons people buy and their motivations and needs. They also forgot to ask some fundamental questions and then validate the answers. They were prepared to accept face value responses and not probe for the truth because they probably feared the result.
There is no doubt today that the buyer is very much in control so unless you educate your salespeople to challenge and persuade buyers to initiate a sale then your forecasts will have more fiction than the latest "Harry Potter" novel.
Get your salespeople to do the following:
- Get in writing the problem the customer believes they have (do not accept that they need an OLAP tool, datawarehouse etc). Problems are often expressed in terms of consequences and never products.
- Scale the size of problem the buyer has in writing.
- Determine how critically a solution is needed. Deadlines focus minds wonderfully.
Management Responsibility
Making sure you get every business opportunity is crucial and as these examples illustrate it is all too easy to blame the "current market" when some of our own shortcomings and lack of skills are being highlighted. Management cannot just right off bad forecasting. Forecasting is a bi-product of understanding how and when a prospect becomes a customer. While not a science there are many techniques that can be applied that can literally save your business, keep good staff and INCREASE sales.
In recognition of this SSP are focussing on helping companies who do not have the sales management expertise but want to understand better forecasting, and increasing cash flow, as well as help salespeople improve productivity and performance. Details on this, and our other services, can be found at our website
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Strategic Software Press is published by Strategic Software Partners Ltd. All rights reserved. Contents may not be
reproduced in whole or part without the written consent of the publishers. Copyright 2002.
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