One of the rituals of fall, beside football and Thanksgiving, is coming up with an annual sales forecast for the coming year. Everyone in the company eagerly looks forward to the numbers because after all, without sales no one else in the company is needed.
Traditionally, sales executives hand out sales quotas to their salespeople. The sales staff has to live or die by those numbers, whether they are based in reality or just wishful thinking.
For us, the forecasting process is more than coming up with sales quotas for our sales team. Instead, it’s an exercise in collaboration and team building.
Our sales forecasting process has four pieces:
- Everyone has a voice. Our sales forecasting is an iterative process. We encourage everyone on the team to speak up and voice their input. After all, who knows more about what’s actually happening in the marketplace than the people with their feet on the ground? Executives typically have the 10,000-foot- up sky view. But the sales staff is where the rubber actually meets the road. Listen to them because their job is to field objections all day long.
- Sales quotas are a negotiation. First, our regional sales directors weigh in. We ask them to forecast their anticipated business for their territory per account and down to the product category level. They submit a first round forecast.Next, the executive team examines the forecasts to see how they jibe with growth trends they predict. They amend the original forecasts and send them back to the regional sales directors.The directors study the executive team’s numbers and try to determine specifically where they can impact growth. They reach out to their sales staffs for ideas since they are the ones who will be implementing the final plan.The two groups volley the numbers back and forth like a tennis ball. Each group negotiates with the other until all sides agree on a final forecast.
- Everyone buys into the forecast, no matter how aggressive the numbers. We find buy in is easy because everyone had a hand in crafting the final numbers. The always friendly, often heated negotiations gave everyone an opportunity to forge the future. They have no trouble owning the outcome because it’s not the company’s goal, it’s theirs!
- Annual forecasting is a powerful exercise in team building. A company’s biggest asset is always its talent; they are the ones who are going to push the company past its sales finish line. The forecasting exercise allows everyone in the sales organization to participate. What a great opportunity to inspire loyalty! The process strengthens relationships, creates alignments and reinforces the company’s culture.
By the time New Year’s actually rolls around, everyone is fired up to meet their sales quotas. They know exactly what they have to do and how they will be rewarded. They believe even the most aggressive numbers are doable because they had a hand in the final determination. And that is the beginning of a killer year!