Beware of Spreadsheet Forecasts!

10 Reasons Not To Rely on Spreadsheets for Sales Forecasting

1. Forecast accuracy inevitably suffers using a spreadsheet because you have only limited visibility, predictability and control in respect of sales (opportunities, accounts, activity, etc.).

2. It is impossible to keep a spreadsheet based sales forecast or sales campaigns up-to-date. This is compounded with different versions being used across a sales or management team. A spreadsheet only gives a snapshot at a point in time and is quickly gone out of date.

3. Managers who track sales using spreadsheets spend twice as much time in report preparation.

4. Sales Meetings involving the use of spreadsheets are grossly inefficient – with updates being made line by line to different accounts, or opportunities for each rep in turn. That is time that could be spent coaching.

5. Spreadsheet-based analyses are more subjective because they struggle to adequately communicate how, for example, an opportunity is rated. They don’t map opportunities to your sales process – e.g. has the buying group been identified/covered, has a formal needs analysis been undertaken, has budget status been clarified, etc.

6. Spreadsheets don’t trigger actions in a diary where an action is allocated to an account, or an opportunity and they don’t provide a record of the associated actions, emails, meetings and so on.

7. Managers should have dashboards at hand so that they can review at a glance their pipeline, identify priority accounts, and so on.

8. Spreadsheets are of little use if a sales manager or a sales rep leaves. With growing levels of rep turnover, it is vital that all account, contact and opportunity is held in a central repository so that it does not vanish when a rep leaves.

9. A spreadsheet will struggle to give a sales manager the metrics he/she needs, including the ratio of leads to meetings, or the win rate of proposals.

10. A spreadsheet won’t adequately tell a sales manager where his rep was last week, or where he should be next week. It won’t enable him to identify areas where the rep needs coaching either.

'In the Dark' Sales Managers Cause Alarm

Many sales mangers don't have access to vital information regarding sales performance and potential. That effectively means they are driving in the dark and running the risk of an avoidable accident.

Sales is a Numbers Game!

We like to talk about numbers. We pull the calculator out wanting to really understand sales performance and potential and bypass hours of talking around the issue.

The fact is what gets measured gets managed, we want to talk to managers about their metrics. That is those variables upon which they will be judged and rewarded.

Managers want to talk about numbers too, but there is one big problem. A lot of the time they don't have them and cannot get them.

So when we ask managers about win rates, the number of sales meetings in the last quarter, the number of sales required next quarter we are often greeted with silence and a frown. When we ask about how these metrics vary across product lines, markets, or sales people the frown is even more intensive. Quite simply managers don't have access to key information regarding the performance and potential of their sales teams.

Managers Don't Have All the Information they Need.

Imagine driving without a dashboard telling you the speed you were travelling at, whether you had enough petrol to get you to where you are going.

Imagine not having the instruments to tell you if the breaks, lights, oil levels, or any of the functions important to staying on the road needed attention. Well this is what many well respected sales managers are doing when they don't have the information on the number of leads, meetings and sales cycles their team needs to work on at any one time. This lack of metrics is having major implications on how effectively they can manage communications with their peers, their team, their executives and their customers.

Visibility, Predictability & Control of Sales.

Sales forecast accuracy and sales reporting have long been a hot topic, and something that we are quite passionate about. We use the terms visibility, predictability and control because people can relate to them better. That is:

- Visibility of what is happening year to date (that is historical sales activity levels, sales revenue and margins).

- Predictability of what is going to happen to year end and thereafter (including booked and forecast sales, required activity levels and conversion rates).

- Control, that is the ability to impact on the level and effectiveness of sales activity, thereby immediately correcting any gaps and continually optimising people and process performance.

How to Achieve Greater Visibility?

Greater visibility comes at a price. It generally requires:

- Better Systems - that is the implementation of reporting systems, stricter forecasting methods, and even sales database, or CRM systems

- Better structures - such as a more structured approach to sales meetings, sales reporting and customer reviews

- Better plans and more importantly an approach to planning and target setting that sets out targets and metrics, not just based on sales, but on levels of activity (e.g. number of sales meetings required) and effectiveness (i.e. conversion rates throughout the sales cycle and ultimately win rates).

- Better processes - a more structured approach to the management of sales cycles so as to enable more accurate pipeline forecasts and the rating of individual sales opportunities.

Visibility is a Challenge.

We feel it is important that sales managers move from subjective measures to ratings based on the completion of specific elements of the sales process (e.g. documentation of needs analysis, contact with all members of the buying unit, or presentation of ROI model).

Many of these items will generate a kick back from salespeople and will require considerable commitment, effort and discipline to bed in successfully.

What is the alternative? Well, it is to keep on driving in the dark.