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 A spreadsheet only gives a snapshot at a point in time and is quickly gone out of date.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.

WARNING: You Cannot Rely On Market Research Alone

I talked to a entrepreneur today who, buoyed up by initial feedback from market research, was ready to set up a new business line, create a new web site, sign up customers and start offering discounts.  Halt I cried, you cannot rely on market research!  You're going to need more than positive feedback to build a successful business.

While listening to the market, and specifically your customers, is vital. the ability of traditional market research to accurately predict buying intensions is patentently limited.  I know this from 10 years selling the market research services to industry and projects involving more than 20,000 interviews with international business buyers and consumers.

When I urge caution in how market research is interpreted for making decision, I am not talking about issues of statistical validity, or reliability.  I am talking about the fact that just because a buyer tells you that he is interested in buying and you tick the appropriate box on the questionnaire, does not mean that the buyer will in fact buy when your product, or service, when it is launched.

Now it is not that the interviewee is deliberately deceiving you.  It is just that market research questionnaires and real world buying scenarios are two very different things.   I would much prefer to base my decisions on sales calls than questionnaires. 

There are of course things you can do to get a more accurate picture:

1.  The first is get face to face with the customers - telephone interviews and postal or online questionnaires can only do so much.  Next make the call more of a sales call, presenting the customer with more information, including prices, sees visuals/demos, etc. - the things that are essential to him/her making a considered opinion.   

2.  Even if you are at concept stage, create a visual, or prototype, however simple, that will enable your customer to give a more considered and informed reaction to your product.  People have limited time and attention, so make it easy for them to get to the nub of the issue - whether they want your product, what features they really need, etc.

3. Ask the right people, at the right time and in the right way.  For example, if you want to ask people about domestic appliances, then the best place to do so is in a electrical retail outlet - after all the people there are potential customers and are in 'the buying zone'.

No matter how accurate your picture of the market is, the interpretation is everything.  Most importantly scenario-based sales forecasting is key and in particular the assumptions you make about the percentages that are actually going to do what they said in the questionnaire and the implications of the same for your business.