Another area that needs mathematical rigor is forecasting. Sloppy inputs will produce sloppy results.
There is a sales axiom that not all prospects are created equal. To determine who best to focus resources on, begin with a targeting analysis of ideal customers. My recommendation is to start the exercise with the sales team by identifying your top twenty prospective deals by customer. This is not educated guesswork. Again, rigor is required. The objective is to determine potential spend by product or solution sets. Do this by performing the following steps:
- Append your existing customer data with the appropriate third-party data
- Determine the variables that best predict the spend with your company
- Define the weighting and scoring for each correlated variable to calculate potential
- Compare calculated potential with actual spending to determine cross sell and upsell potential
- Apply weighting and scoring from step three to the prospects that look most like your best customers.
Another aspect of forecasting is evaluating opportunities. This is done on an account-by-account basis. What you are looking to determine is which of the four stages a prospect is in and where the company stands. The first stage looks to see if the buyer is motivated to investigate other options. The second stage is about the buyer identifying needs. The third stage is about the prospect evaluating options. The fourth stage is about the buyer selecting a solution, and will your company win the opportunity. Each stage can be analyzed by asking a series of questions.
Stage one: Questions to determine the strength of the opportunity
- Are we at the right time in the buyer’s process?
- Are they willing to provide the information we need to do good discovery?
- Is there a compelling event that is important enough for the prospect to take action?
- Have we clearly established the buyer’s expressed needs?
- Has the buyer explored this challenge or need before?
- Has the buyer established a timeframe for addressing the need?
- Has the buyer budgeted money to pay for a solution?
Stage two: Questions to determine if the buyer is aware of the need
- Does the buyer have a vision of the solution?
- Has the buyer offered staff time to assist with the discovery?
- Do we have access to the right technical and business info?
- Do we have the ability to shape the buyer’s vision?
Stage three: Questions to determine if the buyer is actively evaluating options
- Has the buyer seen your product or service in action?
- Do we have unique differentiators from the buyer’s point-of-view?
- Are we well positioned in the industry from this buyer’s point-of-view?
- Does the final approver have a high priority pain?
- Do we have access to all of the buying influencers?
- Do all of the buying influencers believe we have a differentiated vision?
- Has the final approver accepted our business case and ROI?
- Do we have a coach who wants us to win?
Stage four: Questions to determine if the buyer is selecting a solution
- Do we have a strong relationship with all the key buying influencers?
- Do we have regular access to the final approver?
- Do we have a superior relationship with all the key buying influencers versus the competition?
- Do we have evidence that we have significantly lowered the buyer’s resistance to change?
See how many yes answers you get at each stage. If a company cannot muster enough yes answers, then it really cannot proceed to the next stage. The good news, or hard truth, is critical for forecasting future sales.
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