Sales Forecasting: You Can’t Handle the Truth

Pretty much everyone is familiar with Jack Nicholson’s rant on the witness stand in the Hollywood film A Few Good Men. Set in a very different (and pre 9/11) Guantanamo, Tom Cruise’s Navy JAG prosecutor has taunted Nicholson’s Marine Colonel into incriminating himself by admitting he ordered the beating that led to the death of a young Marine. Unable to pretend any further that he’s ignorant of the crime, Nicholson explodes into an epic tirade, telling Cruise, “You can’t handle the truth!” When it comes to sales forecasting, I sometimes wonder if Jack wasn’t right.

The pressure to make quota, or at least to maintain the pretense that one will, is perhaps the central tension between sales and management. Most company cultures are built around an at least partial suspension of disbelief. “Can Do” attitudes rule the day. But what happens when, despite your best efforts and those of your team, you know that you just can’t get there? Do you ‘fess up,’ and produce an accurate – but inadequate – forecast? Or, do you maintain the fiction, talk up deals that will never get done, and hope for a bluebird to fly in and close the gap?

The answer to this question isn’t just a matter of sales fortitude, though it certainly is that. What it really is is a reflection of executive (read: CEO) personality. Organizations take the shape of the people who run them. The bigger, bolder and brasher the boss, the less likely company culture is to allow the kind of truth-telling that sales forecasting sometimes has to be. Now, I’m not for a moment advocating sandbagging or woe-is-us pessimism. What I am saying is that executives should foster an environment where fear-based optimism and pie-in-the-sky forecasting is not only unwelcome, it’s unwarranted.

So, how to stop salespeople and their managers from creating pipelines and forecasts that even the most magical thinking can’t make come true? First, make honesty and objectivity top priorities. Second, establish standards: develop a milestone-based pipeline and forecast system, one that relies on objective criteria for every deal in the funnel. If the standards aren’t met, the deal doesn’t progress. Third, make sure your reps understand that accurate forecasting isn’t optional – it’s required. Use the data in your CRM system to highlight progress and identify the laggards. Finally, make the point – as often as necessary – that while a poor forecast alone won’t cost a rep his job, one based on a wing and a prayer very well might.

This entry was posted in Uncategorized. Bookmark the permalink.