Forecasting Best Practices: A Sirius Perspective

Reps have never seen a deal that they can’t win.

Joe Ort knows this all too well. He has been in sales at SiriusDecisions, which empowers business leaders to make better decisions, execute with precision and accelerate growth. So he knows what it’s like to “carry the bag.”

But today he is the director of sales operations — responsible for supporting the entire team and providing direction for the business. Ort understands the inherent sense of confidence that drives salespeople and appreciates that can-close attitude. Yet he also needs something more concrete than optimism when it comes to projecting how SiriusDecisions is going to perform.

“Too often, companies end up trying to build forecasts solely based on human intuition,” Ort said. “That alone is just not good enough. You have to layer in analytics to supplement what the reps are predicting — adding science to the art of sales. That’s why it’s so important for sales operations to be the more objective side of the organization.”

Ort has the distinct advantage of understanding best-practice forecasting methodologies through his access to the research that SiriusDecisions develops for their clients.

At the Ops-Stars at Dreamforce event, Ort will explain in greater detail from SiriusDecisions’ industry-leading research on how individual sales reps can make more realistic revenue projections. “Forecasting Success at SiriusDecisions” will detail how surfacing data from the bottom up has been more effective than creating top-down assessments.

SiriusDecisions clients that implement forecasting best practices have seen:

• Better decision-making for the business
• More sales accountability
• Greater transparency

“Everybody in an organization is interested in what that number is,” Ort added. “CFOs are expecting a predictable and accurate forecast. Without that, you can’t manage your business effectively. Everything is driven by forecasting.”

Ort noted that businesses typically use a 3X coverage ratio to project a sales rep’s pipeline to quota. But when it comes to forecasting, you also need to factor in historical data about win rates and conversion rates.

Organizations, he added, also must consider timing.

“To really manage your pipeline, you have to understand if you have enough at a certain point in time,” Ort said. “That means looking at the pipeline two weeks before a new quarter and diagnosing if enough high-propensity, mature opportunities exist. Then by applying historical trending, you have a better sense of whether you’re going to have enough opportunities to meet your target, or if specific initiatives need to be launched to drive specific expectations with sales reps in order to move deals through the pipe.”

That historical information helps refine a more data-driven model for projections. It also plays a role in the psychological part of forecasting. Using these best practices within SiriusDecisions has given Ort a better idea about the way each of their individual reps view potential deals.

“It allows you to really understand your sales team,” he added. “Is somebody a sandbagger? Does another salesperson wear rose-colored glasses? You have to incorporate both of those personalities into your forecasting. That’s why you need to spend a lot of time digging.”

Ort exemplifies the need for a pragmatic voice within the sales organization to gauge its business trajectory. While you don’t want to rain on a sales rep’s parade, it’s more important that the executive team knows if there’s a chance of clouds in the forecast.

“You never want to say to a rep, ‘I know you believe you’re going to get X, but isn’t it more realistic to think that you’re going to get half of that?’” Ort said. “That’s not how good sales management coaching works. Sales operations’ role is to help give more guidance on which opportunities have the greatest propensity to close from an analysis perspective. This is the true model of combining art and science into accurate forecasting.”

The better that forecast, the better the health of the business.

Ort is speaking about “Forecasting Success at SiriusDecisions” at 10 a.m. on Wednesday, Oct 5 at the Trou Normand restaurant. His talk is part of the free Ops-Stars at Dreamforce event for sales and marketing operations professionals that’s being held just one block from the Dreamforce conference at 140 New Montgomery St. in San Francisco.