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For Vice Presidents of Sales in technology firms, the pressure to hit revenue targets has never been greater. With reduced sales staff, and the demand to accurately forecast revenues quarterly, monthly (or even weekly), the top sales executive must feel like the lone sheriff in a final shoot-out with Billy the Kid. But the cavalry can come to their aid - if the Vice President adopts process-based sales methodology and implements these best practices with his/her sales managers throughout the sales team.
How wild is the sales frontier?
A recently released 2002 survey of technology Sales Vice Presidents shows continued and increased pressure placed on the "Chief Revenue Officer." The average tenure of the Sales Vice President was only 12 months - down from an 18 month average in the prior year's survey results. No Vice President surveyed had been in his/her position longer than 3 years - down from 4 years in the prior survey. On average, revenue targets and prices had decreased slightly, by an average of 7%. But this decrease comes off of a whopping 94% average increase in quota targets in the prior year.
Forecasting and meeting revenue targets will continue to be the most important job for even the roughest, toughest senior sales executive. Forecasting revenue targets and communicating revenue expectations (especially revenue shortfall!) is too important a task for the Sales Vice President to delegate down to the individual sales rep - particularly if that Vice President of Sales wishes to beat that 12-month average tenure.
In fact, rolling up sales reps' forecasts is like a high-stakes card game in Dodge City. Here are the high-stakes players and their forecasting styles:
With these high-stakes players and their forecasting styles (found in most sales teams) how can the Vice President of Sales create reliable forecasts, and meet revenue goals? That Sales VP needs a way to grade the probability of closure of potential selling opportunities, and to manage key milestones in the pipeline of sales activity, in order to audit and control the revenue forecast.
And without the ability to audit and control? After months of delivering missed revenue forecasts to senior management and the board and reporting slipped close dates for major deals, it's showdown time at the OK Corral for the Sales VP.
Better plan on becoming part of that 12-month statistic.
There is a way for the Sales Vice President, through process-based selling methodology, to gain control of the revenue forecast, to build a winning hand, and to "clean up the town". He does this by compelling his sales managers to audit the sales forecast by prospect opportunity - not revenue.
The job of revenue forecasting is simply too critical to abdicate to the sales representative. Two issues make revenue forecasting nearly impossible for the typical sales representative:
These two issues can be addressed when the VP of Sales implements a process-based forecasting discipline throughout his sales organization. How? To build an auditable revenue forecast, the sales manager (regional, district or territory) must manage activity on the rep level by opportunity, not by revenue. Each sales representative must report the progress of the prospect as an opportunity moving through specific quantifiable milestones.
Each major milestone mandates completion of certain "sales process deliverables". How does this work? For example, in debriefing sessions with each sales rep, the sales manager will verify that a new prospect, early in the sell cycle, represents a truly qualified opportunity. The verifiable deliverables which signal prospect commitment at this milestone are:
The Sales Manager's post-call debrief questions with each sales rep reviews the prospect's conversation to verify this critical commitment to evaluate. The Sales Manager also examines and verifies these sell cycle control letters. The sales rep is responsible for these tangible sales process deliverables, and the field sales manager is responsible for auditing and verifying them.
A well-defined sales process specifies appropriate sales process deliverables at each key milestone along the sales cycle. Unless these deliverables are completed by the sales rep, the opportunity does not advance to the next milestone, nor is it included in the forecast. In other words, there are no shortcuts to the forecasted "close".
Can the Wild West ever be won?
The VP of Sales' will always be "on the line" for meeting revenue targets and producing accurate sales forecasts. Predicting and attaining quota goals remains a great challenge, even as the tech economy slowly recovers; this is reflected in the brief average tenure of the VP Sales. But armed with a process-based sales methodology, and disciplined management audit of opportunities, the VP of Sales and his organization can benefit from increased revenue, more accurate forecasting and improved margins from shortened sale cycles. The Vice President of Sales can tame the Wild West of sales forecasting.
Marie Warner is principal of Warner Sales Architects, LLC and a licensed CustomerCentric Selling
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