EP 27 – Pipeline Management VS Forecasting – Mike Steele

Good afternoon. Thanks for having me on today. Gabriel really appreciates the opportunity to talk about this topic that I spent probably the last three to four years working on.
Prior to that, my career spanned almost 25 years carrying a bag in enterprise sales. I worked for some of the largest high-tech companies like Unisys and Oracle and Salesforce. And I was really surrounded by some of the greatest people that provided me a lot of guidance and direction early on. I had some great mentors and it really afforded me an opportunity to do some great things in many different industries, across government and public sector, public safety, airlines, transportation, hospitality, and High-tech. Around 2016, I started to transition my career into a corporate role in sales enablement. And in 2018, I worked with a peer of mine on focusing solely on trying to improve forecast accuracy in north American sales at Salesforce. That’s where I really started to see a lot of opportunity for improvement. And so, you know, leaning on my almost 25 years carrying a bag, I started to ask a lot of provocative questions and, you know, led us to speaking to dozens of salespeople and sales leaders. Really moved into building a new data model on how they do forecasting and pipeline management.

That’s great. So when we first spoke, you were adamant about the need for company to clearly distinguish their internal processes and communication about pipeline management, and forecasting. Can you share with our listener, why you feel this is so important?

Yeah, thanks, Gabriel. I feel this topic is almost even more important now that we have more virtual selling happening. But of course, even in in-person selling, having discreet processes, I think is incredibly important, but sellers have to be so much more disciplined about what information they’re seeking with their customers.
Today, their interactions are even more discrete and less frequent. So they’ve got to be guided and they’ve got to know exactly what they’re going after. So over time, I began to see a couple of trends. You know, there was just far too much guessing happening in forecasting and within the same company, we saw people using different languages to describe the exact same things.
And so when I saw, when I sat through QPRs, every time a conversation started with planning went so quickly to a forecast. I’m sure most of your listeners have experienced the same in their sales careers that, you know, they start off with asking you a few questions and, you know, minutes later you feel like you’re in a forecast call. Salespeople really don’t like forecast calls and we won’t get into that when sales leaders often, that’s all they want to talk about because the pressure from above.

Yeah, sure. And can you clearly define how you make the difference between pipeline management and forecasting and why you have to enforce this difference?

Yeah, this is a question I think every sales organization should be asking themselves, you know, let me start with a visual for your listeners to help them understand what I feel are the unique differences between the two. Let’s say, you’re standing on this giant checkerboard, right. And someone asks me, you know, where do I think Gabriel’s going to land after he jumps from one square to another. Well, the first thing I’m going to want to know is, well, which squares he actually standing in. If I, if I can’t see that I’m going to be completely guessing as to where you’re going to land, right? So the query, the square you’re standing in kind of what is, what do we know? That’s pipeline management, right? It’s very discreet. What do we know versus what should we know? And that puts us in a much better situation to know. Well, If we know where he’s standing and he’s going to jump now, I’m in a much better position to guess where he’s going to land that’s forecasting. And again, as I mentioned earlier, all too often, I see internal sales meetings go so quickly to speculation on what might happen and there’s so, or not enough effort spent on what is it we actually know and identifying the true health of our pipeline.

Interesting. Could you have customers that will move along in the pipeline, but go back into forecasting?

Well they could, and in some cases they should, but all too often, these things are linked together and, you know, we can talk about that in a bit. Okay.

So if I understand correctly pipeline management is what we know and forecasting is what we think.

Yeah, that’s correct. So like most things though, the devil is really in the details. At a macro level to be successful an organization is going to have an overall framework and a language that they use for consistency. Otherwise there’s a lot of confusion at all levels. A framework, you know, we’ll always leverage a sales methodology like med pic, or medic or value selling Sandler. And then you’ll want to extend that with clearly defining data that, or the information that’s likely needed to advance opportunities through the life cycle.
Now, this is where it can get really tricky for organizations. Everyone has their own opinion as to what’s really needed. Right. And if organizations aren’t disciplined about this, this can quickly scale into, you know, sales rep having to fill out 15. Yeah, fields in a CRM. That only leaves deport options, CRM and sales reps likely doing the bare minimum.
So I’d really urge companies to be very discreet and disciplined about establishing what do we really need to know? It should be really no more than 15 or 20 pieces of information, depending on the complexity of the sale, less complexity of a sale should be even more towards a dozen pieces of information.

And can you give us examples of those type of information?

Yeah. So, you know, to get a little bit more specific with pipeline management, right? Let’s talk about what that really is, and it should be really the overall health of your pipeline and the current opportunities in play. And how do you do that? Well, it really should be focused on what do we know, you know, and this needs to be the foundation for every business, because it not only ends up driving the forecast. The ripple effect of the other parts of the organization. It should really even drive how you do lead gen and how you do marketing efforts post lead gen.
Right. So getting the health of your pipeline nailed is so important. So focusing on what do we actually know, right. Who have we spoken with? What are the gaps that we’ve identified to move business forward? What are the next steps we actually plan to take. All the current information, you know, that we know puts us in a better situation to understand what might happen and what we think.

Okay. And how do you go about what might happen?

So what might happen, and what we think is forecasting, right? The visual I shared earlier, once you have clearly identified, you know, what you know, versus what you should know, you’re in the best position to start thinking about what might happen, which is forecasting.
The inner internal discussion needs to shift to more something like, well, what might happen after we take these next steps? What are the potential hurdles that could come up. And come into play and how might we prepare for them? What’s the month and the quarter going to look like? And if I’m short of calling my number, what are the things we can do to possibly correct?
Typically, you know, there were far less deals to even talk about in the forecast if you’re doing pipeline management. Well…

Sure. And so how could you improve forecast accuracy? This is more clear now but once we have that in mind how companies improve forecast accuracy?

Yeah. This is a great question. And one of the things I’ve discovered is most often there’s very little or no meaning at all behind the actual forecast category or the label. It’s basically just a roll-up of similarly grouped opportunities. What I’ve experienced is out of the box. Systems like even Salesforce, the sales stages are actually linked to a forecast category.
I know when I was at Salesforce for over 10 years, you know, sales stages, I believe it was two and three were automatically linked to the pipeline. If you move an opportunity to say stage four or five, It automatically behind the scenes moves the deal into something called best case, and then stages six and seven were a deal that was committed.
I see this as one of the biggest weaknesses in the deployments of CRM today, and very few companies have changed this. They just go with the standard implementation. So what it does is it renders the forecast labeling in my opinion, somewhat useless. Then it also starts to drive certain behavior in the organization where I’m sure some of your listeners have experienced this. If not all of them where they’ve had someone tell them to move a deal to a different stage, just to get it committed or to move it into best case. Now you’ve got bad data and the ripple effect is really crippling on an organization. It takes a lot of discipline to stick to pipeline management, where the deal is, and it has to live there.
The forecasting then moves based on what we think. If you start moving stages to drive your forecast, now your data is basically bad from the get-go

that’s for sure. That’s very interesting. Can you elaborate a bit on how an organization can break the link between forecast category and sales stages? And could you also give us some examples?

Yeah, sure. I think this is probably one of the most important things as we talked about earlier, you know, sales stages are part of the output of what is, you know, this is a process in and of itself each week, all deals in a pipeline, you know, should be reviewed for what do we know? And the outcome is a much cleaner pipeline. From that everyone’s got a better view of where the deals are in a life cycle. What might happen is derived based on speculation. What I’ve seen over time and over and over is just having a clear definition of what forecast categories actually are. You know, if I pulled your listeners and ask them, you know, in your company, what is a committed deal? I probably get as many different answers as people we asked.

Sure. So what I hear from what you’re saying is that instead of a forecast category being automatically applied to a deal based on its sales stage, it should be manually applied based on some definition. Can you share an example of how this would work?

Yeah, definitely. What we came up with I spent a few years working on this with a peer of mine and I’ve continually worked on this ever since. Coming up with a discreet definition for different forecast categories. Not only helps you, you know, get a better speculation, but it drives a conversation with your seller. The example might be, you know, what if everybody in that organization knew that a committed deal was defined as you know, we have a mutual close plan and it’s been reviewed by the customer and it supports closure of the opportunity by the close date on the opportunity. That definition, very, like there are three things that are distinctly called out the first part, right. We have a mutual close plan. So the first thing you can start doing is review the close plan with your seller. If one’s not created well, then it shouldn’t be committed to begin with by reviewing the close plan, it helps the sales leaders start to understand how is a sales rep thinking strategically. And it’s a great coaching opportunity for sales leaders.
Second part of that description, closed plan has been reviewed by the customer. Great. Now you can have the conversation. Who did you review it? Are they decision makers? Are they the right people? Are there people that we’re missing, right. Drives a conversation to help the leadership understand? Well, how broad are the relationships inside that account?
Third part of that definition, it supports closure of the opportunity by the close date, the infamous close date. I’m pretty sure if we asked everyone on this podcast today, if they looked in their CRM system, how many of the opportunities they have are either the last day of the month, the last day of the quarter or the last day of the year?
I’d say that number’s probably north of 80%, right? It basically means we’ve got a bunch of artificial closed dates out there that are probably never even reviewed with the customer.

Sure.

So by having a clear definition, It drives a conversation to start to validate what we know and gives I guess, a greater level of confidence to the speculation

And another example that could be simpler. It’s also. How long since you had the last conversation with your customers, that somethings that could be taking in into consideration for forecasting?

A hundred percent. You know, when I was at Salesforce, one of the things we tried to look at. Particularly with that software, I’m unfamiliar with some of the others, but they have something called contact roles that you can add to an opportunity. Well, if you looked at, let’s say the decision makers that you had an opportunity when you committed deal and you have not spoken with or met with any of the decision makers within the last 90 days, are you really ready to commit that deal? Right. There’s key information based on [00:16:00] what you’re selling, who you’re selling to. Right. It’s going to differ by company, but there are great examples like that that organizations can adopt to drive better conversations around forecasting.

So your expectancy of success could not only grow, but also decline.

Correct.

Because if you follow the pipeline stage, it could only grow because you will not go back into the pipeline stage, but you can reduce the expectancy of the deal.

You know, it’s something I saw when I’ve been consulting with a few companies in the last several years and I see it over and over there seems to be this reluctance to know the truth. And so you see a lot of gaming of the sales stages, which automatically influences forecasts just to reach a number. Whereas if we really knew the health of the business, where it is, wouldn’t that put us in a better situation to then bring the right resources to move deals forward. Right. We just see this kind of gamesmanship of the forecast. And when you start gaining data, we all know. Everyone else that’s trying to look at the data for things like, you know, lead gen as mentioned earlier, marketing efforts, resource utilization like resource hiring. They’re all looking at that data to try to drive their business, their parts of the business and their contribution and support a sales. But sales is moving the data all over the place. So you’d end up with a lot of really bad data.

Great. And to wrap up the discussion, can you share with our listener two tips or some tips related to pipeline management and forecasting to conclude?

Sure. Well these are two really complex topics. I could probably give you at least 10. I think one of the more important ones would be, you know, implementing the discipline to have two very distinct discussions or processes, right? If you’re forecasting on a weekly basis, it means you’ve got to have two different distinct calls or meetings. One that does nothing but validate the health of the pipeline for pipeline management, go through the process of what do we know and stay in the mindset of what do we know versus what do we, what should we know? Right. Stay away from what we think it’s a completely different conversation. And it’s, I don’t feel you can have that in the same conversation. So by separating those two, you can improve accuracy of information. The second thing, you know, this is something I’ve seen change over the years, and it goes around the conversation of making your number. It wasn’t this way when I started my sales career and I don’t know exactly when it changed, but it seems to be more and more today. The conversation from sales leader seems to start out with how are you going to make their number? And I feel there’s a little bit of a, you know, they want to have a positive view. And so let’s start with, you know, how are you gonna make a number of versus are you gonna make your number? But the problem I see with that is if you start the conversation with how are you gonna make your number there’s an implied assumption that you’re going to make it. Once a sales leader in the room says, alright, Mike, how are you going to make your name? You started to get nervous and you don’t want to say, well, I’m not right. So you start, you know, potentially making stuff up or, you know, you’re kind of biasing your way through it.
And I’m sure a lot of people that are listening to this have experienced that. Sales leaders need to really start the conversation with, are you going to make your number? And they need to be okay with a sales rep saying that they may not. If a sales rep feels they’re not going to make it, they’re probably not going to make it. The earlier a leader can hear that, then you can start to work with the sales rep on how do we help them correct it. It puts you in a better position to help your salespeople versus again, coming in with how are you going to do it? And then they start making things up and it puts people in a very uncomfortable situation.

Yeah, it’s clear. You don’t have to mess up with data. That’s I think the principal information of this podcast. Data needs to be true and you have to be true with your data. Thanks a lot. This episode of the virtual selling podcast is over. Thanks for sticking around. Join us twice a week for a new episode with new stories and challenges of giants in the field.
If you enjoy today’s episode, we are always listening for your feedback, share the show and subscribe on your favorite podcast platform so you don’t miss any episode. This episode was brought to you by Salesdeck.io. The virtual selling platform that increase your sales team efficiency and sell readiness, enables remote management and vamps sales operational excellence. Book your Salesdeck.io demo today to discover how you can close more deals with engaging and better prepared customer meetings. Thanks. It was a pleasure. It was really interesting.

Thank you Gabriel.