CEO at Outset | Revenue Architect | Helping SaaS leaders build and execute go-to-market plans that lead to profitable, efficient growth -- using AI
Why do companies keep buying forecasting tools to fix forecasting problems? What challenge is being solved? Are sellers and sales leaders unable to forecast their deals? The consequences of missing forecasts are not to be underestimated. Shockingly, as reported by RevOps Co-op, a staggering “80% of companies fail to meet their forecasts/plans by 25% or more.” This begs the question, why does poor forecasting persist despite the negative financial implications? To help create perspective, I recently asked a CFO to describe the impacts of missing forecasts; his list of negatives was lengthy. Examples include: 1). Sales & Marketing: Inefficient spending to fill short-term gaps-to-goal. 2). Capital Expense: Underutilized CAPEX spend; investments in capacity are not needed. 3). Operational Expense: Staffing for growth that did not materialize. 4). One-Time Costs: Reductions in force and layoffs. 5). Financing Costs: Covenant costs, waiver fees, and higher borrowing costs. 6). Negative customer goodwill. 7). Reputational loss. Some excellent forecasting tools are available–no doubt. (I've licensed some of them.) However, to meet and exceed plans on a long-term horizon, companies need to deploy predictive tools and methods—tools and methods that forecast outcomes on a 12-plus-month horizon. Tools and methods should not be indexed solely on opportunities; opportunity-based analysis alone will not build a long-term view. Predictions should be made based on many data points, beginning at the earliest Top-of-Funnel entrance point. If you can’t see at least 12 months into the future, you cannot efficiently deploy sales and marketing dollars. Filling unexpected, near-term gaps-to-goal is inefficient and expensive. Sales leaders, in particular, need to stop focusing energies nearly 100% on the current month/quarter and think longer-term. Now is the time to ask the entire business to help fix a 4Q pipeline challenge. October is way too late. Building predictability and visibility long-term is critical to building a successful SaaS business. Creating predictability is why we built Outset.
Founder @ The ISP Group | Grown-up Skater Kid | Punk Rock Enthusiast | UltraRunner | Founder at Innovative Technology Partners & Innovative Selling Partners - Elite Sales Training & Tech Solutions for the Self-Aware.
6moYes, they are unable to forecast their deals. Here are a few reasons why: 1) Bad management- Sales managers not setting great expectations on deal management, making it difficult to assess the likelihood of it closing. This can be especially true in complex sales cycles with multiple decision-makers. 2) Bad data - reps not inputting accurate info/No standard opportunity management process in place 3) Phantom forecasts (Deals that AEs are secretly working, and not allowing executive visibility on), Sandbagged deals to ensure future metrics are met. Companies buy forecasting tools to compensate for bad management, with the hope that a standard process of opportunity management will allow them to forecast accurately. We have found a great sales culture built on empathetic leadership and trust is a required element to build a diverse funnel growth, predictable/consistent pipeline and accurate forecasting.