Hints & Tips – Forecasting

Topic Progress:

Purpose

The objectives of the forecast call are:

  • To agree a range (worst case, commit, best case) of expected sales
  • To ensure close plans are in place and credible
  • To review previous forecast accuracy
  • Enforce compliance with CRM

Agenda

  • Review of last month forecast accuracy
  • Next month forecast (including close plans review)

Output

  • Worst case, commit, and best case for next month and related list of opportunities
  • Actions for CRM update

Attendees

  • Commercial Leaders
  • Commercial Manager/Director

Frequency

Monthly – Week 3

Duration

As required, ideally no longer than 1 hour

Data Required

  • CRM Pipeline
  • Previous month/quarter forecasting accuracy (against WORST CASE and COMMIT)

Definitions

Worst Case – The total value of the opportunities that will certainly be won the following month

Commit – The total of worst case plus the value of opportunities that you are confident will be won

Best Case – Total commit plus the value of opportunities with a reasonable chance of being won in the next month

CRM Best Practice

With regards to next month’s forecast:

  • All opportunities in WORST CASE must be in VERBAL & NEGOTIATING stage
  • All opportunities in COMMIT must be in PROPOSAL, NEGOTIATING stage
  • All opportunities in BEST CASE should be at least in QUALIFY & PROPOSING stage
  • ALL IN CRM

Forecast best practice (Next Month)

Opportunities in WORST CASE must meet the following criteria:

  • The solution and price have been agreed, and the customer/prospect has explicitly notified Savanta of “preferred supplier” status.
  • The procurement process and timescales are known and, for the avoidance of any doubt, explicitly validated with the customer/prospect.
  • Contractual terms are either agreed or in the process of being signed off, and there is no contentious item.
  • We have evidence that the budget is available and signed off.
  • The timescales for signature have been confirmed, ideally by the person with the authority to sign the order form.
  • Ideally, a compelling event exists and a quantifiable pain for the customer/prospect if the signature date slips.
  • Ideally, and particularly in the case of a new solution/product implementation, a dedicated resource has been allocated by the customer/prospect to the project.

Opportunities in COMMIT must meet the following criteria:

  • The solution has been agreed, but further negotiation may be required on pricing.
  • We can articulate a credible features-> advantages -> benefits statement.
  • The customer/prospect has expressed a strong preference towards Savanta, albeit not officially awarded Savanta “preferred supplier” status.
  • We are still vulnerable to competitive activity or “do nothing” option, albeit the risk is manageable.
  • The commercial person has a credible close plan
  • The procurement process and timescales are known and, for the avoidance of any doubt, explicitly validated with the customer/prospect.
  • We have been told that there is no issue with budget sign off, and ideally we have evidence of that.
  • Contractual terms are actively being discussed, and there is no indication of a deal breaker or delays.
  • Ideally, a compelling event exists and a quantifiable pain for the customer/prospect if the signature date slips.
  • Ideally, the timescales for signature have been confirmed by the person with the authority to sign the order form.

Opportunities in BEST CASE must meet the following criteria:

  • The solution has been agreed in principle, but the final design/configuration/features still have to be locked down.
  • SAVANTA is a strong contender, but other competitors are still being considered, including “do nothing” option.
  • The procurement process and timescales are known, albeit not explicitly validated with the customer/prospect.
  • The Commercial person has a credible close plan.

Checkpoints

  • The procurement process, budget approval process and timescales for signature should be validated, for the avoidance of any doubt, for any transaction, even in the case of an existing customer. If the customer/prospect isn’t willing to discuss those openly then this is a red flag with regards to their commitment to proceed within the expected timescales or at all.
  • Direct access to the key decision maker and person with authority to sign is available, or indirect communication can be solicited.

Forecasting Accuracy Health Check

  • The procurement process, budget approval process and timescales for signature should be validated, for the avoidance of any doubt, for any transaction, even in the case of an existing customer. If the customer/prospect isn’t willing to discuss those openly then this is a red flag with regards to their commitment to proceed within the expected timescales or at all.
  • Direct access to the key decision maker and person with authority to sign is available, or indirect communication can be solicited.

Forecast Accuracy Review Best Practice

  • Assess previous month forecast against actual new business sales and compare against historical data and trends
  • Review status of all opportunities that were in WORST CASE and COMMIT, but did not close
  • For those opportunities in WORST CASE and COMMIT that did not close, sense check were they qualified, how did we close?

Taken all that in?