Piling On The Pile – Still MORE On The Most Useless Metric In Sales

By July 17, 2010Metrics

Dave Brock started the mudslinging at a useless forecasting metric, then Anthony Iannarino piled on.  These two guys are right on the money – again – and I can’t help but throw another log on the fire.

A common assumption by sales leaders…  Allow me to re-phrase:  A common dumb assumption by sales leaders is that odds to close an opportunity is directly proportional to and in lock step with the sales process stage.  If it’s stage 1, 10%; if it’s stage 2, 20%; etc.

I’m convinced that some junior programmer with a shiny new IT degree back in the early days of CRM decided this was a great idea, blithely coded it up, and over time, due to nothing more than longevity, it become a “Great Truth.”  As Tony Salvaggio, a mentor of mine always says, “All great truths are false.”

Don’t we all chase a relatively low odds opportunity now and again because it’s for a strategically important account, or in a new geography or related to a new product/service, or is a new application, or…  Don’t we all get opportunities that we just know are ours right out of the chute even if it might take 6 or 7 months for it to come to fruition?  Anybody with any sales experience at all knows that odds to close is dependent on a whole series of factors; some controllable, some not.

Personally, I like a forecasting approach that considers several factors in each of three categories:

  • The prospect & the prospect’s situation
  • My company’s ability to deliver the value needed and/or sought by the prospect
  • The market & competitive situations

Each factor gets a 1-5 score, and over time it’s really not all that difficult to develop a fairly bullet-proof (dare I say accurate?) forecasting process.  There’s more detail about the approach here.  And by right clicking here, you can “save target as” or “save link as” and download a specific example.

Meanwhile please stop using some programmer’s brainstorm as the basis for a key chunk of your sales process.  I wonder what other common “best practices” have this sort of really bizarre origin?  I wonder how many other bad metrics, bad management and wasted time are a result of similar sloppy thinking on our part?

Think About It…

Join the discussion 2 Comments

  • Jason Charnov says:

    From setting up many a CRM from the implementer side of things, I can tell you that those percentages are the “out of the box” numbers meant to be placeholders. The sales staff is supposed to develop over time or already know what their pipeline looks like (the stages, percentages, probabilities, etc.) and change the software to fit their sales organization. It’s going to change over time, anyways. The better software lets you set this, the crappy ones do not.

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