Right90 Blog

This is the second installment in our thought leadership series from our Portland roundtable. We will cover three topics:

• Maximizing sales adoption
• Sales and marketing collaboration
• Driving trust in the sales forecast.

Sales and marketing collaboration proved to be a lively topic. Not surprisingly, the cats and dogs don’t get along much of the time. However, an actionable sales forecast can foster productive discussions that lead to better collaboration not just between sales and marketing, but between sales and other areas like operations. Our key learnings follow:

Key learning #1: Each area of the company has a different view and something to add to the party.

Our thought leaders had many different processes for getting from sales forecast to fulfillment. One company’s process was that sales generated the forecast, marketing vetted it and gave it to operations who built exactly to their forecast. Another’s was that the factory built to maximize their profit margin and then sent it to sales and marketing to sell, sell, sell, regardless of whether their customers wanted it or not. Either extreme doesn’t do a good job of linking feedback to the forecast. In the former, inventory is not optimized. In the latter example, the company could be doing 10-20% more revenue per year if marketing and sales had the  product they wanted, not just what the factory built. Both of these companies put sales forecasting systems in place to bring the various views together, as the forecast application can capture the different views of sales, marketing and operations into a common system of record, while tracking changes. This lets the organizations focus collaboration on what the data is telling them, not on whether or not the data is good. This is a much more productive discussion for these companies – focus on optimizing the unconstrained customer demand forecast with what the company can deliver.

Key learning #2: Responsibility and compensation drive behavior.

Regardless of the process, compensation drives behavior. When marketing runs the forecast, they can impact sales compensation by constraining product to make their inventory bonus, while sales doesn’t have the right products to sell. When the factory runs the process, their comp is to optimize inventory, not revenue which impacts both marketing and sales compensation. When sales runs the process, they can affect operations compensation (e.g. sales may have visibility to margin, but if they’re not comped on it like operations, they won’t optimize their forecast for margin in addition to revenue). Putting in the right compensation drivers is difficult for most companies. Many focus on one end or the other of the sales forecast to fulfillment process. As one thought leader asked another, “Your marketing forecast affects the sales team’s comp when the units are wrong. How does sales like you then?” The reply? “More when inventory is available.” All of the companies recognized that aligning compensation across all the functions is an area of opportunity to drive better behavior for their company.

Key learning #3: New product introductions are the most fun.

New product introductions (NPI) are the riskiest part of any forecast. Run rate or recurring business is much easier to forecast, and is more predictable.  But creating a forecast for an NPI is a work of art, not science. One thought leader’s company has the product team focus on the idea of what the product will look like in the context of macro level items, like input from big customers, consumer data, and competitive products. Sales, of course, has a different view. Their forecast for NPI starts with sales, then goes to marketing, and then to sourcing. This insures that input from sales on new items is definitely seen by marketing, and seen earlier. It is better to have sales call the baby ugly, and let marketing know. And many times, sales was right.

The best analogy of this session — one of our thought leaders likened a new product introduction to flying an F18 by the wire. For those of us who don’t know, when an F18 takes off from an aircraft carrier the pilot is not actually flying the plane. Pilots make too many changes to the stick and the on-board computers can’t keep up. The computer takes care of the plane’s takeoff, then the pilot takes over once airborne. For a NPI, marketing should launch the product, and then sales can fly it. Of course, operations had to build the plane first!

Recently, Right90 hosted a thought leader roundtable in Portland, OR attended by leading companies like Sharp Microelectronics of the Americas, LaCrosse Footwear, Merix Corporation, Planar Systems, and Trimble. Three topics that are critical to delivering a successful sales forecast were covered in the roundtable :

• Maximizing sales adoption
• Sales and marketing collaboration
• Driving trust in the sales forecast.

I’ll be covering each topic in separate blogs – there were so many great insights that were shared amongst the attendees.

First, maximizing sales adoption. This discussion focused around one of those deceptively simple and critically underestimated phases in the rollout of any new process and application. Rolling out any new application for sales people is especially challenging, but sales adoption can be greatly improved with these key learnings.

Key learning #1: Sales forecasting is fundamental to improving revenue and maximizing sales.

Make the sales forecast not only easy to create but also easy to consume. This will drive a more effective dialog between sales, products/marketing, and operations. This dialogue becomes a discussion about how the data can be leveraged by these groups to drive the various aspects of the business rather than a dialogue focused on who has the right data. Adoption of the forecast across the company is just as important as within sales. Nothing fosters adoption faster than seeing the results of your efforts delivering value back to you.

Key learning #2:  User adoption revolves around people’s motivations.

Many companies view the forecast as an incredible time sink that takes the sales team away from selling and is widely ignored by the rest of the organization. A highly motivating situation. How can you combat that?

First, motivate your sales people by showing them it’s easier than what they were doing before (remove the pain). You may not want to go cold turkey on them and pull their familiar forecast spreadsheet, but one of the thought leaders did. They found that when their sales team actually tried the new way, they realized the new application was much better. Why? Because it allowed them to forecast faster, and then provided them with improved visibility “around the curves”. The forecast became the tool that prevented them from slamming into walls at the end of the quarter. Less hassle, better insights will always motivate people.

Key learning #3: Show them you care.

We heard stories of sales people randomly changing their Excel-based forecast just to see if anyone was watching. Sadly, at many companies, no one is. But, if you give feedback on the forecast consistently and directly to the sales team, they will adopt the behavior you want. One of our VPs of Sales occasionally sends out emails to the sales reps making changes in their forecast asking questions about their updates. Combine this level of executive attention with an easy to use application for forecasting, and the sales team pays attention.

Key learning #4: A little competition goes a long way.

Carrot or stick? With sales people, competition and a carrot can really move the needle. For example, set up a competition between the forecast sales produces vs. marketing’s. Or, between sales teams in different regions or countries. For extra credit, set up a competition between operations and sales. Winning any of these competitions really means the company wins by getting an actionable forecast.

Next, key learnings around sales and marketing collaboration.