The New Year means a lot of things to a lot of people -- well-intended resolutions, a chance to reflect on the past year, aspirin if you need it. To me, and many other business owners and sales professionals, it also means pulling out the crystal ball and calculator and making annual sales projections.
Some small business owners, especially those without a background in business or finance, believe there is a highly complex, magical equation for accurate sales forecasting. The truth is, the math is relatively simple in most cases, and there are many factors you can apply with a large degree of certainty.
Let's first look at what we know. These are the cornerstones of your forecast:
• Past sales trends or competitor sales trends
• Existing, signed contracts moving forward
• Existing, pending contracts moving forward
• New products or services planned
• Analyst projections for your industry
• Rate of inflation
Now, what you don't know (but you'd be willing to guess):
• How many of your prospects are going to turn into customers
• How quickly that will happen or not happen
In a high volume business, you may be able to get by with historical percentages for win rate, but in many businesses, a few opportunities could make or break the year. How real are they? My 2014 challenge to you is to stop guessing.
There will never be a replacement for a conversation and gut-check when taking the temperature of a potential customer, but the ugly truth is people don't like to share bad news. They tell you they're interested, that they've passed along your proposal, or they're just waiting on something to happen, when in fact they haven't even opened your email or looked at your proposal.
In addition to positive verbal feedback, when rating a business prospect, here is what I look for:
• Did they quickly open my email? Emphasis on quickly.
• Did they download my proposal or other assets?
• Did they share this information with anyone else and is the decision maker involved?
• Did they reply with feedback or next steps?
In my experience, these are the traits of an interested prospect. This is critical, yes/no information that is trackable and measurable and gives you invaluable insight into the prospect's true intentions. By measuring the level of engagement your prospects have with you and your materials, you can more accurately forecast new contracts and sales. You can also increase your efficiency and success rate by focusing on the promising leads and not on the prospects just giving you lip service.
So here's to 2014! Wishing you more certainty, less guessing, and always good luck.