One of your reps comes to his last Opportunity Review Meeting of the month with some great news: he just added a new opportunity to his pipeline and, even better, it’s a huge one! Almost 4x your average deal size! And guess what: they want to close soon. Looks like you’ll be hitting your number this month after all.
Not so fast. Banking on this extra large, last-minute opportunitiy is appealing, but it’s a huge risk. And it can really screw up your sales forecasts. Your rep might be excited – and for good reason, but you, as an analytical Sales Manager, should know better. Late random additions, especially big ones, often die on the vine.
In fact, the opportunity used in this example should be immediately flagged in your forecast for at least two reasons.
First, it’s too big. Behemoth deals are great – they can turn a lackluster month into a superlative one – but they also have lower conversion rates than average-sized deals and they often spend more time in the Pipeline inching their way to the finish line.
Second, it’s not following process. Opportunities that are dumped into the end of the funnel are risky propositions. Why didn’t the opportunity progress naturally? Is it truly qualified? Sure, some deals fall into your lap, but most require your reps to methodically work them to closing. Your Sales process was developed for a reason, and more often than not, Won Deals hit every stage along the way.
So what should you do? You should congratulate your rep on his good fortune, tell him to cautiously work the opportunity, and then… go straight to your forecast and flag the opportunity. Why? Because this opportunity shows signs that it may be too good to be true. That doesn’t mean you should instantly jettison it from your pipeline – it just means you shouldn’t count on it 100% in your forecast.
Understanding your forecast – and, even more importantly, your forecast killers – will help you stay realistic and accurately predict your selling period’s outcome. The two forecast killers mentioned above – late random additions and extra large deals – are just 2 of the 10 that you should know inside out.
What are the other 8? Download our FREE new guide for Sales Managers to find out!