Situation: A company is developing new forecasting metrics for both sales and revenue. The immediate future does not look robust, and they are concerned about mid-term future revenue. Ideally they want to extend a 3 month forecast window out to 6 months. What is an effective methodology for forecasting revenue out 6 months? How do you forecast sales and revenue?
Advice from the CEOs:
Get your team together and gather impressions on the direction of business through the end of year. How many see sales going up, staying the same or declining through the end of the year. Discuss the rationale behind each member’s estimate so that you fully understand their thinking and what metrics each sees as important to their forecast. Work to make the estimates and metrics as rigorous as possible.
Based on the metrics discussed, develop an algorithm that you can monitor on a monthly or quarterly basis, depending upon your needs.
As you develop your algorithm, test it against past sales forecasts and history. Can it accurately plot past performance based on the metrics that you had at the time. If not, what needs to be adjusted or better understood.
Do you ask clients for forecasts of their purchase needs and do you track the accuracy of their forecasts? Weigh their responses by the quality of their past predictions.
As an alternative to trying to predict demand, assemble your resources to fit the needs of your market and customers and arrange your resources for flexibility.
Look at industry resources. How far out do experts in your industry claim to be able to forecast demand and sales or purchases? How reliable are these forecasts? What can you learn from this exercise that will improve your own forecasts?
Situation: A company has grown to five times the size that that were when they hired their last Vice President of Sales & Marketing, and are looking for a new VP of Sales & Marketing. What is your advice as they embark on this search? How do you recruit a VP of Sales & Marketing?
Advice from the CEOs:
Think coach as opposed to star player. You are a much larger company, and at this phase of growth you need an individual with good marketing skills combined with sales management skills. You need a brand builder.
Recently, another CEO went through a similar process. His mistake was hiring a person with deep domain experience, when what they really needed was a person with process/methodology experience in complex sales. In your case, consider an individual from a larger company in your industry, or an allied industry. Somebody with knowledge of similar technical sales processes to your company with similar complexity and similar lead flows.
Skip head hunters. Based on your knowledge of good companies in your industry use LinkedIn to find who’s who. You can look at three pools of candidates – those that you can hire away from these companies, those who have worked there but are out of work, and early retirees who have found that they now need to go back to work.
Research current salary ranges in your industry and plan to be competitive, both base and bonus target.
As this individual will be a doer-manager make bonus qualification a combination of personal quota and team performance (overall new sales growth vs. existing projects).
While another CEO agrees that you don’t need a head hunter, find someone who can organize the process – review resumes, perform screening interviews, schedule higher level interviews, follow-ups, etc. – and who will work on an hourly basis.
Have a job application and be sure to ask for the following:
Copies of last W-2s.
State on the application: falsehood is grounds for immediate termination.
Do or outsource formal background checks including verification of education and degrees.
Personally call references for your finalists. Ask these references who else knows this person and speak to them, as well.
Situation: A company recently set up an operation in Shanghai. An immediate shock has been that that the Chinese engineers have not been able to solve problems creatively. To date their solutions are limited to following an outline provided by the home office. How does the company address this? How do you get a Shanghai office up to speed?
Advice from the CEOs:
Current Chinese culture is to do what you’re told, and not to vary from the direction given by those to whom you report. However, these are smart people. Given time and training they will get through this. Can you be patient enough to allow this to occur?
The most important role in your Shanghai location is a trusted, competent Chinese General Manager. This individual can get you where you want to be the fastest. It is also the hardest position to fill in China.
One option is to investigate connections through the SCEA – Silicon Valley Chinese Engineers Association. Many SCEA members are Chinese who have been educated in the US but want to return to China. You may find good candidates here.
The best candidates have bi-cultural exposure – they understand Chinese culture, but also understand US standards, expectations and operations.
Be sure to check US references of any candidates who are currently in the US.
Early operations and adaptations are the most difficult. Talk to people in Shanghai who have solved this problem.
Develop a separate project selection / development methodology for projects you want to transfer to China. This will change as the Chinese employees begin to approach US standards.
As you hire new Chinese employees, look for individuals who play and write music. They are naturally more creative. Microsoft has used this approach successfully in China.
Interview with Mari Anne Vanella, CEO, The Vanella Group
Situation: High tech companies need a more effective, higher level approach to prospect accounts. This means capturing sales intelligence more meaningfully, and aligning marketing approaches with customer needs based on prospects’ experience. Traditional transactional lead generation methods must be replaced by a deeper methodology that enables salespeople to speak to the personality of the business buyer. If all of this is true, how do you revamp your lead generation process?
Advice from Mari Anne Vanella:
Executives are so busy that their schedules are overloaded. If you want to reach them, you must engage them at a meaningful, more situationally fluent level.
Executives aren’t disinterested in new vendors and opportunities to gain efficiency or save money; they’re just hard to reach. Therefore, it is critical to develop sufficient knowledge prior to initial contact so that you can quickly engage the prospect, and equally quickly re-engage them on follow-up calls as they progress through your sales pipeline.
Companies must mature beyond volume-based marketing and sales. The traditional model calls for up to three or so telemarketing center contact attempts to a large number of leads.
Current research indicates that 80% of leads are matured into prospects after 5 or more contact attempts. More effective approaches call for 7 to 10+ contact attempts to reach busy executives and managers. This requires greater skill and persistence than the traditional approach.
Re-engineer the process through which you contact leads and follow-up on prospects. Most deals fall out of the pipeline through mismanagement.
The focus of sales and marketing transformation should be on new metrics to boost success rates, as well as communication skills and pipeline management.
It is critical to understand the individual buyer’s purchase process. Sales close at varying rates. This requires listening closely to the prospect’s timeline and the next steps in his or her consideration process. If you agree on a follow-up date, honor it. Attend to the smallest details.
A lost deal calls for a deeper de-brief than a simple note of “sale lost” or “lack of prospect interest.” Marketing needs to understand why deals don’t happen to optimize processes.
The implication of these observations is broad. Most sales and marketing teams are held strictly to results, expressed as numbers that can be taken to management and the Board. This serves a function, but if it dominates sales and marketing processes it may undermine results. Understanding the realities facing prospects calls for a more technical marketing organization and an empathetic customer approach based on an intense understanding of the prospect and their needs.