Quarterly forecasting or healthy pipeline?

14th February 2023 |   Ofer Zilberman and Dr Phil Squire

Sales operations are having a golden era. Organizations that understand this will come out winners in the years to come.

Quarterly forecasting or healthy pipeline?

Right idea wrong time?

Are sales leaders ready for what sales operations gurus can deliver?

In my entrepreneurial business career, I have learnt the importance of timing – quite frequently making the right decisions at the wrong time. One example, 15 years ago, we invested in an Israeli digital online live platform that was going to revolutionise the way we delivered our training programmes and provide access to unprecedented numbers of global students. The problem was that the vision for this online technology was ahead of its time, but the internet bandwidth of our international audience was so varied that it was impossible to provide a good student experience because the online system always defaulted to the slowest speed. Technology could not deliver on its promise.

I find myself coming back to the same issue in the current context of AI and its potential to change the way that sales, marketing, finance, interoperate. (By the way, I am not talking about CRM systems that arguably lay claim to that notion.) The issue now though is different: I find myself asking, “Are the technologies out there too advanced for the current set of mindsets, skills and knowledge among sales managers and sales directors?”

In addition, I see a deeper and perhaps more profound issue which is that a great many sales directors lack the data-driven mindset that is now required to harness the array of new technologies that can help them better predict the sales performance of their teams.

To appreciate what I mean, here is a simple test: is sales pipeline a leading or a lagging indicator (of sales performance)? If you answered “leading” you would find yourself alongside the 85% of respondents of a recent LinkedIn survey that we ran who agreed with you. This is the wrong answer. Pipeline is a lagging indicator. Whilst a simple test, 85% suggests that many are not appreciative of the activities that drive sales performance and perhaps focus too much on the short-term systems/data that rely on quarterly-driven revenue targets.

Chasing history not creating the future. This mindset will not appreciate quite where sales enabling technologies could take them.

In the fast-moving world in which we as sales leaders are operating, it is essential to have the clarity of levers that drive sales performance, dashboards that measure the right KPIs, and the sales system that gives us the intelligence required to anticipate and plan for the future. (It’s extremely rare to find a CRM system that works. It’s normally the source of a lot of frustration.)

This is where enlightened sales operations play such a critical role and where their knowledge of enabling technologies can provide a competitive advantage. With sales-enabling technologies developing at such a fast pace, sales leaders require sales operations leaders to provide insights on the art of the possible and then the technical capabilities to harness the actional insights such technologies can bring. The complementary skills sets of sales leaders, who know what they need out of a sales system, and operations directors with the analytical and technical skills to harness enabling technologies will ensure this is the right idea at the right time.

Tomorrow is happening now – like, now now!

From forecasting to demand management, sales operations is moving from an enabler to a player, but the move must be intentional; it will not happen by coincidence. Here’s why.

The business of “sales forecasting” is flourishing. With a myriad of vendors offering solutions that directly address the in-quarter forecast process, sales leaders have never had better insights into the pipeline, upside, forecasted or committed deals.

Starting from activity-based reporting on data pulled out of the CRM system and Outlook, we can now map who met with whom, when, their seniority, how often emails were exchanged, what topics have been discussed, identify risks, and action proactively. 

Bots log in automatically into online meetings with “keyword trackers” reporting back the most debated topics, while artificial intelligence is plugged in on top, analysing who spoke the most, how was it received, performing sentiment analysis, and while at it logging actions and agreed next steps.

This is not limited to online customer meetings, artificial intelligence can be set up to monitor email correspondence and internal meetings as well. Web-crawlers monitor the customer interactions on your website, on your competition website; they scan job postings, CVs, press releases and report back – all served on a silver platter of “one click to view the insights” and then aggregated into a deal score that like a magic wand with some fairy-tale dust tells you “deal will happen” or “deal will not happen” with considerable high probability of getting it right.

All the above are subject to some GDPR laws, languages and cultural nuances, some workers council or union agreements, perhaps also your employees’ appetite for automated scrutiny monitoring how they go about the company business every day. 

Putting those out of the way, it can be made available quite easily: all you have to do is buy the services, flip the switch to “on” and the insights start flowing to you.

Does it sound too good to be true? Perhaps to some

But why is that? Didn’t we just solve the mother of all challenges? Is not having a machine that can send its digital tentacles across all sales channels at the same time, and report back what is really happening as it is happening, the ultimate nirvana for sales management?

Not quite. Why? Because with all the bells and whistles, these technologies at the end of the day, report the news. Yes, you can be much more productive scanning through the insights served up. And by being more productive you also can scan through more than you would normally do and uncover issues or underreported successes earlier (aka sandbagged). However, for an in-quarter forecast, even out-quarter (which I am yet to find an organization that truly knows how to do), it is too late.

Are the technologies out there too advanced for the current set of mindsets, skills and knowledge among sales managers and sales directors?

Sales cycles supported by these technologies are typically longer than six months, for sure in enterprise organizations, double that for the economic times we live in.

Forecast process, at worst, tells you how deep you need to cut your price to create compelling events to bring in business which otherwise would not have been there. At best it gets folks out of procrastination mode and focuses them on deal execution, removing internal roadblocks. Either way it is hard to accelerate a sales cycle in-quarter, let alone come up with new pipeline to close in-quarter (the latter is impossible I would say). 

There is really not much you can do when your oxygen, your pipeline, runs out. Time and time again in my 20 odd years of a sales operations career I have seen forecasts collapse, people grasping with their fingernails to something that is no longer there, and with nothing else to replace it. Vice versa is not much better. It only puts off the inevitable. Blowing your number “unexpectedly” means you are a hero today, and quite likely a zero tomorrow. 

Business predictability is key for an organization’s long-term success. There simply must be something better to help manage it. Spoiler alert: there is.

From forecasting a quarter to ensuring a healthy pipeline for the future

It would be a cliché at this point to say you need to watch your pipeline, “pipeline is your oxygen”, you need to have three times, four times or whichever KPI is king-of-the-day, to secure the viability, lifeline, of your business in the current quarter.

More advanced organizations talk about “quality pipeline”, only to fall into the trap of defining quality with ambiguous metrics such as “velocity”, “win-rate” or “hygiene” which are not immediately actionable (eg, “reduce average sales cycle”), and are easier to game than actually move the business in the right direction.

Quarterly forecasting or healthy pipeline?

The next step on the maturity curve belongs to companies that want to look at the “health” of their pipeline, and that is pretty advanced. 

How do you define “health” though? Health in Old English is hælþ “wholeness”. Borrowing on human health as a good analogy: it is made of many factors, “KPIs” that must be balanced together so one could be called “healthy” or “whole”. Health therefore denotes a level of complexity, multiple factors hanging in a balance, complementary to each other and making something not just whole, but bigger than its parts. Although some might argue otherwise, health, certainly long-term health, is not given, it is earned.

One needs to eat the right food, watch your weight, BMI, cholesterol levels, blood pressure, and you name it, to be considered “healthy” in the bodily sense. Exercise just the right amount so it is not too little but also not overdone. And even if one does all that, it is still recommended once in a while to undergo a “health check”, because something may still be happening which doesn’t meet the eye (or nervous system). Trouble could be brewing deep inside.

Even though we may think we know what is right for us, we could benefit from good advice. At “worst”, it would be a different perspective that tests our beliefs. It helps us make sure we are on track for good health, or a goal, or the purpose we want to serve – long term. As the saying goes: do not believe everything you think. Get a second opinion.

Who is in-charge of healthy pipeline in sales?

Back in the sales world, pipeline is our body, and long-term pipeline health, way beyond the current quarter, ensures we will meet our goals. A modern sales operations organization is responsible for the pipeline health check and sales operations leaders should be making it their business to worry about a healthy future.

There is no other guardian out there that has the time and the holistic perspective to be on top of all that jazz. Sales operations must be the interpreters, the translators with an eye for the details of a myriad KPIs – and not only to understand the nuances, but also to turn them into actions

The remit for modern sales operations must go beyond just sales. The huge investment companies make in the customer-facing organization (aka the sales ecosystem), from marketing to partners, customer success reps, technical resources and biz dev, lead to said companies putting a major emphasis on measuring pipeline contribution.

I once had a marketing leader point out to me “why are we (marketing) being measured on pipeline creation? We do not create pipeline; we source it; we help nurture or progress it, but we never ‘create’. The person holding the keys to the pipeline is always the sales rep; he decides what is worth pursuing and engaging in a sales campaign.” 

This is true – at the very least technically speaking – if pipeline is defined in the right way as the point from which both a prospect and sales agree to go on a sales campaign: when it is interesting enough for both to explore because the value roadmap is clear to the client, and a meaningful quota retirement is on the horizon for the sales rep.

The ultimate owner of demand can only be its customer: the sales department. They should be the ones pulling all the strings as these will determine their destiny, but they cannot act alone; they need a crucial partner.

It is hard to accelerate a sales cycle in-quarter, let alone come up with new pipeline to close in-quarter (the latter is impossible I would say). 

Modern sales operations can help sales not only to orchestrate the above-mentioned investments, they can assist greatly by acting as the custodians who define (and explain) what “healthy pipeline” means, how will it be measured, how contribution or attribution will be assessed, how the insights will be served up, when it will be discussed, what are the actions that must be taken, and ultimately help track who is held accountable for executing them. 

They are the doctors, the nurses, and the technical operators of demand management. And they, with the full empowerment of sales leadership should put in the operating room those who are unwell – whoever runs out of oxygen, or even has too much of it and is overheating.

It is a pivotal role, either co-piloted or in close cooperation with sales leadership.

What’s technology’s role in all of this?

Here is a good question: why do the tools described above for Forecasting not apply the same way to demand management? Why can’t we point the same technology solving one problem at another? Isn’t it just a different time horizon of the same issue? It is not.

Whilst in-quarter forecast, the running of an opportunity in its final stages, is mostly sales-rep-activity based, demand management as described above is a multi-disciplinary capability that requires many more organizations and roles getting involved. 

Technology certainly has a crucial role to play, delivering insights, KPIs, and helping orchestrate the entire customer-facing organization on a technology platform. However, unlike coming up with a forecast score, running an organizational health check does require not just interviewing the patient, but coordinating and following up with the entire organization, defining the services available, budgets, ideal customer profile, territories and internal segmentation, and making some go-to-market decisions – in short, sales strategy. It is a people-management business, which for sure could be assisted by machines, but should be run by sales operations.

A modern sales operations organization is responsible for the pipeline health check and sales operations leaders should be making it their business to worry about a healthy future.

Stuck in first gear? Sales ops will help you shift up.
Stuck in first gear? Sales ops will help you shift up.

Future of sales operations: from oil in the machine to a transmission lever

Sales operations is often referred to as the “oil” that enables the various parts of the organization to work with less friction. My contention is that the future of sales ops is to become the transmission lever, the shift gearbox of the customer-facing organization. Even the best oil cannot make a car drive faster if it is stuck in low gear. What will enable it to gather speed is shifting to higher gears.

Sales operations is perfectly positioned to be the organization that understands, defines and gets the return on investment an organization is making in technology and people.

How then can sales operations play an even greater role in orchestrating the entire ecosystem around sales? How can they define a framework of measurable return on investment that is explicitly linked to such ecosystem influence on demand? More on that next time.

VP Global Sales Operations & Enablement at Board International

Ofer Zilberman is VP Global Sales Operations & Enablement at Board International.

CEO at Consalia

Dr Phil Squire is CEO of Consalia.