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Friday, 8 October 2010

Sales Forecasts are just estimates


“which describes a twenty-year study in which 284 experts in many fields, including government officials, professors, and journalists and ranging from Marxists to free-marketeers, were asked to make 28,000 predictions about the future. He found they were only slightly more accurate than chance, and worse than simple extrapolation algorithms.”
Expert Political Judgment: How Good Is It? How Can We Know? PHILIP E. TETLOCK

Review your Sales forecasts for 2015, how did you do?
Did you miss the number, overshoot or undershoot?
Did you book any bluebirds, miss any certainties or drop a ball?
Would you bet your pension against next year’s 2016 FORECAST?

navigator

 

The Captain called the Navigator to the map room.

I want you to tell me, where the ship will be in three days time,

  if we steer South by South-east?”

The Navigator looked at the chart, and then drew a red line almost a thousand miles long.
He cut the line in three places.
Pointing to a spot just short of halfway, he said.
“We will be here if all goes as it has gone for the last three days.”
Moving to a point much closer to their current position
“But, we will be here if all goes against us.”
Then pointing to a spot well past halfway on the line, he said.
“Or, we could be here under optimum conditions.”
The red-faced Captain demanded.
“I need you to point to where you BELIEVE we will be in three days time!”

“It depends.” Responded the Navigator looking at the Captain calmly.
“On what?” Retorted the Captain
The Navigator responded.
“On the wind, the tide, the weather,
how well the crew sail the ship, and unexpected circumstance.”
 
 
The Captain insisted. “I still need your answer”.
The Navigator rejoined.
“My answer can only be an estimate, based on speculation and judgement.
  Best case, worst case and probability based on recent experience.” 

This story is repeated weekly in Sales ‘Forecasting’ meetings all over the globe.

The Sales Variables are:

How good are we at Selling? Economic factors, interest and exchange rates, Market Price Movements, demographics, psychographics, Market sector, Political environment, Product preference patterns;
seasonal or cyclical buying patterns;
Buyer attitude, expectation and perception;
Competitive activity: pricing, selling, new product announcement, market positioning and strategy.
Internally we have, technical capability and support, Financial resource or lack of limitations,
Product Marketing, PR, Lead generation, product and service innovation,
R&D, HR and Administration.

By comparison, the Navigator has an easy Job!

Sales forecasting, even short term, is fraught with difficulty.

The factors we control are outweighed by those factors we cannot control.

At best, it’s an estimate based on

speculation and judgement,
with probability based on recent experience!

And, in sales often the the sales person has little idea where they are now!
If you would like to look at Forecasting based on probability and not guesswork,
based on buyer behaviour and not speculative ‘Sales Process’
then contact brian.maciver@googlemail.com

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