#234 - Sales Playbook: Nick and Armand Teach You How To Forecast

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Everybody. And welcome to this playbook episode of 30 Minutes to President's Club. My name is Armand Farouk and I'm here with my co host, Nick Sigelski. And today it's been a minute. Nick, we have a sales playbook and we're not talking about this fun, jolly cold calling script that you and I have been designing. We're not talking about the fancy chat GPT emails we're sending. We're talking about, folks, it's Q4, how to land your forecast on the button and how to nail pipeline reviews as well with your manager so you don't have people down your throat while you're trying to close revenue. Nick, why should people listen?

Well, remember, your job as a salesperson is to do two things. Create new pipeline and advance current pipeline. And when you have inefficient pipe review practices and inefficient forecasting practices, you and your boss and the entire revenue organization that you report up to get distracted from those things. And so when you do this stuff right, you and your team became a revenue generating machine. And when you do this wrong, you and your manager don't see eye to eye and you get frustrated and they get frustrated and you waste a lot of time. So I won't waste any more time talking about why you should listen. Armand, what are we going to cover today?

So the first thing we're talking about is basic definitions. What is a pipeline review versus a forecast? Then we're going to walk through pipeline reviews and then lastly we are going to walk through how to turn that pipeline review into a forecast at the end. And a three, two, one. Let's ride. Today's show is brought to you by Text Us, which helps you move your deals forward faster. When timing matters, the fastest way to move a field forward is to avoid getting stuck in the inbox. And so my favorite way to get on a text basis is literally when your prospect requests a demo, just send them a confirmation text saying that you're looking forward to the meeting and that opens the text channel for you to call back on it later. Folks, we put an entire guide on how to revive ghosted deals. Nudge next steps and use texting to keep deals moving forward. With Text Us, check it out. It's free in the show notes.

All right, let's start with some basic definitions. Armand, we're going to start with what is a pipeline review? A pipeline review is meant to be a time blocked review of key deals that are in your pipeline. And the intent of this is for you and your manager to figure out how to unblock those deals and win those deals. And so what you're going to do in that is you're covering who you're working with, what's happened and what needs to happen to get that deal to signature.

That's right. And the difference between a pipeline review and a forecast is a couple different areas. The first is a forecast call typically covers far fewer deals. There is an explicit dollar call that says, I'm going to bring in this much revenue this month or this quarter. And that dollar call is backed by these key deals. And if anything, there will be a quick update on those key deals. But this is not a deal strategy. This is calling your shot before it jumps in. This is not practicing the different places plays that lead up to your jumper. That's a pipeline review. The goal of a pipeline review is for a professional development standpoint and also from a success standpoint. How do we figure out how to unblock deals as a team together? A forecast creates public accountability and it forces predictability in the business. So that if you call a shot, you know that you have called your shot publicly and you need to do everything you can to work your way backwards to hit your number. That's pipeline review versus forecast.

Okay, so let's move into how to actually walk your manager through your pipeline. Armand, first, before we get into the specifics of this, the most important piece of a pipeline review, and frankly also the forecast call, is that you and your boss are aligned on the purpose of that meeting, the type of information that you are going to review together and, and the outcome that the two of you are mutually looking to achieve. And if you're not aligned on these, you are both going to be extremely frustrated with each other and these won't be productive sessions. And so from a rep's perspective, when you're going into a pipeline review, you are looking to improve your pipeline, not just have your pipeline a proved. And what that means is you should be presenting reality, the good and the bad associated with your pipeline. I see a lot of reps, they just say, oh, the demo was great, I'm feeling good about this one. No, you should also be sharing where you think there's risk in the deal. You should also be sharing where you feel like you might have not done the best job. Because when that happens, you and your manager can then game plan on how to recover from that and how to move that deal forward. So from a rep's perspective, that's how you should even be thinking about these sessions.

On the manager side, my goal with the pipeline review is, number one, I'm seeing certain things that are blowing up other deals that I want to help prevent from blowing up your deals. Number two, there's a lot that happens when you're tied up in the emotional fray of it. You might have a champion telling you everything you want to hear, and they're super excited, and you're like, this deal is a lock. But when you have a second set of eyes look at it, you might as well be like, I know this champion's awesome, but you're talking to an analyst, and there are two people in the chain of command above them. So it allows someone who is not swayed by the emotional deal to help you unblock your deals and point out blind spots for you. The second piece of this is you are in for a terrible forecast meeting with your manager. If you go into a forecast review before having aligned with your manager on what your pipeline looks like. Because what that means is the first time a deal is committed or slips, the first time that that is gonna be found out is in a public team forecast. And that is a horrible place for your manager to receive bad news, because he or she is going to want to unblock that deal right then and there. But again, a forecast is not meant to do that. And so they're just left confused as to why their forecast has slipped. And then one last bit here is if you do this correct, folks, you should be like, coaching yourself as the rep, where you know how you cross the exit criteria, you know the three next steps, and what these will eventually evolve into is your manager is then going to be like, okay, can we combine two stages into one? Or can we accelerate deals? Once you get the basic dribbling, blocking and tackling down, then what your pipeline reviews turn into is, okay, how do we start to do trick shots and come up with bigger deals or faster deals?

So again, the reason you're able to do a trick shot or a trick play is because you and your team are on the same page. And part of getting on the same page is when you are going through a pipeline review, you should have mutually agreed upon deal stages and exit criteria for those deal stages. And so the stages that we use here at 30 minutes to President's Club stage one discovery. And the exit criteria for that is, did a qualified prospect of agree to a problem that we can solve? Stage two is demo, and the exit criteria for that is did a qualified prospect agree after seeing the demo that we can solve their problem? Stage 3 is multi threading and the exit criteria for that is that power in the deal has agreed that we can solve the problem. And then stage four, proposal and negotiation, and the exit criteria for that is did they agree solving the problem that we're able to solve was worth the price that we've presented. And then the last stage is vendor review and the exit criteria for that. Armand is getting a signed contract. This is really important because if you and your boss aren't on the same page of like what constitutes a deal, moving through your pipeline and the exit criteria at each stage, you're going to spend a lot of time arguing about where a deal is and what needs to happen to move it forward. And as opposed to just focusing on how to move it forward.

The reason it's also critical to align on your sales process by stage first is I have seen deal reviews where it literally takes 20 minutes to go through a single deal. If you are efficient in your pipeline reviews, you should be able to get through a minimum of 15 deals. You typically start with the late stage deals and the big deals first and then you work your way to the more exciting earlier stage deals afterwards. And here is your recipe to run a 60 second deal recap. It's really simple. If we have those five stages with those five exit criteria, all you need to do is recap that exit criteria in one sentence. So for example, if in the discovery stage the exit criteria is did they agree to a problem? You would simply say the prospect's problem is this. Explain how you've achieved the exit criteria. Step number two is explain who you achieve the exit criteria with. So that might be this Persona, this director of demand generation agreed to this problem. And if you stop the deal at discovery stage and now it needs to go to demo, the next two things you're going to explain are simply what happens next and what is the risk of that next step not happening or this not closing. That is all you need. You basically are just recapping the stages and how and who you've achieved these stages with. And then you're saying, this is what I need to do next and this is how I'm covering my own blindsides.

I'm actually going to use an example from 30 minutes to President's Club, where if I'm recapping a deal that just exited the demo stage and we're moving to the proposal stage, I might say something like Armand, the next deal that we're going to talk about in this pipe review is Demo Blast. And this one's interesting. We're working with their CRO. She's actually leading the charge on the deal because marketing reports up to her. As a reminder, the big problem that she said she's looking to solve is that everyone knows them as this tool to really help with demos, but they actually just released a new product that helps with prospecting and they've gone an entire quarter and the CRO said it's gotten really little traction, which is a problem for her because they built their revenue plan based upon this prospecting tool, helping them increase their deal size. In terms of what happens next. We've had a couple demo meetings with her and the team and most folks are bought in, especially their head of demand, Gen, who's actually helping me game plan for a proposal meeting that we have next Friday. And this is one Armand where I could use your help because the CRO is sort of a bulldog and I know she's going to come at me really hard to try to negotiate and I'm wondering if we can spend some time on our one on one later role playing how I should respond when she tries to grind me down on price.

So if you think about the different ways that I might dig in on this pipeline review is Nick has told me everything that's happened up to this point and what he thinks should happen next. So I'm either going to go back in time and I'm going to be like, hey, is this a real problem? Should we pressure them a little bit? That's the first bucket that I'm thinking of as a manager is did we really cross off the exit criteria? And then the next bucket is whatever Nick has suggested as a next step. I'm going to confirm that that's in fact what we should do and point out additional blind spots that I see. Or in the best case, Nick has already identified those blind spots for me like he has in this case and we just talk about solving the problem for this deal. Or I might just say, nick, you've done everything you can on this deal. Keep me updated on it. Let's move on to the next deal. This happens over and over and over again. You get through 15 deals. And I liked it when my reps would tell me, hey, here's a preview at what's probably going to go into my forecast. Just surprised on Forecast Friday. So before we get into the forecasting part of this playbook, it's important to note that forecasting is not just org and company dependent. Oftentimes it's VP of Sales CRO dependent. Every company has different Deal cycles. And that might indicate whether you forecast monthly, annually or quarterly. Okay, so make sure you are conforming to your org standards. Also, we are going to share the 30 minutes to President's Club way that we do forecasting and the way that I've personally done forecasting in the past. But if you are a Med Pick team, for example, you should probably be following the Med Pick methodology for forecasting and what your VP of sales wants. Sometimes a VP of sales will also want to be way more conservative than others. Other times they might only have two forecast categories instead of three. So we're going to give you some general guidelines that should apply to most companies. But always change these guidelines based on your sales cycle.

Let this entire episode serve as a trigger for you and your boss to have a conversation where you can mutually agree upon the the way that you're approaching this stuff. Now let's talk about the forecast categories that we use at 30 minutes to President's Club. We've got three, we've got worst case, commit and best case. And so when I present a forecast to you, Armand, we look at where we think we're going to land based upon worst commit and best worst case. The definition of that are the deals where if the world burns down, these are the deals that we're still going to get. And so for us, these are the deals that are in that vendor review stage that have very clear timelines to close. This number doesn't go down. These are the deals that lock and key you are going to get. Now that's the lowest number in the forecast that I presented to you. The next one is the commit bucket. And this is where you would bet that you would land. You want to be a little bit conservative so that you end up doing a little bit better than where you really think you're going to land. Because oftentimes salespeople will think through the world in rose colored glasses and that's not always the case. And so this number usually goes up. And so what you're doing is you're thinking, okay, if I really, really had to put a stake in the ground of like where I think we're going to end up, this is the number I present, that's the number in the middle. And then the biggest number is the best case scenario forecast. And so if everything goes right in most of your deals, this is where you would end up landing. Now what I don't recommend you present here is you look at every single one of your deals that are more than 50% of the way through and say, we've got a $12 million forecast for this month because you're going to look a little bit silly going that optimistic. So, again, a little bit conservative. But again, if most things go right in most of your deals, this is where you land. Now, what's going to inform the way that you think about those categories is, is the stuff that we talked about earlier, the exit criterias, the Personas of who you're talking to, the next steps and the risks and where things feel shaky in the deal. And so what you're doing is when you're thinking, especially about that commit number, in my mind is I'm thinking about if I'm going to place a deal in commit, meaning it's not quite at vendor review, but I'm pretty sure we're going to get it in this period. I'm thinking about how well I achieved stuff like the exit criteria for each stage. One of the things we talked about, Armand, is the problem that they said they had. How strong, how big, how impactful, how gnarly is that problem that they talked about. Personas. Am I working with a cmo? I'm going to have higher confidence in a deal that I'm working with a CMO than I would a marketing analyst? I'm looking at stuff like next steps, how well did we move them through all of the steps? Have we talked about time limits, et cetera. So all of the stuff that we're talking about in the pipeline review informs the way that I'm thinking about those forecast categories.

That's right. And so from there, what happens is you need to make your forecast call. Your forecast call is going to be different depending on if you are on a quarterly or on a monthly, but also depending on if you're early in the month versus late in the month. So you always want to be more conservative earlier in the month or earlier in the quarter versus later on. The second piece is there's a common saying in sales that is missing your goal is bad, but missing your forecast is death. And so you really, really want to make sure that your forecast throughout the month and quarter goes up as you find more certainty. So let's put this into practice. What I might do is I might say that if I have five sales stages, discovery, demo, multiple, and then vendor review, I might say that anything in stage three early in the month could be considered best case. Anything in stage four could be considered commit, and then anything that is literally in vendor review at the beginning of the month or quarter is a worst case. Deal. But I'm going to look like an idiot if I basically say that my only commit is a vendor review deal. So what I then need to do is early in the month, I need to build inventory. So I might say my worst case consists of this single deal that is in vendor review. It's in red lines, it's locked in. But then my commit will be landing one of these three proposal deals that I feel good about. For these reasons, what you want to do early in the month is you want to have inventory that covers your spread. And then later in the month, what happens is the deals that are earlier in the sales cycle fall out of your forecast, and the deals that say no fall out of your forecast. But then the ones that ultimately say yes are the ones that start to slide into your worst case and your commitment. And what happens over time with a really wide forecast call where your worst commit and best are pretty far spread apart. And then over time, as you get more certainty, your best starts to come down and the entire range slides up about 10 to 20%. You typically don't want to go from a commit of $100,000 to $500,000 because that means you're a sandbagger. But you also typically don't want to go from a commit of $500,000 to $400,000. So try to have a slight lifting in your entire forecast range that tapers at the end of the month.

Let's say I'm a rep, Armand, and you're my sales leader and I meet with you and my forecast doesn't look good. What is the right way for a rep to message to you versus what if it's a VP of sales?

I'll break down two pieces of this. The first piece is how would I expect my reps message it to me? And then the second piece is how would I expect myself to message it up to my CEO if I was expecting a slip or a miss in terms of how my reps message it to me? Nick, you did this the other day with a deal where you said, this deal is a commit, but there are two things that could happen. Number one, they're in red lines right now and it could go all the way through. Number two, they have mentioned the thought that a layoff could happen. And if this deal slips, that's going to be why is there's going to be a reduction in force. And all you did is you said, hey, folks, this ended up actually happening. And for that reason, this is coming out of my commit. And the reason that this worked and it didn't cause a surprise for me is it was covered in the pipeline review as a key risk. So what you want to do is you want to get ahead of the miss, where you almost want to be saying, like, if we miss, here is the risk in our forecast. I'm putting up a number to have skin in the game. And I'm putting up a number because I don't want to put up a totally low ball sandbag number. But I want you to know that there are risk in these three areas and I might need to come back to you later on and tell you that this is a big swing deal that didn't fall in our favor. And that's the exact messaging that I'll be giving up to Matt as well, is as I'm honing in on my forecast, I'll have what I call the mashed potato deals, the deals that will make 50, 60, 70% of the forecast. But then I'll have these swing deals and I need to get his eyeballs on the swing deals so he knows if we miss it was specifically because of these deals that we knew had volatility in them, not just because we forgot how to sell.

One other question for you. You've talked about this term sandbagging, and it sounds like that's a bad thing. Can you explain what sandbagging is and why it is bad?

So when it comes to sandbagging, the first is the definition. A sandbagger is someone who commits $50,000 in their forecast and then actually brings in at the end of the month, $250,000. That can happen if you're not sandbagging, but usually that means you knew you had way more in pipeline and you just chose to not call it. So what happens and why is sandbagging bad? I'll just be completely honest, folks. Sandbagging is not as bad as missing your forecast. It's just not. If it's between missing your forecast and sandbagging, sandbag away, Be a sandbag king or queen. You'll be the savior of the sales org. But the most impressive thing that you can do is landing your number right next to the pin plus just a little bit. So what happens when you sandbag month over month? You become known as the person who calls 50k and brings in 150. And what happens is your manager and your VP of sales and your CRO need to make forecast calls over what's an extremely volatile number because clearly you are far more conservative than everyone else on the sales Floor. So now what I need to do is I need to have, in this case, we'll call the rep, Nick, right? I have to have Nick's actual number in my roll up. And then I have to know the number that I think Nick is going to have to land at. And that's what I'm going to use to put together my forecast as a VP of sales. So by you sandbagging, I need to play this mental guessing game to figure out what I should actually call. And what happens is if I'm wrong and you actually end up where your original commit was, I miss my forecast. And what that means is all of the planning that happened around implementation resources, around product resources, support engineering, comes from flaming back my way as well as the board pressure and the finance pressure to hit your goals. And I come back to you now wanting to far more deeply inspect your pipeline because I don't know what to actually believe. So that's number one. Number two is forecasting is a forcing function for accountability and for you to show that you can control your deals. Someone who is really, really good at forecasting shows me two things. Number one, if I were to put them in an enterprise role, they know exactly how to control a big million dollar deal. They know all the levers they can pull to speed a deal up or slow a deal down. And that means you're ready for the next step. But number two, if you want to be a manager, forecasting is critical. Because what that means is you know how to pull strings in a pipeline review, you know how to speed up your rep steals and show them how to bring deals in on time. And you can teach this to other people. But if you can't even forecast your own number, there's no world in which I could trust you to teach someone else to land their deals on time.

If I think about it from a rep's perspective, I'm like, I want our pipeline reviews to be easy, but if I'm sandbagging, you're going to dig in even more. And that's frustrating because I'm like, neither of us want that. We want to get to the truth. We want to be aligned. There's implications for the other functions in the organization. And when you sandbag, you screw them over. And if you want to move up in your career, you want your boss to love you and you actually make their job way harder when you sandbag. Well, Armand, we're running out of time and we gotta move to our 60 second recap.

Alrighty folks, so we started with the definitions A pipeline review is more for professional development and unblocking key deals. You should be able to give one sentence pipeline review updates and get through over 15 deals in a 30 minute pipeline review into your forecast. So the forecast should never be a surprise to your manager. They should be aligned to and looped in on your deals inside of a pipeline review and that goes into the forecast. For your forecast, you're going to call your key deals and your worst case that you know are locked down. From there you move to your commit, which is your bet on what will actually happen. And then your best case includes if the key swing deals swung in your direction from there at the beginning of the month. If your commit consists of one deal landing, you should probably have two, three or four in inventory and then over time throughout the month or the quarter, your forecast will start to taper. And the last piece is don't be a sandbagger folks. And also make sure that you don't set a goal that's way too high for yourself or put a forecast that's way too high for yourself and be forced to bring that dreaded news to your sales manager or VP of Sales that you've dropped your number already. Nick, how could people help us out?

The number one thing that you should be taken away from this playbook is you and your manager must be aligned on terms, on preferences, on outcomes from both a pipe review and from a forecast call. And if you're listening to this episode thinking gosh, my manager, or if you're a manager thinking gosh, my team and I are not wholly in lockstep, please, please, please share this episode with those folks. It will make everybody's life easier and remove so much distraction and frustration so you and the team can actually focus on blowing out the quota and making it to President's Club. Thanks for listening. We'll see you next week on the show.