From Guesswork to Clarity: The Real Forecasting Journey

Mike Saxton is a high-performance leader. He was the SVP and regional president of Software AG, a publicly listed firm where he reported to the CRO and built the region from $40 million in revenues to $100 million. He had a direct organization of 140 reports, and he has experienced 120 quarters. During this time, he has had significant wins, and I've asked him to come and talk to us about the process, the art, and the science of forecasting. So let's dive right in. Mike, thank you for joining me on the conversation today.

Hey, Pari, how are you? And thanks for the invite.

Fantastic. Well, Mike, let's get right into it. What are you really trying to achieve when you are going through the forecasting process? Because you've been reporting into the CRO of a publicly listed company? You know, what's the main goal here?

Sure, Priy. Well, quite simply, what we're trying to do is give a version of the business that we know and we love in our region and give it visibility and give forecast accuracy to, in my case, CRO and to the board. You know, sometimes these numbers are quite big and they have a marked influence in public companies on share price and the performance of the organization. So we have to be accurate and we have to give visibility of that business. And what I mean by accurate, you know, from my perspective, a good quarter, shall we say, is a performance of around 95 to 105% of what I forecast. Okay, that's quite difficult to achieve, but it should be where we are aiming. And of course, Pri, you know, politics always come into forecasting. There's no doubt about it. You know, if, for example, I'm sticking my neck out for new resources, I'm trying to move my business into a new area, a new industry, or a new geography, and I'm looking for people and I'm looking for investment. Sure as hell that quarter, I want to be accurate and I want to be delivering my numbers. So we have to bear in mind not only the financial impact on the company, but the political impact of what we say and what we deliver in getting the investment that we need for our business. So that's really the first point is accuracy and visibility. Consistency is the next point. Every sales leader across the globe will have a good quarter where they come in really close to the numbers that they forecast. But really what sets out the excellent from the good are the people that do that quarter in, quarter out. And, you know, throughout this chat, I'm sure we'll talk about a number of tools and techniques and tips really that are gonna help us to get that consistency as well as Accuracy, and from my perspective, the most important is data. And we'll come back to that point, I'm sure, on a number of occasions. But data, you know, we there's that age-old phrase: crap in, crap out, right? You know, if people are putting in bad information into your CRM system, then it is difficult as a leader, particularly a leader of leaders, to get a feel for what the business really looks like. So we have to get. First up, right down into the detail of what is the data. But also something that I've learned over the years is consistency of data definitions. What is a forecast deal? What is a best-case deal? At what stage should I forecast it? Do we have a common understanding of that? And do we enforce those data definitions on a regular basis? And then finally, what we're trying to achieve, growth. At the end of the day, that is what a corporation needs. It's what a business needs. It's what we want to feather our own nest in our own region in terms of what we want to achieve. And to do that, we need growth. And to get growth, we need consistency and accuracy and visibility in our forecast.

So my main takeaway here is that Accuracy into consistency equals growth. So, it's this feedback loop where you build confidence with the business that you know what you're doing. You are, you know, able to request for more investment and continue to on that growth cycle, and they're delivering the results that they're promising to shareholders.

You're absolutely right, Pri. You know, when it comes down to the annual budgeting cycle, you know, the CRO and the board will look down the list of people who are looking for investments. You know, oh, this guy always delivers his number, tick. It's almost a given. So if we can get ourselves into that position, we can really grow the business that we envisage in our minds.

Okay. So now let's take this down another notch. So you want Accuracy, you want consistency. Let's now turn towards the building blocks. You mentioned data and data hygiene and data definitions. How do we ensure from the territory by territory up that your managers are feeding you the right forecast?

Yeah, let's drop down to a little bit more of a level of detail, as you say. Data discipline, I've mentioned it already, but let's go down into a little more detail. Reps that have been around for a number of quarters, let's say at least 3 quarters, I don't allow them to come into any quarter with a zero commit.

Okay.

Once I've implemented that and people understand it, You don't get people just coming in. I mean, salespeople have to understand that their job title includes the word sales, right? And that means selling stuff. So do not come in for a quarter where you are telling me you're gonna deliver nothing because I may as well, you know, move on to somebody else. So once people understand that that really is a no, you start to get a little bit more of a, a real feel for the early commitment in a quarter. So net zero. Another thing is salespeople, particularly pre the more experienced ones, they lose focus on the process of forecasting, the discipline of forecasting. They lose focus on data discipline. And that needs to be maintained. Like I said earlier, crap in, crap out. If I haven't got the core data, to run a forecast, then the chances of me providing an accurate forecast to the board are almost zero. So, you know, if people aren't updating their deals in Salesforce or whatever your CRM happens to be, you know, take drastic action, move a deal from one sales rep to another. You only have to ever do that once, but it seriously does work because people will never want that to happen again. And then finally on data discipline, let's come back to definitions. Constantly reinforce what we mean by a forecast deal. Is it still competitive? Well, probably not. It shouldn't be forecasted if it's still competitive. Is the deal now sole supplier, but we're in a paper chase? I'd like to see that forecast, particularly early on in a quarter, because we have time to get that done. So, you know, really over time, and we'll come back to this point later, understanding your people and how they forecast and what you need from them is critical in that respect. So moving to that point now, trust within the team. The team trusts me, I trust them. It's probably the number one trait of a high-performing team. How do we get to that trust position? Personally, what I do is I like to have one-to-ones either weekly or monthly, depending on the scale of the team, where we are not allowed to discuss the forecast. Okay, so we are regularly talking about other things. You know, how was your holiday? How's the family? How are the kids getting on? You start to understand the individual, you build trust, it builds confidence in you as a team. So number one is really know and trust or engender trust both ways across your team. And then finally, You know, don't take sole responsibility for the numbers. Obviously, as the leader of sales, you have the most responsibility. But, you know, let's look at sharing the ownership with, for example, pre-salespeople or product managers. Let's get people having some ownership of their part of the forecast. That to me has provided a significant boost to accuracy. because you get multiple views. The second and probably the most important liaison when it comes to forecast accuracy is your marketing team and business development team. I've seen some pretty hairy-fairy definitions of what marketing leads, marketing qualified leads look like.

So, Mike, what you're saying is that it's a real team effort where you've got marketing, you've got pre-sales, you've got sales that's collaboratively providing this forecast that goes through the leadership channel up to you. Tell me a little bit more about that.

Sure. So really it's about shared ownership of the forecast. Definitely sales owns the forecast, but dividing that ownership between different complete, you know, different functions that absolutely add value to the forecast, I have seen as valuable over my career. You know, marketing, for example, I've seen some fairly spurious descriptions of what qualifies as a marketing qualified lead or the handoff process between marketing qualified leads and sales. At the end of the day, it doesn't matter what your company tells you to do when it comes to what is a marketing qualified lead, etc. What's important is that you and the marketing lead understand what those things are and you have agreement as to what those things are. Once you're joined at the hip around those things, irrelevant of the rules and regulations, they will start to generate real genuine pipelines. And that's a A tip that I took probably a decade to work out. Forget the rules and regulations, fix it for yourself. And finally, when it comes to shared ownership, and this is a little bit out there, the customer. Okay, at the end of the day, these guys are the ones that press the button. They're the ones that sign first on the contract. It's really their decision when this thing is going to sign and for how much.

Okay.

We can lead the conversation, absolutely, and we'll come back to that. But the customer needs to be on the same page as you. when it comes to the sign-off. And a little tip for that, you know, we operate a process called reverse timeline. We used to call it a closed plan, but closed plan is a little bit inward-facing, and reverse timeline sounds a little bit better.

I like that.

When it comes to, you know, it's a reverse timeline from the customer go-live and the customer value. Realization back to, oh, there's an important point in this for us, right? The contract. I get my AEs to get the customer to sign that if we can. If we can. Now, it doesn't of course always happen. What am I signing? I need legal to check it. No, I just want your agreement that this date is accurate. Okay? Normally it ends up happening in an email. But one of the things you will learn as a sales leader is when you ask your AE to get that, all of a sudden things start happening. They start really genuinely quantifying that that closed date is real. So there's a couple of tips on kind of the how behind forecasting.

Yes, that is fantastic. I really like the reverse timeline. concept, even more so than the mutual close plan, which, like you said, is very internal-focused. You know, it's instead of what's in it for me versus what's in it for the customer. And I can think of a number of instances that I've seen myself in terms of both as a sales leader to managers and reps, as well as other leaders that I'm working with across the SaaS landscape, is that the moment we ask the customer for commitment or communication, it becomes very real for the rep. So, you can no longer pad your pipeline with hopium to buy yourself a little more time. And that has caused a lot of heartburn and heartache for many leaders who have, you know, committed to things which didn't eventuate or slipped. So, I think that's very, very useful. Thank you. Tell me some of the challenges that you've, you know, have experienced along the years when it comes to delivering with accuracy, with consistency, trying to build trust with the teams, getting them to collaborate. I mean, this is quite a synchronized effort? You know, what are some of the key challenges that come up along the way?

I think I recently calculated that I'd done more than 120 quarter ends. And some of them feel the same, some of them feel different. An ex-boss of mine used to say to me, pressure is for tires, not for sales teams. But, you know, There is an immense amount of pressure on a sales leader to make the right commitment and then back that commitment, that forecast up and deliver against that forecast number. You know, there's always pressure to deliver plan. An important learning from my perspective is if plan is not possible, then you need to let your guys know, your board know that immediately. You know, trying to deliver plan when your pipeline doesn't support it is a recipe for failure. It's a recipe for stress and it's a recipe for, you know, doing all the wrong things by the business. At the end of the day, the business wants to know, can you deliver the number? You want to deliver as close to plan as possible, but if you can't, you genuinely can't see plan, call it, call it early. And we'll come back to that a little bit later on, but call it right. Is what I say. And sometimes that means calling above plan when you genuinely see deals that are going to close this quarter that mean you're above plan. There's another scenario which puts even more pressure on you as a sales leader when perhaps another part of the business, another region has seen some slippage midway through the quarter. You can see a strong upside, and you know some of it's going to close, you want to call that because sure as hell, Priya, there's going to come a quarter when you need that help from one of your colleagues. So if you can call it, call it. I've always been a little bit hesitant to call massive upside, big, big upside deals too early because, Priya, you know what? You can actually go from being the potential hero to the villain just for trying to do the right thing. So, you know, when you are calling a big upside number, it's even more important sometimes than calling a forecast number. So that pressure for plan or more is a constant and understanding how flawless execution from you and your sales team is probably all that's within your control, can limit the pressure to tires and not to sales teams. Our old friend pipeline. If you enter a quarter calling a large percentage of the available pipeline, you're setting yourself up for failure. You need a pipeline that is able to support your business. Pipeline generation is probably the subject of a complete separate discussion. But at the end of the day, the tool that I've found most useful when analyzing pipeline is just a statistical analysis of it on every forecast call. What is the total pipeline? Has it gone up or down? What are the big deals that have affected that pipeline so that everybody in the business understands where the pipe of business that supports the forecast is going and where it's moving. And then really a tool to evaluate that pipeline, and I call it Q+3, 3 quarters on top of the current quarter where you as a leader and your leaders, your salespeople are starting to get visibility into deals almost a year out. Huge value. To you as an organization. This, at that point, that's where a CRO, a CEO, a head of product can genuinely affect a sales cycle. So we want to get visibility as early as possible into the potential size of those deals. So again, data accuracy, getting your guys to give a reasonable value to a deal so that you can But focus on the bigger ones, 3 quarters out, again, critical. And the, probably the final point I'll come to in terms of challenges is what I call forecast burnout, right? If we run a forecast call on a weekly basis and we do exactly the same thing every week, boy, we get bored with it as the leaders, even though we are the ones that have to present the numbers. So we have to have the data. Mix it up a bit. You know, sometimes I don't have any forecast calls in month 1 of a quarter and we do big deal reviews instead. Or we make sure that every single day, morning and afternoon, the AEs are taking me out to see a customer in month 1 for a deal that's 3 quarters out. Mix things up a bit. So, you know, in the second quarter, you might revert to traditional forecasting where you're doing the things on a A weekly basis and maybe week, month 3 rather of the quarter where we really get into the pointy end. Take the detail away, but let's look at progress. One of the things you want at the end of a quarter is making sure that AEs and sales directors are making daily progress on deals. So don't ask for an update, ask for what has changed from yesterday. So there's just a couple of ideas on some of the challenges that I've faced over more than 2 decades of sales leadership.

That's fantastic detail, Mike. Thank you. I mean, because I hear the same being resonated through the AEs that my team spend a lot of time talking to around what are their frustrations. And sometimes they feel like the communication that they're providing to the managers is a tick in the box rather than adding value in either direction. And that then causes the fatigue, forecast fatigue. But what you've said here is that you take your 3 months and then month 1, you go really light, month 2 is weekly, and month 3, is more, you know, more often. That's a mixed cadence or a mixed as against the week in, week out. Moreover, I think the big one here, what you've called out, is really a focus on what's changed or what's the progress that's taken place on the deal, which really keeps people focused on moving the needle forward as against saying the same thing that they said last week and the week before and the week before that, which is, again, a recipe for fatigue and burnout. So, that's fantastic. So, in terms of, as we move into, as you take a step back, you've had a significant number of quarter ends, as you just mentioned, 120 quarters. What are some of your biggest takeaways as you reflect, you know, from a forecasting point of view that a leader who's listening to this or an account executive who's listening to this, perhaps earlier in their career or to your younger self, what are some insights, advice, and just Observations that you provide?

Really good question. And probably, you know, comes down to the crux of the matter, which we mentioned earlier on, you know, really understanding the people that are in your team and building trust. You know, we, I think the sales process is mostly a process and you can adhere to a process. The beginning and the end of a deal, there is artistic interpretation in my view. So creating value in the mind of a customer early on, taking them on a journey, painting a picture for them about what the future looks like. And at the end of a deal, you know, we're in a dance, we're in a negotiation, there is artistic interpretation to be had. But really understanding the forecasting style of the AEs or of the sales directors that roll up that forecast for the AEs. is absolutely a critical point. I've got a couple of stories, one negative one, which I think is quite funny. I'd just taken over a particular region and I won't name names or regions for obvious reasons.

Tell me about it.

Yes. But I'd just taken over a region. There was one very vocal sales guy in the team, had a huge pipeline. But the rumor behind the scenes was, you know, that's gonna whittle away as the quarter goes on and, you know, there won't be too much left. So take with a grain of salt what goes into the forecast. So I took that feedback and was very cautious about forecasting from this particular guy. So as I was warned, the pipeline tailed off during the quarter and All that was left was this one big deal, which whenever I tried to speak to this guy, he was busy working on. He was at their office or he was working on something to do with that deal. So I couldn't get to him to analyze what had happened that quarter. Anyway, sure enough, I hadn't forecast the deal because I felt nervous about it. 3 days before quarter end with a substantial deal for that region. The CIO had a heart attack and was unable to sign the contract. So I, even though that was potentially a serious situation, I smelled a rat and I said to this sales guy, okay, well let's go and get some flowers from the market and let's go to his hospital bed and let's give him the flowers and give him our best wishes. Okay, that's a good idea, Victor, I said. And we got in a car for a 150-kilometer drive.

Oh my gosh.

With a bunch of flowers on the back seat. And halfway to this customer, he, and I was driving, he admitted that there was no deal. We flipped the car around, went back to the office, and not surprisingly, he resigned. So, you know, that was a kind of comedy situation. It was a real situation, but, you know, we need to understand the forecasting styles of our people. It's a critical, critical measure. So, you know, I talk about the 2 extremes. You know, there are some people like my friend we just discussed who would forecast 2 flies walking up the wall, right? As a committed— And then there is the other end of the scale, which is equally bad, which is the guy that won't forecast the thing till it's signed.

Okay?

We as leaders need to interpret that information and we need to help our sales reps, our AEs, our sales directors to have the confidence and the trust in both the process and the individuals to be honest about the deals. Okay, can it close this quarter? Yes, it can. Okay, can we forecast it? Well, why would you not forecast it? Okay, so we need a middle ground between flies walking up the wall and signed contracts, you know, and that again is something that can be engendered by building trust within the team. And talking of trust, you know, Just occasionally you'll need help from your team. Okay. I've had one situation which really sticks in my mind. It's more than a decade ago. I had a sales rep back when I was working back in the UK who was what I called Mr. Consistency, never delivered less than 90% and he never delivered more than 120% ever. He's ex-military, so he did exactly what he was told. Right. So, and this particular individual, we slipped a deal. We were gonna miss not only our plan, but my forecast for the quarter. He came to my office and he said, Mike, I can pull forward a deal. Okay. But the only tool I have in my belt is discount. If I do that and we make the quarter, will you help me? And I said, yeah, of course. And he did. And we did. So, you know, you need the trust in the people around you who know that you'll go into bat for them if they go into bat for you. Really important. You know, the next point in what I learned, bad news early. You know, as soon as you think a deal that you've committed is not gonna happen, tell people, okay? It's a difficult conversation. It's like breaking up with a girlfriend, but at the end of the day, You've got to get it done because it is for your own good at the end of the day. So bad news early, communicate bad news early. And good news, we talked about supporting other regions with upside deals. Maybe take your time on those ones. Think about it before you make commitments to adding to your forecast. Communication is critical. I tell the receptionist of the company that I'm working for how we're doing in a quarter. These people need to know, right? They all have a bonus of some kind or other. They don't want the sales team to be aloof. They want to know what's going on in the business. Communicate with your AEs why forecasting is important. Why do I need that report? AEs in Australia have a, in my view, an unwarranted reputation for dropping everything at 4 o'clock and going surfing. And actually, that's a good thing if everything is done right. But, you know, saying to one of those guys who's got his wetsuit on, his board under his arm, that you need a report, you need to let them know why. Why is it important and why is it important now? And certainly, I've found that once you let people know why things are important, it helps with the process. You know, so communicate, communicate, communicate. And finally, metrics and processes. You know, we need to know where we're heading as a business. We've talked about crap in, crap out, data accuracy, data definitions, momentum that can be built by monitoring quarters, Q+3. You know, looking at processes like deal scorecards, which we could come to on another podcast, qualification, reverse timelines that we've talked about, negotiation worksheets. I've got a really interesting story, I think, a deal I was working on and closed with an Australian insurer. I got on really well with the head of technology procurement, and I asked him to take us through the preparation they go through when they're building a negotiation with us. And it was intricate, it was detailed, They spent half a day talking among their team about how a half an hour call was going to go. And we as salespeople, because we've been salespeople for 20 years, we know what we're doing. We pick up our Montblanc pen and our pad and off we go because we know what we're doing. So negotiation worksheets, preparation, absolutely, absolutely critical. So those are some of the things I've learned.

This is a mini masterclass, and I think that it really shines through the time that you've spent. I think that whoever is listening to this, and there will be many, can take away something that will either help them feel normal with the challenges that they are struggling with. And I guess, also help them be better wherever, whether they are AEs or whether they're sales managers or they are leaders. Before we wrap up, tell me about a deal that you expected to come through but slipped and what was the result of that? Because that is something, a real situation people feel all the time.

Yeah, that's how I'm not wishing to end on a negative, of course, Pri, but yes, there was a situation and it was massive. I slipped a $48 million forecast deal in Q4 and I didn't get fired. I didn't feel particularly good about it and I wanted to send an email rather than pick up the phone to my CRO, but I did pick up the phone. Yeah, $48 million deal slipped with 3 weeks to go of Q4. I kept my job, which I was a little surprised about, I have to say. But at the end of the day, customers are in charge of their own destiny. It doesn't matter what med pick process we adhere to, what solution selling course we've gone on, how deeply we've evaluated the value that the client will get from the deal. At the end of the day, they're the ones that put ink on paper. And they have their own organizational challenges that sometimes get in the way of our business. That was the case in this particular scenario. A complete reshuffle of the government department was nothing to them, the timing, and the deal slipped. You know, what we need to rely on as sales leaders and as account executives is that we've done our bit. Properly. We have flawlessly executed the process. If hand on heart, we can say there's nothing I could have done about that, then making a $48 million deal slip out of the quarter is at least a little bit more comfortable. So yes, it's all about process and, you know, making sure that the company knows what's going on. by adhering to that process?

Well, I think that it's often your challenges and losses that set you up for further wins, as well as that wisdom. I would argue there are more leaders who would be honest and say they've learned, you know, you win or you learn. And every time you don't win, it's an opportunity to retool, reassess, go back and look at every step of the process. So, when you talk about the cadence for forecasting, the collaboration between teams, the principles and best practices, that it makes so much more sense when you yourself have worked through really difficult situations. So, again, I want to say thank you. Thank you. Your experience and your wisdom is extremely valuable, and it's going to help a lot of people. And so thank you again for spending this time with us today.

No problem, Vri. Thank you for the opportunity, and good luck, everybody.