Comments on: Forecast Accuracy http://www.2-speed.com/2006/04/forecast-accuracy/ Entrepreneurial Leadership and Management . . . and Other Stuff Sun, 05 Feb 2012 18:29:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Forecasting Sales in 2009 « 2-Speed http://www.2-speed.com/2006/04/forecast-accuracy/#comment-54140 Forecasting Sales in 2009 « 2-Speed Thu, 15 Jan 2009 19:55:33 +0000 http://www.2-speed.com/2006/04/forecast-accuracy/#comment-54140 [...] discussed how critical accurately forecasting sales is to a company’s success before.  In short, I think that companies that have the skill to accurately predict how much they [...] [...] discussed how critical accurately forecasting sales is to a company’s success before.  In short, I think that companies that have the skill to accurately predict how much they [...]

]]> By: Will http://www.2-speed.com/2006/04/forecast-accuracy/#comment-181 Will Tue, 18 Apr 2006 03:16:22 +0000 http://www.2-speed.com/2006/04/forecast-accuracy/#comment-181 Yup, agreed.  There's no particular solution and it's a moving target.  Dealing with the unintended consequences of sales plans take a supercomputer to consider all permutations.  Have built many of these plans in the past, I have sorta figured out when I hit diminishing returns and then put the plan into action.  I don't think I've ever implemented a sales plan, though, where I didn't yell "doh!" at some point in the year when behavior I didn't plan for was inadvertently rewarded by the plan. <BR><BR>In my experience, implicit punishments in plans never work.  Rewards for exhibiting the desired bahavior generally do. Yup, agreed.  There’s no particular solution and it’s a moving target.  Dealing with the unintended consequences of sales plans take a supercomputer to consider all permutations.  Have built many of these plans in the past, I have sorta figured out when I hit diminishing returns and then put the plan into action.  I don’t think I’ve ever implemented a sales plan, though, where I didn’t yell “doh!” at some point in the year when behavior I didn’t plan for was inadvertently rewarded by the plan.

In my experience, implicit punishments in plans never work.  Rewards for exhibiting the desired bahavior generally do.

]]> By: Will http://www.2-speed.com/2006/04/forecast-accuracy/#comment-105956 Will Tue, 18 Apr 2006 03:16:00 +0000 http://www.2-speed.com/2006/04/forecast-accuracy/#comment-105956 Yup, agreed.  There's no particular solution and it's a moving target.  Dealing with the unintended consequences of sales plans take a supercomputer to consider all permutations.  Have built many of these plans in the past, I have sorta figured out when I hit diminishing returns and then put the plan into action.  I don't think I've ever implemented a sales plan, though, where I didn't yell "doh!" at some point in the year when behavior I didn't plan for was inadvertently rewarded by the plan. In my experience, implicit punishments in plans never work.  Rewards for exhibiting the desired bahavior generally do. Yup, agreed.  There’s no particular solution and it’s a moving target.  Dealing with the unintended consequences of sales plans take a supercomputer to consider all permutations.  Have built many of these plans in the past, I have sorta figured out when I hit diminishing returns and then put the plan into action.  I don’t think I’ve ever implemented a sales plan, though, where I didn’t yell “doh!” at some point in the year when behavior I didn’t plan for was inadvertently rewarded by the plan. In my experience, implicit punishments in plans never work.  Rewards for exhibiting the desired bahavior generally do.

]]> By: Steve Joshi http://www.2-speed.com/2006/04/forecast-accuracy/#comment-182 Steve Joshi Wed, 12 Apr 2006 00:02:57 +0000 http://www.2-speed.com/2006/04/forecast-accuracy/#comment-182 Sorry to crash your party with an opposing point of view, but this discussion rings of a typical theoretical response from someone who has never been in sales and had try to accurately forecast down through a couple layers of sales directors, managers and salespeople. <BR><BR>Forecast accuracy is a real problem.  If it was an easy thing to solve, it would've been solved by now. <BR><BR>Trying to solve it with a comp plan won't work.  No matter what comp plan you put in place, sales people will find a way to use it to their advantage.  If you try to punish them for sandbagging, then they'll just hit their forecasted number and withhold the rest of the business until the next quarter. Sorry to crash your party with an opposing point of view, but this discussion rings of a typical theoretical response from someone who has never been in sales and had try to accurately forecast down through a couple layers of sales directors, managers and salespeople.

Forecast accuracy is a real problem.  If it was an easy thing to solve, it would’ve been solved by now.

Trying to solve it with a comp plan won’t work.  No matter what comp plan you put in place, sales people will find a way to use it to their advantage.  If you try to punish them for sandbagging, then they’ll just hit their forecasted number and withhold the rest of the business until the next quarter.

]]> By: Steve Joshi http://www.2-speed.com/2006/04/forecast-accuracy/#comment-105957 Steve Joshi Wed, 12 Apr 2006 00:02:00 +0000 http://www.2-speed.com/2006/04/forecast-accuracy/#comment-105957 Sorry to crash your party with an opposing point of view, but this discussion rings of a typical theoretical response from someone who has never been in sales and had try to accurately forecast down through a couple layers of sales directors, managers and salespeople. Forecast accuracy is a real problem.  If it was an easy thing to solve, it would've been solved by now. Trying to solve it with a comp plan won't work.  No matter what comp plan you put in place, sales people will find a way to use it to their advantage.  If you try to punish them for sandbagging, then they'll just hit their forecasted number and withhold the rest of the business until the next quarter. Sorry to crash your party with an opposing point of view, but this discussion rings of a typical theoretical response from someone who has never been in sales and had try to accurately forecast down through a couple layers of sales directors, managers and salespeople. Forecast accuracy is a real problem.  If it was an easy thing to solve, it would’ve been solved by now. Trying to solve it with a comp plan won’t work.  No matter what comp plan you put in place, sales people will find a way to use it to their advantage.  If you try to punish them for sandbagging, then they’ll just hit their forecasted number and withhold the rest of the business until the next quarter.

]]> By: Dave Jilk http://www.2-speed.com/2006/04/forecast-accuracy/#comment-183 Dave Jilk Thu, 06 Apr 2006 14:14:21 +0000 http://www.2-speed.com/2006/04/forecast-accuracy/#comment-183 In thinking more about this, you could just take whatever decent comp plan you already have, and divide that by the square of the difference.  This way there's no incentive to make "0" the target. <BR><BR>Just tell them it's like gravity... In thinking more about this, you could just take whatever decent comp plan you already have, and divide that by the square of the difference.  This way there’s no incentive to make “0″ the target.

Just tell them it’s like gravity…

]]> By: Dave Jilk http://www.2-speed.com/2006/04/forecast-accuracy/#comment-105958 Dave Jilk Thu, 06 Apr 2006 14:14:00 +0000 http://www.2-speed.com/2006/04/forecast-accuracy/#comment-105958 In thinking more about this, you could just take whatever decent comp plan you already have, and divide that by the square of the difference.  This way there's no incentive to make "0" the target. Just tell them it's like gravity... In thinking more about this, you could just take whatever decent comp plan you already have, and divide that by the square of the difference.  This way there’s no incentive to make “0″ the target. Just tell them it’s like gravity…

]]> By: Will http://www.2-speed.com/2006/04/forecast-accuracy/#comment-184 Will Thu, 06 Apr 2006 04:38:04 +0000 http://www.2-speed.com/2006/04/forecast-accuracy/#comment-184 You're, of course, right about the granularity of early stage enterprise deals.  You can't value the forecast the same way at an early stage with that type of sales model.  Perhaps this says more about how a company enters such a market than how it forecasts sales in it. <BR><BR>Your math for the comp plan makes a lot of sense.  Perhaps avoiding the term "inverse square of the difference" might make it sell-able to a sales team  ;-) You’re, of course, right about the granularity of early stage enterprise deals.  You can’t value the forecast the same way at an early stage with that type of sales model.  Perhaps this says more about how a company enters such a market than how it forecasts sales in it.

Your math for the comp plan makes a lot of sense.  Perhaps avoiding the term “inverse square of the difference” might make it sell-able to a sales team  ;-)

]]> By: Will http://www.2-speed.com/2006/04/forecast-accuracy/#comment-105959 Will Thu, 06 Apr 2006 04:38:00 +0000 http://www.2-speed.com/2006/04/forecast-accuracy/#comment-105959 You're, of course, right about the granularity of early stage enterprise deals.  You can't value the forecast the same way at an early stage with that type of sales model.  Perhaps this says more about how a company enters such a market than how it forecasts sales in it. Your math for the comp plan makes a lot of sense.  Perhaps avoiding the term "inverse square of the difference" might make it sell-able to a sales team  ;-) You’re, of course, right about the granularity of early stage enterprise deals.  You can’t value the forecast the same way at an early stage with that type of sales model.  Perhaps this says more about how a company enters such a market than how it forecasts sales in it. Your math for the comp plan makes a lot of sense.  Perhaps avoiding the term “inverse square of the difference” might make it sell-able to a sales team  ;-)

]]> By: Will http://www.2-speed.com/2006/04/forecast-accuracy/#comment-185 Will Thu, 06 Apr 2006 00:39:37 +0000 http://www.2-speed.com/2006/04/forecast-accuracy/#comment-185 The case where this is particularly hard is in an early stage company that does large enterprise sales.  In that case there's no granularity and the actual number depends a lot on a couple of key deals, and there's always uncertainty with those. <BR><BR>Your comments suggest a terrific sales comp plan, though - have a significant component that is based on the inverse square of the difference between actual and forecasted sales - possibly based on forecasts at beginning of quarter, one month in, and two months in. The case where this is particularly hard is in an early stage company that does large enterprise sales.  In that case there’s no granularity and the actual number depends a lot on a couple of key deals, and there’s always uncertainty with those.

Your comments suggest a terrific sales comp plan, though – have a significant component that is based on the inverse square of the difference between actual and forecasted sales – possibly based on forecasts at beginning of quarter, one month in, and two months in.

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