A sales forecast gives an indication of what money is going to come in to a business and where it’s likely to come from. If a forecast is accurate, it's useful but if it's not, it can be dangerous, and sometimes even deadly.
If you're running a recruitment agency, managing recruiters, or maybe even considering buying a new recruitment business, it's important to know if your numbers are accurate, or if they’re just BS.
In this blog, we’ll look at how you can tell forecast fact from fiction with your very own Sales BS Detector (patent pending).
If a recruiter predicts that they’ll bill on target, then the key thing to watch out for is inconsistency. Carefully consider the details of the jobs that they’re working on. If things seem unusual compared to how this recruiter normally operates, it’s always worthwhile doing some digging.
Here are three key points to consider:
1. The projected close date is too soon
Bluebirds do happen! Yes, there are those deals that materialise in 2-3 days, but in most cases, speedy forecasts aren’t accurate ones. These types of predictions are worth exploring in more depth. Find out why your recruiter believes he or she can close the deal in such a short period of time.
TOP TIP: To understand your average timescale you can take historical data on how long each job has been open for, and then divide by the total number of jobs.
2. The volume of deals is unusually low and the value is unusually high
As we all know, you only convert a percentage of the deals in the pipeline. If a recruiter does not have enough deals lined up, they’re more likely to miss their target. But if the forecast is still looking ok because the few deals that they do have are unusually big ones, then alarm bells should ring.
There’s a tendency when working on white whale deals to neglect the day to day stuff. This is risky. If the big deal doesn’t go down when it should, and the recruiter is left with no back-up plan, then there’s a massive financial shortfall and nothing to fall back on.
3. A loch ness monster is sighted
Yes, if a deal pops up in someone’s predictions that’s rarely seen e.g. it’s out of your regular market, perhaps it’s notably senior compared to others, or it’s for an unusually difficult to find role compared to others, there needs to be an excellent justification as to why the recruiter believes they can fill this job.
Now, I’m an eternal optimist, but if it turns out that said recruiter isn’t known for finding purple coloured, squirrel looking, 3 legged java developers that speak 10 languages, then it’s likely that the deal is a crock of shit. It probably shouldn’t have made it into the forecast in the first place.
A good system that tracks sales forecasts can be helpful, but if it's not used correctly by everyone, it can do a lot more harm than good. If management base decisions on planning or expanding the team on a sales forecast that’s wrong, then the consequences can be catastrophic.
In some cases, technology actually provides a cover to hide behind for recruiters who learn how to game the system. If you find that recruiters are making excuses for not updating the system, then it could be that the system is cumbersome and time consuming to manage, or the recruiter themselves is trying to hide a poor forecast.
Whatever the reason, you need to make sure that your sales forecasts are accurate. Get to the root cause of the problem, and make sure that you’re basing decisions on solid information.
Many recruiters are gifted speakers, and if you give them time to prepare, it may be difficult to spot their BS. Typically, sales pipelines are reviewed on a regular basis and recruiters have plenty of time to flex their performance skills.
If you suspect that recruiters are using misleading information, or perhaps their predictions are always too good to be true, then shake things up. You can schedule short notice reviews of sales forecasts and make recruiters think on their feet.
Bullshit in a sales forecast can have a lasting negative impact on a business. Recruiters need to be honest and transparent with the deals in their pipeline.
Alan is an advisor here at Firefish with experience in both sales and marketing.