Why Your Sales Forecast Is Always Wrong

You are competing for a prospective client’s business. You know there are two other companies being considered, both of whom, like you, could do good work were they awarded the business. You have all done discovery, developed a solution and presented your final proposal.

Your CRM has a pull-down menu that indicates the stage of the sales process, as well as the likelihood of winning that deal expressed as a percentage. Your CRM suggests that you have a 75 percent chance of winning this deal. Your two competitors also have CRMs, and their likelihood of winning based on the stage is also 75 percent. Neither you nor your competitors have a 75 percent chance of winning the deal at this point.

If there are three competitors in this contest, none of whom have been ruled out for some reason, the very highest odds you have in winning is 33 percent. One company will win, the other two will lose, as is the nature of a zero-sum game. The 33 percent chance is the very highest number you can use to project your chances, and the number could be 25 percent, leaving open the possibility that the client decides not to do anything, something that happens frequently in sales.

If there are only two competitors in this same competition, the best you can guess (and you are guessing, unless you have strong evidence that suggests otherwise), is a 50 percent chance of winning, with the real number being 33 percent, again leaving open the option to do nothing.

If there is one thing that hurts sales organizations, sales leaders, sales managers, and salespeople, it’s the false confidence that comes from believing they have enough opportunities to meet and exceed their goals. Much of the time, when they are surprised, the surprise comes in the form lost deals they believed they would win, deals that ended in a no-decision, and deals they believed they would win that push into future quarters because the date in the CRM is, was, and always will be a placeholder when it lacks a client’s commitment.

If you are going to use a percentage to express your likelihood of winning, you are better off with a rule of thumb that suggests that three competitors in a deal means you have a 33 percent chance of winning and not 75 percent.