Forecasting has never been more essential to the bottom line of business. In the COVID market landscape, sales teams have to work harder for each deal, and they have to make the most out of each and every conversation.
On this week’s Weekly Briefing, Jim Benton and Trey Boyer, the VP of Sales and CS at Hudl, discussed the importance of accurate forecasting and the behaviors that drive a deal from commit to close.
The commit stage of a deal is a signal that a signed contract is imminent. And every sales rep has a story about deals that score and others that foul out.
“7 years ago, I stumbled into this deal,” said Trey, sharing a deal that went far better than he expected. “It’s the first $100,000 deal we had in this company's history. Started organically from a meeting that I had. I wish I could take more credit for it because it progressed rapidly. We were able to close it and it’s still the single deal that sticks out most to me.”
And when asked about a deal that didn’t go as planned, Trey laughed that this was an easier one to recall.
“These stick with me longer,” he said. “I thought this one deal was done. We’ve all had this experience before. They’re ready to sign, they’ve agreed on price and everything! And then it just goes dark. My learning was I wasn’t there with a true decision-maker. I was talking to someone who wanted to say yes. I didn’t do a good enough job asking the right questions upfront. That really stuck with me.”
We take a three pronged approach. Which has led to a ton of accuracy for us because over the past few years, we’ve been able to forecast our annual targets within 6%.
Three-Pronged Approach to Forecasting #
According to CSO Insights, only 48% of forecasted deals end as closed-won.
When asked about Hudl’s experience, Trey said that he went back and looked to see how they measured up to this industry-wide stat.
“Over the past few years, we’ve been at about 56%. Slightly higher than average, but nothing different.
We take a three-pronged approach. Which has led to a ton of accuracy for us because, over the past few years, we’ve been able to forecast our annual targets within 6%.”
Here’s Hudl’s three-pronged approach: #
1. Start From the Ground Up With the Reps
“No one knows the deal better or whether or not they’re going to close better than the rep,” said Trey.
So sales managers ask their reps two questions:
- What is your commit?
“Your commit is: If you had to put $100 on the line as a bet for what number you think you could get this month, what would that number be?” - What is your best and worst-case scenario?
“If all [of your deals] were to go through or fall this quarter, that gives us our range for forecasting.
2. Utilize Your Data Analyst Team
Hudl leverages their Data Analysts to look at historical trends and ACVs year over year to predict where they’re going.
“They produce another forecast for us on a monthly basis,” said Trey.
3. Gather Weighted Pipeline Numbers from Your Sales Leadership Team
Across these three numbers, Trey and his team at Hudl determine an ultimate forecasting range of where they’re going to be and an eventual number that they put on the line.
Inaccurate Commits Means Inaccurate Forecasting.
Coaching Reps to Forecast Accurately #
The median win rate of deals that reach the commit stage is 80%. But has this changed since COVID impacted the market?
“COVID has been challenging,” he said. “We sell to sports teams. Sports landscape has been in flux. That impacts our business. It impacts when collections come in, how long deals are taking, even how much individuals are buying in comparison to years past.”
So, how are Trey and his team at Hudl changing the way they forecast? Less historical data.
“We’ve really scaled down the usage of our historical data because it’s just not as relevant as it was in a normal sales cycle. We can’t use the last five years of data because the selling environment is just not the same. We’ve had to rely on those first two pieces: What our reps are seeing from the ground up, and our Data Analyst team to measure pipeline and sales efficiency.”
Accuracy of Forecasting from Commit Stage Deals #
Only 43% of reps have average forecasting behavior. 57% of reps have below-average forecasting based on win-rates.
So, what makes a great commit?
“We struggled with this for a long time,” said Trey. “We were a really elementary sales organization when I first started in sales leadership. Forecasting was all over the board. So we need to reverse engineer our best deals.
So we created some deal validators. For a deal to be in the committed stage, we have to have these deal validators. And now our best reps are the ones who stick to this process and check all the boxes.”
What are these Deal Validators Trey was talking about?
Before a deal can be considered in the commit stage, you must have:
- Talked about price.
- Talked about timing and a date.
- Ensured you’re talking to a decision-maker.
- Validated if there are competitors or incumbents we have to unseat.
The reps that forecast the most accurately have a few things in common.
“They stick to these validators,” said Trey. “They have documentation to confirm these validators.”
A second and important point is that the best performing reps don’t work in a silo. “They partner with their sales manager to put a number in. They’re having these conversations with their sales managers during the week. They each use data to get there and they have a healthy conversation about it. It does us no good if they slap a number down and we haven’t challenged each other on the number to discuss if it’s feasible.”
It’s also an iterative process. In the following month, they look back to see how closely they were able to stick to that number and make process changes moving forward.
What about poor forecasting? There are patterns here as well in terms of rep behavior.
“I don’t want to say that our Deal Validators are a silver bullet, but they’ve been consistent for us. For those that aren’t forecasting appropriately, they’re not checking the boxes that they need to. We coach on these in a few ways. We look at the closed-lost report at the end of the month and determine at what stage and then coach on it.
And we also use Chorus. We had two large deals that would have propelled us forward in our quarter, unfortunately, we lost them, which happens. But we use those recordings, we use those write-ups so that we can determine what we could have done differently. And we share those across the company so that we can help the entire company - to our PM team, our GMs, to Marketing - so that we can change, adapt, improve so we can win next time.”
Maintaining Momentum Between Your Meetings.
The longer that we wait between validating information or checking in, the more likely we are to lose time. And, as they say, ‘Time kills all deals’.
Maintaining Deal Momentum #
We know that, on average, there are 7 days between each meeting in a deal that ends in closed-won.
At Hudl, this is a key tracker to make sure their deals are healthy and maintaining momentum. When they notice that deals are lagging, they take immediate action.
“I’m going to give another hat tip to our revenue operations team. They did a great job in our process to reverse engineer our good deals to understand what is happening and the difference between closed-lost and closed-won deals. It’s spot on with this information. The longer that we wait between validating information or checking in, the more likely we are to lose time. And, as they say, ‘Time kills all deals’.”
To stay on top of these deals, they utilize their tech stack to flag deals that are lagging.
“This goes right back to creating a machine to put all these pieces together,” said Jim.
Sales Velocity of Closed-Won Deals #
The number of days between the first and last call is far larger in Enterprise deals.
Trey shared that their largest deals are around 52 days from their first to the last call. “If it starts to stretch beyond that, we see this as a deal that’s at risk.”
To get ahead of a lagging deal, they have a process to address it once it’s flagged.
“If we’re working on a deal that’s well-validated and they’re ready to move forward with us, but we lost them along the way and it extends past that 50 day time period, we find another way in. We call it building the army. We reignite the conversation. Find another way back into that organization to get to the decision-maker.”
Sales Velocity of Closed-Lost Deals #
The days between meetings in closed-lost deals are lengthening. The age-old advice of “getting to no faster” still stands.
“Get to no faster,” said Trey. “Lose quickly. The worst answer in my mind is ‘Maybe’. ‘Yes’ is ideal, ‘No’ is the second-best answer. You can move on and find prospects that are more aligned with you, your value proposition, and where you can add the most value to those companies.”
Predictions Entering into Q4 #
Trey is much more optimistic about the future of sales heading into the second half of 2020 than he was previously.
“I’m much more confident than I was 4 months ago,” he said. “We have sports on TV for the first time in however long, so our business is much more confident than we were in May. I think that it's similar across different markets. It seems like people are ready to buy.”
The biggest learning for Trey and his team is the changing buyer. “Our buyer has changed. Our reps used to spend 30, 40, 50 days on the road. Now we’re able to close the deals just as fast and for the same dollar amount without even traveling.
It’s forced us to rethink our sales process and forced our buyers to rethink how they buy. Which I think is a great change for the market.”
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