Sales VPs: It’s time for the earnings call, are you ready?
You’re the VP of Sales for a medical device and diagnostics company. You sell thousands of products to hospitals and labs and it’s nearing the end of the quarter. The CEO wants to see your updated sales forecast so that he can prepare for an upcoming call with Wall Street analysts. With so much riding on investor calls, the forecast needs to be right. Are you ready? How quickly can you pull these numbers together? And, more importantly, are they trustworthy? Nothing would be worse than to provide a forecast that is wildly off base – and then to watch your stock price sink the next quarter.
The problem many companies face is that they have no idea how reliable the revenue forecast actually is. They may not be fortunate enough to have a solid, reliable set of sales pipeline data from the Field.
With the pressure of quarterly sales earnings calls and annual reports always looming, this situation applies to every Sales VP. Additionally, while it’s clearly bad news if sales don’t meet expectations, beating expectations (while something to cheer at) also leads to forecasting accuracy questions. You can bet the CEO will raise his expectations of you should you continue to exceed your advertised forecast. Are you ready to meet that new bar?
Couple that with ACA industry changes, from a fee-for-service to outcomes based, fee-for-value model, providing that revenue number to the CEO becomes all the more complicated. As one example, the DuPuy Synthes Geriatric Fracture program encompasses the entire treatment process – from the time a patient fractures a hip to through the process of rehabilitation. They’ve developed an online treatment protocol that standardizes care and shortens the length of stay by more than one day. It’s modern strategies such as these that allow companies to be in synch with payer outcome expectations and increase sales. As VP of Sales, you have a lot on your plate as you move towards such strategies and bake these assumptions into your forecast.
So, how do you build reliability into the process and provide the CEO the figures needed to run the business and provide realistic guidance to Wall Street?
We’ve seen some medical device companies literally spend days every month pulling pipeline data out of their CRM and into spreadsheets for their managers to review and adjust. This slow, painful process yields a sales forecast, but the time it takes to scrutinize every deal and contract status takes time away from selling and leaves nobody with a good feeling about the process. Plus, with every level of the forecasting chain potentially sandbagging their forecast, the accuracy becomes questionable. By the time it gets to you, who knows how truly reliable it is.
What can you do?
A better way is to automate the pipeline process from the ground up and remove as many pain points as possible. In this instance, reps still enter their deals into CRM with the usual details such as dollar amount, predicted close date, probability of close and current sales funnel stage. From here, however, a good analytics solution can take over and review these inputs from a variety of angles.
Does the Rep’s Forecast Make Sense?
Some reps may choose “all products” as the deal structure. For a company with thousands of devices, this is highly unlikely. Or, reps may have opportunity close dates that are past due. Other deals may have a revenue amount of “zero dollars.” By conducting a pipeline audit and calling out these inconsistencies, managers and reps can work together to ensure there is quality at the source. Just by shining a spotlight on these errors, we saw one diagnostic company’s forecasting confidence increase dramatically over the course of a few months – something the VP of Sales was very happy about.
What does the pipeline look like?
Is one stage of the pipeline bloated? What can be done to move those deals along to the next stage? Are any deals regressing? What is the win and loss rate? By easily allowing management (including you) to track the movement and value of opportunities, they can get their arms around problems areas and correct them. Perhaps one geography, account or rep needs the manager’s assistance.
What degree of clarity do you have?
Has one hospital stopped ordering a product? Is one particular device suddenly declining across the board? Being able to quickly pivot across all of the data and see specific detail enables everyone to not only maintain the forecast, but proactively address issues early on. We once had one medical device sales rep tell us he would spend five hours each week comparing his CRM with various home office reports to build his own territory management spreadsheet. With an integrated solution, this can be completed in a matter of minutes. How would you rather have your reps spend their time?
As VP of Sales, your job is much easier knowing that forecast accuracy begins with reliable inputs, in a solution that is easy to use and provides analysis for proactive, corrective action. Your team is happier and so are you. Bottom line? You can get those numbers to the CEO quickly and confidently.
Are you struggling with your sales pipeline? Download this free whitepaper: 5 Ways to Take Control of Your Sales Pipeline