Sales Pipeline - Don't Use Weighted Probability to Forecast

Sales Pipeline - Don't Use Weighted Probability to Forecast. In this video I talk about how using a weighted probability forecast model. | www.VictorAnton... |

[@williamkantor8136]

Hey Victor nice to see someone bucking conventional wisdom. And you so eloquently point out the flaws in a weighted forecast. What you are proposing here is a thresholded classification forecast. This approach has different shortcomings. Classification forecasts are most accurate very near the end of a sales cycle, which is usually at the very end of the quarter. You get a very pessimistic perspective at the beginning of the quarter. So your comment that you would not plan on anything other than the $10K in your example is accurate... but what planning can you really do with such short notice? Also, while weighted forecasts can be grossly wrong for a small number of opportunities (as in your example for an individual), they are quite useful for understanding what to expect from a large portfolio of opportunities. So each approach has its strengths and weaknesses. Of course the elephant in the room is how to assign those probabilities. Most businesses don't go to the trouble of defining what it takes to meet a forecast probability. As you aptly point out, there should be very well defined criteria. But to be useful for forecasting, the meaning of a probability also needs to be defined. Is it the probability of a win or the probability of a win by a certain date (usually the end of the current quarter). In our experience being clear about the timing of the probability (defining it to mean the probability to be won this quarter-that's usually what people want) goes a long way towards making deal probabilities usable for forecasting. Happy forecasting. And planning.

[@mcpelayo74]

I'm in fundraising and came across this clip. absolutely relevant in development as well. thank you

[@VictorAntonioLive]

Thank you! VA

[@assdaim1574]

mcpelayo74 p

[@VictorAntonioLive]

Great catch Kevin! I should've added that to the video. When people are overconfident they believe that they know more than they in fact do know, or believe their accuracy to be higher than it in fact is (i.e., “cognitive conceit”).

[@KevinHoganChannel]

It is a painful truth that salespeople believe that something has, for example, an 80% chance of coming to fruition after they have departed...when it almost certainly doesn't. There are industries where exceptions are the rule of course. Removing one zero from that 80% and projecting an 8% probability of closing is likely pretty realistic. In academic research we know that when people believe they are 90% certain about something, about 10% of the time they are actually correct. Great video!

[@rizanflenner882]

Great illustration. As sales manager I always wondered how this got established. Salesforce still uses the percentage forecasting on stage basis. We came up with up with a qualification score that will allow reps and managers to qualify against their best practices like need, product fit, budget, executive sponsorship etc.. Worked for us to qualify if a deal should be in commit or best case. Would be interested to have your thoughts on this..

[@armstrong2008]

This is a great talk. A weighted pipeline looks more like homework in certain format for sellers to hand in to their mangers, managers to their directors all the way upwards. Finally, a hiccup for nothing and stomach still feels hungry!

[@VictorAntonioLive]

Thank you Armstrong! VA

[@a.m.8333]

I agree that looking at the pipeline this way is not 100% accurate. BUT the probabilities of this calculation being irrelevant must be minimised by a thorough and proven definition of the stages and % of closing. If the stages are well identified and proven based on history, then the possibilities are very minimised. The personal rate of close is also contrasted with the percentages and for example in a well defined journey, stage 4 doesn't mean the same probability of close for John than Paul. Also the interpretation of the number is very important, you lack experience if so easily as a manager you believe someone will come up with 30.000, the talk that VA indicates is completely relevant but 30.000 is a great baseline to start the conversation. Please don't forget that motivation is key on sales management and this is a good way to motivate. Hope you viewers understand because sadly this method is broadly used in Forbes 500 and by no means you it can be ignored.

[@Fankhauser10]

Very nice video. I think another reason to avoid the weighted pipeline is the effect it has on the sales force. It generates a lack of accountability to individual deals. Any other interesting Sales Operations material out there? Aleays looking to continue learning, if you have something cool let me know. Cheers, André

[@VictorAntonioLive]

Great point!

[@VictorAntonioLive]

Sales Pipeline Forecasting.

[@andrewBwinter]

I have never believed in a weighted probability. It doesn't work. I lost a $300,000 deal which could have been considered at more than 80% probability becasue it was a repeat from last year, too difficult to move, etc., but I lost all $300,000. I didn't get $240,000, $300,000 or anything else. All of it went "Bye, Bye"

[@a.m.8333]

Sales reps tend to focus only on repeated orders or easy to close ones. Big mistake. Hopefully this wasn't your case, you should always have backups.

[@Asmodath]

You will get 7560 $ from these probabilities.

[@ZURU1]

【受注確率でフォーキャストしない】 ・メンバーに受注確率（％）を申告させて、それに案件額をかけたフォーキャストをしてはいけない ・受注確率については明確なガイドラインが必要 ・ガイドラインなきフォーキャストは推測に過ぎない

[@enajack6ee]

Mwah THX a billion