When Isaac Newton watched the apple fall from the tree, he developed the concept of gravity: What goes up must come down. I have never met a national sales manager that understood this concept. Perhaps they just don’t accept it.
Every year the salesmen of our company were asked to make a forecast for their territory (this is a standard procedure for most corporations that employ sales people). The problem with it is, is that it’s nothing more than a hypothesis or guess; If for instance, you feel that you are going to get one million dollars in new sales from an account, you place it in your forecast as a gain. On the other hand, if you sold one million dollars to an account that is shutting the doors, you post it as a loss. The X-factor is, is that the business you gain or lose often happen in a capricious manner. Someone may suddenly pull the rug out from under your feet, or perhaps you receive an unexpected windfall. Once again, it’s just a guess. The only thing that’s a certainty, is that it is unacceptable to forecast a net loss. Sales must go up, not down-just ask the crooks at Enron.
After preparing forecasts for many years, I came to the conclusion that they were a necessary evil. The forecasts were needed by management to determine whether capital was needed to buy new equipment for expansion. In order to not waste a lot of time and effort, I developed a simple formula. When the experts would predict an increase of five percent in the economy for the upcoming year, I would take my product line and forecast an increase of five percent per item (not very scientific, but uncanny in its accuracy).
The new management of our company had become bogged down by forecasting. All salesmen were instructed to take a careful look at their sales and submit an accurate forecast. This may not seem like the formidable task it can present. If your product line contains ten items, you can evaluate each item and forecast it-no problem. Conversely, if your product line contains five hundred items that are the by-products of chemical raw materials based on the volatile oil industry, you have a big problem. Unfortunately, our product line fell under the big problem category.
Diverting from my formula, I prepared my forecast by carefully analyzing my sales and submitted my report. One week later, I received a voice mail from my boss. I was informed that my forecast was unacceptable and must be re-submitted. Apparently, he did not like the inevitable loss that I had forecast. I bit my tongue, and told him that I would take another look at it. I reviewed the report, made some minor adjustments, and then turned it back in. (Alchemy at it’s best.)
A week later, I received another call from the boss. “I really don’t see this,” he said.
“Then write it yourself,” I said.
“Look, I’m not Alan Greenspan and I don’t run the Fed-I’m also not Nostradamus; so I can’t predict the future. If you want a fairy tale, I would suggest getting a copy of the Brothers Grimm. The stories are really quite amusing.”
Silence on the telephone; I broke the silence by continuing, “All I’m saying is that I have spent a lot of valuable time on this forecast, and it’s taking away from the time that should be spent selling. I am wasting entire days on this thing. He didn’t like like my answer, but I really didn’t care: I had hit the “big kahuna” playing poker and I was ready to tell him to go fuck off.
(Excerpt from Sales Tales.)