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An investigation on why sales people might be less than accurate on their forecasting on purpose. Highlights potential negative behaviour that Sales Managers might exhibit

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  2. 2. What is Sandbagging? • Hiding future orders from management • Understating potential sales
  3. 3. Why do Salespeople “Sandbag”? They don’t trust their management: • They want to avoid unwanted attention • They want to avoid target creep
  4. 4. Avoid Unwanted Attention • Believe it or not - sales people with big deals on the table get more attention than those with no deals on the table! • Attention tends to be audit and compliance based – checking up not assisting • Mad isn’t it. Surely management should help those without deals!
  5. 5. To Avoid Target Creep • Once a deal is known, particularly if it affects a future year (with a target yet to be set), it can get incorporated into a salesperson’s next year target • Increased target means decreased earnings for the salesperson • Salesperson feels undervalued ( and is) as his hard work (in year) is not rewarded, it gets sucked into next years “normal”.
  6. 6. Why is Sandbagging bad? More deals come in than are forecast – Not enough equipment in inventory • Long lead times = unhappy customers – Not enough people to make and support the equipment or service that has been sold • Quality and responsiveness drops = unhappy customers – Stock Market thinks you are not in control of your business • Share price drops = ability to invest drops = unhappy shareholders!
  7. 7. Management behaviour that causes mistrust • Target creep – Deal is in the pipeline, so increase salesperson’s goal to drive extra effort • Deep deal analysis – Distrust of salesperson • Might be sandbagging • Might cock-up the deal • Might not bring the deal in quickly enough – Focus on forecast accuracy vs pipeline creation
  8. 8. Negative Trust Circle self fulfilling prophecy! Mgt doesn’t trust salesperson to forecast accurately Why? Oversight to find “truth” AM sandbags to avoid pressure = overachievement Set high targets as AM must be sandbagging AM expects to be OVER goaled so sets a low expectation of future business
  9. 9. How does Oversight go bad • Weighing the pig mode • Over and early commit • Need to cover lost deals
  10. 10. Management enter “weighing the pig” mode. • Mgt commits deals to higher management to get the needed forecast. Promise the pig for Christmas dinner • Belief (possibly true) that Salespeople need “motivating” to honour the commit. - They apply pressure. • But stressed individuals work less effectively than motivated ones! • Mgt becomes worried that the pig isn’t big enough to feed everyone so they keep weighing it – or keep reviewing the situation . • Reviewing – doesn’t make the deal stronger, it steals time from selling – Weighing the pig, stops the pig being fed!
  11. 11. Over Commit • Desire to make Executives and Shareholders happy • Leads to committing more than one should • At crunch time, there is a gap • Management exert pressure to close the gap
  12. 12. Need to Cover Lost Deals • Binary – singular and large deals, when lost cause a big hole in a committed forecast • Management want to “hit” the forecast • Answer: – Pressurize other existing deals to come in earlier! – Sales people hate pressure • bad motivation technique – so they sandbag to give themselves cover. • They under-forecast binary deals
  14. 14. Foster trust • Reward truthfulness • Punish dishonesty • Be authentic and consistent • Enough said – good leadership principles apply
  15. 15. Lead and Coach • Help Salespeople get more deals in the pipeline – team based selling • Help sales people land more deals quicker- by coaching and then rewarding great behaviours, not policing behaviour!
  16. 16. Realistic Forecasting – Allow slipped deals, – Reward accuracy instead of punishing inaccuracy – Coach improved selling technique including forecasting – Protect Binary deals with cover and adequately resource them
  17. 17. Protect the Salesforce • Lots of internal pressures to get accuracy - from operations and finance • Ensure balance hence enabling the Sale person to do his job and accurately forecast deals. – Eg CRM tool malaise: • often favour forecasting based requirements > which is information-IN, • vs • helping the salesperson which is information-OUT
  18. 18. For help on this • Contact • • Or •