article | October 27, 2011
Channel Management: How to Improve Partner Sales Forecasts
In the summer, our analysis of 152 companies indicated that best in class companies had a 5% variation whereas the median was 25%. You might be wondering how many firms saw 25% more channel sales than forecast – two of them. The rest received forecasts for sales that never materialized.
As much as your CEO or CFO may want a tighter forecast, you are in an arms-length relationship and have less control over external partners. Put yourself in their shoes.
A typical partner:
The payoff just is not there for them to allow you to impose more control over their forecasting. They can’t forecast differently for every vendor they work with today.
The traditional approach to handling this dilemma with partners is to give the whole channel forecast a hair cut of about 10-15%. Some will come in over their original forecast and that will make up for many misses from the rest of the partners. This simply addresses a symptom rather than address root cause.
The core issue is that your sales processes are different and thus the forecasts will be as well. Your process is designed specifically for what you sell. Your partner’s process is likely less robust given the variety of things they sell. The diagram below illustrates how they can differ.
If your partner is giving you a weighted forecast across all stage of their sales process, it may vary substantially to how you would forecast the same business.
Let’s focus on the things we can control. Take the following steps to improve your overall channel forecast accuracy:
This may seem like more work but once you have it in place, it is much better in the long run. Several of our clients have moved to this methodology and have eliminated 100’s of hours from the monthly forecasting exercise.
To learn more about effective sales process, view our recorded webinar on “The Truth About Sales Methodologies“. What have you changed recently from a channel management perspective to improve partner forecast accuracy?