Mindset
Optimism vs. Accuracy – The Rainmaker’s Paradox
Posted by
Ian Brodie on 17th February 2009.
The objective of the rainmaker – the high-end salesperson – is to bring in sales. High quality sales, of course – work the firm can actually deliver, in areas of strategic importance with target clients. But at the end of the day the their overriding objective is to bring in as many sales as possible.
The sales manager, on the other hand, often works to a different agenda. They care about accuracy – will we hit the numbers? Those who work for publicly quoted companies know the extreme pressure to hit quarterly revenue and profitability forecasts to meet City/Wall Street expectations. Often (very, very often in my experience) , the focus of sales or pipeline meetings is less on figuring out how to sell more and more on getting an accurate forecast.
Now in theory, those aren't incompatible objectives. Strive to sell as much as possible and provide an accurate forecast as to how we are most likely to do.
In the real world however, human psychology acts to make it very difficult to achieve both.
By nature, successful salespeople are optimistic. In fact, Ford Harding's research for his classic work Creating Rainmakers highlighted optimism as the first and most striking defining attribute of a Rainmaker. Optimism is vital because it causes the Rainmaker to interpret events in positive ways that encourage them to keep progressing and chasing opportunities long after the rest of us have given up. It gives them a thick skin which allows them to brush off the rejection that's inevitable in sales and to keep knocking on doors, picking up the phone, and heading out to networking events. Developing the relationships necessary to deliver sales in complex, service oriented business such as consulting, law and accounting takes time – much, much longer than most people realise. And it's only the optimistic salespeople that hang in there long enough to reap the rewards.
The side effect of this optimism shows up in forecasts. Rainmakers are inherently prone to be optimisitic and overestimate their chances of winning a deal. Despite the fact that “sandbagging” (deliberately producing a low and easy to beat forecast when setting sales targets) can be very lucrative – in fact the vast majority of forecasts I've experienced in my many years selling, managing and consulting in professional services have been significantly overoptimistic.
So how can we square this circle and produce accurate forecasts despite the inherent optimism of successful Rainmakers?
Well, here's how not to do it: grill the Rainmaker, question their judgement, highlight all the risks and potential slip-ups, and browbeat them into lowering the forecast.
Apart from royally pissing off the Rainmaker, dampening their optimism damages their ability to sell. All of a sudden, they stop going the extra-mile – because they're not quite so certain the client is going to buy. They stop making quite so many calls, or going to quite so many networking events. Their dampened optimism even projects itself to client prospects who notice the Rainmaker doesn't seem quite so confident: perhaps his firm can't help after all?
Now, I'm not saying that analysing and qualifying opportunities is a bad thing – far from it. Done in the context of identifying the actions the Rainmaker needs to take to win the sale, or to help him focus his time on the highest payoff activities, it is tremendously helpful. But using it as a hammer to beat down the Rainmaker's optimism in order to produce a realistic forecast can have the side-effect of killing his effectiveness as a salesperson.
So what's a a more effective approach?
Well, one option is to lessen the need for accurate forecasts. This is easier done in partnerships than in publicly quoted companies who live or die by hitting their quarterly numbers. But remember – these are aggregate numbers for the whole company. An accurate company-level forecast is not necessarily one that is built from highly accurate micro-forecasts from each salesperson. When aggregated, forecast inaccuraces can balance out, and optimistic biases can be corrected for. In many leading consumer goods companies for example, sales forecasts are not calculated by asking each salesperson to accurately forecast then rolling them up – they are calculated statistically using overall demand and environmental factors – and are often far more accurate than salesperson projections. It also makes sense to reduce the firm's reliance on accurate forecasts by thinking through: apart from our external reporting – why do we need accurate forecasts? Capacity planning is an obvious reason – but often, accuracy is not needed so far in advance – and clients can often be surprisingly flexibile over scheduling & start dates. Outside of that, there are often few reasons to maintain an accurate forecast (especially in professional firms) – other than the fact that it gives leadership a feeling of “being in control”.
Another option is to remove responsibility for forecasting from the Rainmaker. The Rainmaker's job becomes one of selling as much as possible (of course, at bare minimum hitting the sales targets). Forecasting becomes the responsibility of the sales manager or a staff function – who are measured on the accuracy of the forecast. It's their job to understand the pipeline – and the Rainmaker – enough to make an accurate forecast. It's not the Rainmaker's job to hit the forecast – it's the Rainmaker's job to sell as much as possible.
A third option is for the Rainmaker to retain responsibility for the forecast – but for firm management to be more hands-off in how this is done. Allow the Rainmaker to manage their own pipeline “in private” and pass up forecasts (either per major opportunity, or just overall). In this case the Rainmaker can keep their own optimistic perspective on the opportunity 90% of the time, but is asked to pass a number upwards which they can “guarantee”. The sales manager (or managing partner/practice head in a professional firm) will work with the Rainmaker to give coaching on how to progress each opportunity – but they don't browbeat the salesperson into changing their forecasts.
Now these methods aren't perfect. But individually, or in combination, they are a lot better than the traditional approach of beating up salespeople in pipeline meetings to get accurate forecasts – and actually damaging their ability to sell.
Ian