What sales managers can learn from traders

What sales managers can learn from traders

Sales managers manage their pipelines in a way no investment portfolio manager would. They try to call the outcomes of individual deals.

Investors know they can’t do that consistently. They analyze individual stocks. But they don’t rely on being right about every one. Instead, they manage the expected return and risk of the portfolio.

Ah, but sales managers have a superpower over investors: They can influence individual outcomes.

Yes. And that superpower has created a bad habit. Managers try to forecast and allocate resources by calling each deal.

“Commit” means it will happen—and it gets resources.

“Best Case” means it is less likely—and gets fewer resources.

How well does this work?

We examined more than 11,000 deals to see how well sellers call Commits. On average:

• 80% of Commits closed in the committed quarter

• They became Commits only 11 days before closing

• Commits represented just 57% of total sales

Commit’s reliability comes at a cost: It is myopic and incomplete.

It helps you reliably deliver the short-term minimum. Do that every week, and you leave sales on the table—by design.

How does Commit do for resource allocation?

Our optimized deal focus produced 60% more sales, on average, than Commit and other company deal priorities.

Sales managers could take a lesson from traders.

Conviction—and even some ability to influence an outcome—do not equal certainty.

You can’t consistently call what will happen to individual deals. But you can manage the pipeline as a portfolio—forecast its range of outcomes, quantify the risk, and invest your resources where they are most likely to improve the result.

To do that:

• Use your CRM deal history to estimate the probability distribution of total sales

• Quantify the risk around that expected outcome

• Estimate where additional attention will produce the greatest increase in sales

• Allocate resources accordingly—and recalculate as the pipeline changes

Commit does none of this particularly well.

Funnelcast does. We forecast your pipeline—and show you an optimal portfolio of deals to focus on: where to invest attention to maximize sales while controlling risk.

It’s the same risk-return principle used to manage your 401(k)—applied to sales.

Are you calling deals—or managing a portfolio?