Raise Revenue by Raising Forecasts
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I just finished reading The Smartest Kids in the World by Amanda Ripley. In the book, Amanda gives her opinion on why the children in South Korea, Poland and Finland score so high on international tests. Or, in other words, why these three countries leave the U.S in the dust. Although there were differences amongst all three countries, one of the big reasons she cites is expectations. Simply put, in these three countries children are expected to score at a level which is higher and more rigorous than what we expect in the U.S. Ultimately in these countries, children have risen to the expectations that are set for them. Pretty simple, yet profound.
I believe in this same general concept when thinking about business. When it comes to setting sales and revenue targets, I tend to push the people and business units of Assurance to higher revenue targets. I believe, provided the target is still feasible, employees will rise to the higher expectations and hit the revised target – much like the children in South Korea, Poland and Finland.
This has basically proven itself at Assurance. In each of the past five years, we’ve beaten our revenue targets overall between 1 and 4 percent. Beaten the targets, but just barely – however, still great success! To blow away a sales goal at Assurance would be quite difficult. In fact, if it happened, I would probably question the forecast.
Revenue goals should be difficult, but possible to hit. When we began our forecasting process for 2015 in late September, I asked myself these questions to ensure balance:
- Are the targets difficult enough to stretch and push employees close to their limits?
- Are they possible to hit (still within the range of reason)?
Lastly, to give you an idea of what we expect overall at Assurance, I expect growth on average to be around 12 percent per year for both revenue and operating profit. In my industry, this is difficult, but possible to do. If the numbers fall quite a bit less than this over time, then I’m probably writing my resume as opposed to this blog post. It’s my job to make it happen and one of the big components of this is to push my employees to higher expectations.
I wish you luck with your own 2015 forecasts!
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