There are many sales forecasting applications out there, but as our CEO so eloquently put it yesterday, the problem is that “you can forecast your way all the way to failure.” The key to true predictability is better pipeline management and forecast accuracy.
If Salesforce.com is your CRM, you’ve probably noticed that it’s almost impossible to get a bigger picture sales forecast, that’s because forecasting is irrelevant without historic data. Salesforce.com doesn’t provide historic data, so there’s no real way for you to examine trends, and make educated decisions based on past sales history combined and other (external) factors.
In order to get true predictability, you need to have better accuracy. And to get better accuracy you need to consider a number of drivers. Here are three primary drivers you should consider if you are trying to increase your predictability through more accurate forecasts.
For one, CRM adoption is critical. If you are looking for accuracy, you need updated (frequent) data. Tools and incentives often help sales people on track with their accurate data entry. Jim Dickie goes as far as to suggest linking as sales persons pay to the individual accuracy of their own pipes. Using a pipeline analytics or management application will help sales people realize the value of CRM and help sales managers proactive manage or mentor their sales people.
Better pipeline management in general is also a key driver. If you don’t already, you need a pipeline management application that gives you better visibility into what going on in your pipeline, like what’s changed for example. Having better visibility allows you to be proactive in your managing of sales reps, and detect and correct deals that are slipping or other issue that arise in real-time.
Sales Process (Qualification & Conversion)
Qualification is another driver for accuracy. If your reps are forecasting in deals that repeatedly don’t close, then the qualification and sales processes need to be adjusted. At some point in either process there is a major disconnect. Sales Reps should be crystal clear about what qualifies a “sales-ready” lead, and the sales process needs to be dynamic. Conversion rates are another factor that play into accuracy, and are linked to both the qualification of leads, as well as the sales process. If the conversion rates are low, you need to examine where the disconnect is within the buying cycle (focus on what the customer is experiencing versus, what you want them to experience).
There are many other factors, these are three to get you started. The main thing to remember is that if you really want to get accurate predictable models and drive more revenue, you need to have accurate sales forecasts produced by timely and accurate data into the CRM which generates historic data, allowing you to make realistic predictability’s and better business decisions.
Barbara, in multiple years of sales management, I have seen very few reps who forecast accurately.
Accurate forecasting requires deep and critical thinking about each prospective client, client, referral source and opportunity.
Most reps do not want to take the time to do the in-depth mental analysis needed to forecast accurately and see each opportunity as its own separate business plan.
Excellent post. Thanks.