4 changes to improve your sales forecasting process
The challenges of sales forecasting accuracy
Nailing your sales forecast can be transformational for your business but you aren’t alone if doing so is a challenge.
In fact, 80% of sales organizations DO NOT have a forecast accuracy of greater than 75%.
This is why we’ve created this blog on how to improve your sales forecast accuracy.
This blog covers the main symptoms that result in forecasting inaccuracy, some quick fixes to improve your sales forecasting, and some more significant changes.
Challenge 1 – Gut feelings and subjectivity
Putting together a forecast is like a game of Chinese whispers…
The number called by sales reps is rarely ever the same when it reaches management. Why is this?
- Sales reps rely on gut feelings to estimate when an opportunity will close, and deal values but this is not backed by data
- Reps minimize their own risk by low-balling high-value deals (sandbagging)
- Sales managers and directors tweak forecasts to align with C-suite expectations
- At every stage, the original forecast is tweaked resulting in layering. More often than not, these ‘layers’ are not communicated back to reps.
- Now, reps have a completely different target for the month or quarter which is not aligned with management.
See solution 3.
Challenge 2 – relying on your CRM
CRMs are an essential tool for any sales team, but when not properly maintained they cause a lot of problems.
The popular phrase is ‘garbage in, garbage out’.
Not logging everything into your CRM?
This will always have a negative knock-on effect.
Lack of data leads to inaccurate insights, and poor insights lead to ineffective decision-making.
Sales reps are responsible for updating their CRMs with details of every opportunity but it is a running joke in the sales community that reps hate doing so.
Without proper processes in place, reps can sandbag their deals or report an overconfident number into the CRM which ultimately contributes to an inaccurate forecast.
See solution 2.
Challenge 3 – lack of visibility
Pipeline visibility is incredibly important. Here is why:
- Gives you an understanding of how much pipeline you need to generate to hit your sales quota
- Helps you understand where your process is working well and where it needs tweaking
- Builds a foundation for growth and allows you to generate predictable revenue
Inaccurate CRM data, undefined sales stages, and a lack of solid processes all contribute to a lack of pipeline visibility.
An example of a lack of solid processes is 1:1 pipeline reviews between sales reps and managers.
The first 30 minutes are spent catching up on the state of play.
The information relayed is usually the deals that are front of mind and are open to subjectivity and gut feelings.
The second half of the pipeline review is spent focused on these same deals, often with little structure or procedure.
This process is inconsistent and ineffective.
Managers are not getting the detail that is required from every opportunity in order to better support their sales reps. Well, what does this mean?
It means a lack of pipeline visibility.
See solutions 3 and 4.
Now, we’ve covered the challenges of sales forecasting. Let’s jump into some solutions.
Solution 1 – Use historical data
You can learn a lot from your historical data, especially your forecasts.
Historical data can be used to your advantage in two ways:
- To understand patterns and trends in how you operate your business
You can benchmark historical data to provide a point of reference on how you SHOULD be performing.
So your sales teams know exactly what targets they need to hit at each stage to progress to the next.
With this information, you can spot deals at risk:
Too long in stage
Too few relationships
Too little engagement with stakeholders
- Learn from past inaccuracies to fix those forecasting errors
If the forecast was inaccurate, what contributed to those inaccuracies?
-Reps lowballing high-value deals
Now, you can ensure these mistakes are ironed out and do not contribute to any further inaccuracies.
Solution 2 – Keep your CRM clean and up to date
The figures from your forecast are pulled from your CRM.
So if your CRM is inaccurate, your forecast will also be inaccurate.
Keeping the CRM up-to-date falls on to reps to ensure they are tracking all their activity.
But teams need to work together to do this.
Reps don’t do it, because they often are not shown why it will help them.
How does it help them?
– Allows managers to have visibility of what is happening so they can effectively coach
– Provides comprehensive data for operations and enablement teams to train reps on how to close more deals, faster
There are four types of dirty data that can corrupt your CRM resulting in poor pipeline visibility:
- Too much data
- Duplicate data
- Incomplete data
- Inaccurate data
How do you clean your CRM?
- Standardize data entry across all your teams
- Automate data entry
- Purge out duplicates
- Encourage sales reps to update as and when things are happening
Did you know that high-performing companies update their data on a daily basis resulting in 23% higher win rates than low-performing companies?
We’ve got an in-depth blog on how to clean your CRM here so you can unlock better pipeline visibility, have confidence in your decisions, and shorten your sales cycles.
Solution 3 – Consistency in your sales process
If managers have different processes for forecasting, it is a nightmare to work out why a forecast is inaccurate.
When you have multiple teams in multiple regions running the same playbook, it is far simpler to identify what is working and what is not.
One process for everyone creates consistency.
How do you do this?
This is a way of standardizing all your sales meetings.
Forecasting cadences are proven to increase forecasting accuracy to within a few percent.
A forecast cadence is a structured series of meetings that can drive your sales teams to deliver on their targets and achieve the organization’s goals.
For example, if you have a set agenda for your pipeline reviews, both reps and managers are able to prepare beforehand and understand what will be discussed in these meetings.
Here is a teaser of some of the questions in the pipeline review cadence:
- What deals have trended negatively or remained idle?
- What deals are at risk? Why?
- Who do we need to influence? Do we have the right decision maker?
This new level of communication ensures nothing slips through the cracks and issues are addressed as they arise rather than waiting for the deal to slip.
Standardize your sales meetings and increase your forecast accuracy with the Ebsta Forecast Cadence.
Solution 4 – Introducing predictive forecasting software
This is potentially one of the biggest changes you could make to nailing your sales forecast accurately.
But it is one of the most effective.
You might be hesitant about implementing this change but here is why predictive forecasting is so powerful:
Your sales team no longer has to manually update the CRM.
Automatic CRM updates remove human error contributing to a more accurate forecast.
It should be noted that calls made on personal phones would not be captured by the CRM.
This handy feature creates alignment between your team.
Everyone is singing from the same hymn sheet and has a single source of truth.
We previously mentioned layering, where sales leaders inflate forecasts to match up with C-suite executives.
This level of pipeline visibility eliminates layering as sales leaders have access to cold hard data.
This allows them to make well-informed and accurate sales forecasts.
Now, your organization has switched from gut feelings to a more data-driven approach.
- Robust and repeatable
All teams operate using the same processes.
Consistency allows you to begin generating predictable revenue growth so you can scale with ease.
- Encourages collaboration
Sales reps can no longer hide opportunities and no longer have to defend their pipelines.
This improves the relationships with their sales leaders.
Predictive forecasting allows you to easily spot opportunities at risk enabling sales leaders to approach reps with specific feedback and better support them to close more deals.
Ebsta can do all of this and so much more!
Combined with predictive forecasting powered by Deal Score and Relationship Score, you can view the opportunities truly likely to close, then make a commit and upside submissions based on this data.
Want to learn more about how Ebsta accurately predicts your sales forecast? Get a demo