Mastering the art of sales forecasting

In many organisations, sales forecasting is a bit of dark art with managers having to base their predictions on a mix of historic data and gut feel. As a result, accuracy levels can hover around 60 per cent or even lower.

It’s a situation that needs to be improved. Finding ways to achieve more accurate forecasts should be high on the priority list for all Sales Operations (Sales Ops) Managers.

Improving accuracy

Sales forecasting relies on data provided by sales teams. This includes the status of every potential deal in the pipeline, anticipated revenues, and when those revenues will be realised.

Unfortunately, however, such data can often be of questionable quality. Sales teams may forget to log potential deals and inaccurately estimate how many will be won. Different teams might also be undertaking estimates in different ways, further clouding the data.

The first step in improving forecasting is to make the process of data collection easy. If sales teams have to wrestle with things that bog them down, they simply won’t do it. You need to have in place a process that is clearly documented and easy for people to follow on a consistent basis.

It’s also important to be specific about the sale stages being followed and have them tied back into the company’s sales methodology. This ensures consistency across teams as it spells out how certain things needs to happen before a deal is moved to the next stage in the sales process.

When you become better at judging what stage deals have reached, you can create a model of forecasting that is much more accurate than it has been in the past. When you reach this stage,
it becomes easier to move the accuracy needle up, from 60% to 90% and beyond.

Sales Ops and Sales Managers working together

While progress will be encouraging, pushing through the final 10% to become as accurate in forecasting as possible will require a strong working relationship between the Sales Ops Manager and the managers guiding the sales teams.

In many cases, Sales Managers tend to be salespeople who have been promoted for strong performance. However, all too often, they don’t really function as managers but instead become super salespeople. Rather than coaching people and showing them how to win deals they spend their time helping them to win the deals.

It’s important to ensure that your Sales Managers don’t fall into this trap but instead focus their efforts on motivating and training their teams. They also need to work closely with the Sales Ops Manager to maintain forecasting accuracy over time.

The evolution of CRM

Another factor that is assisting with achieving better forecasting is the ongoing evolution of CRM platforms. Once little more than central repositories of sales data, they are rapidly becoming powerful tools that can provide proactive support to sales teams.

Thanks to advances in everything from artificial intelligence to speech recognition and data analysis, much of what has traditionally been a manual process will become automated. For example, AI could read a salesperson’s diary and know which client they were meeting today. The meeting could be recorded with notes automatically generated and stored in the system. AI tools could then analyse the conversations to identify the sentiments being expressed and then recommend the next steps that should be taken.

The combination of embedded, consistent processes and new technologies makes this an exciting time for sales teams and Sales Ops Managers. Achieving further advances in forecasting accuracy will be one of the key benefits.

Tim MacCartney, APAC Managing Director, Miller Heiman Group

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