5 Ways Sales Leaders Can Improve Their Sales Forecasting
Sales forecasting accuracy is one of the most key components of any sales manager’s job. Yet achieving this isn’t always easy. The lack of sales forecasting accuracy is often due to several factors, including the utilization of ineffective techniques, a lack of clearly defined rules or measures for forecasting, or not properly utilizing their tools or resources. But you can improve your sales forecasting when you have a plan in place. Here’s how:
1. Map Out a Cone of Uncertainty
While it’s typical for your sales leaders to rely on their judgment or intuition as decision makers, this often can cloud sales forecasting accuracy. Much of that is due to a lack of defining uncertainty. Teach your sales leaders that they need to prioritize defining a cone of uncertainty. When applying this method, sales leaders can clearly outline particular situations or possibilities that go beyond specific events. It helps them to use data to make more informed, strategic decisions instead of just solely relying on intuition or making a “judgment call”.
2. Use a Consistent Model
While no sales forecasting model is perfect for every organization, it’s crucial to use a consistent model. That means once you select your sales forecasting model, you should continue to use it consistently. If you switch from one forecasting model to the next on a frequent basis, you won’t have time to determine that it’s the right sales forecasting model for you, so you should at least commit to it in the medium term. Moreover, you won’t be able to use the data you collected previously and apply it in the new forecasting model or for future purposes. However, when you stick to one forecasting model, you can standardize the format of your sales forecasting model. This simplifies reviewing sales forecast models each year.
3. Forecast Via Sales Reps Submission
You can also enhance your sales forecasting by using sales representative submissions. It’s one of the most effective techniques for constructing sales forecasts. When you have your sales representatives submit their individual sales forecast on a weekly basis in either a current quarterly or monthly format, they’ll be obligated to review and evaluate their sale pipeline’s health. This practice also forces your sales reps to look at their numbers instead of working off estimates in a transparent way.
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You’ll also be able to empower your sales representatives to prioritize forecasting and hold themselves accountable. You’ll want to hold them accountable to sales forecasting accuracy, too, including using their resources and tools effectively. In fact, forecasting accountability is one of the best skills that sales representatives can possess. According to the MHI Research Institute, 90 percent of world-class sales managers are held accountable to use their resources and tools in an efficient manner. This may include leveraging sales force automation systems, mobile apps, data mining, sales training and coaching sessions from frontline sales managers.
You can use tools, such as Datahug, to facilitate sales forecast submissions per deal and for historical forecast tracking. By holding your sales team members accountable for forecasting accuracy, you can help them improve deal tracking and enhance their professional development.
4. Assess Deals by Their Own Merit
If you want to improve your sales forecasting, you have to work on enhancing the accuracy of your metrics. However, it’s a common practice to use the “weighted pipeline” method to get this done. Yet this sales forecasting technique can be misleading when it comes to developing an accurate sales forecast, and it can essentially destroy the precision of your sales forecasts. That’s because it places emphasis on the opportunity stage, which is based on subjective data. Moreover, the “weighted pipeline” sales forecasting accuracy method relies on probabilities based on a deal stage and probability-based values. This hampers accuracy for sales forecasting because they are based on assumptions or assess the path of a sales deal in the same way. Additionally, using holistic probabilities on a sliding scale or applying them to every deal doesn’t work, as each deal path is unique and the data required to get this level of accuracy is often beyond any one organization’s pipeline. Instead, a more solid method for sales forecast accuracy is to evaluate deals on their own merits. While you can evaluate deals manually, you can speed up the process when you use advanced tools, such as Datahug.
5. Simplify Updating Sales Forecast
Whether it’s the change of speed of a deal or a new opportunity that arises, changes that can impact your sales forecast are inevitable. Because changes occur frequently, it’s important to update the sales forecast. However, changing these numbers can be tedious for sales representatives and can discourage them from updating. Thus, it’s key to simplify the process. One of the easiest ways to get this done is by using a reliable CRM system. This helps simplify the sales updating process so that it’s quick and easy to do and essentially promote sales accuracy.
Getting an accurate sales forecast is paramount to the role of any sales leader. But you have a game plan for getting it done. From using consistent sales models to simplifying the process to update sales forecast, you can implement several measures to improve sales forecast accuracy for better sales numbers.