What is forecasting?
It is doing your level best to accurately predict the amount of sales that will be closed during a particular sales period—month, quarter, half-year or year.
Today, every public company in the world must, for every sales or fiscal period, accurately predict its revenue.
3. What is forecasting?
It is doing your level best to accurately predict the amount of sales that will be
closed during a particular sales period—month, quarter, half-year or year.
4. How important is an accurate
sales forecast?
Today, every public company in the world must, for
every sales or fiscal period, accurately predict its
revenue. At the bottom of this is an accurate sales
forecast. If the company falls 2-3% or more short of its
predicted sales, the analysts and various other critics
really take it to task.
5. How important is an accurate sales forecast?
Internally, accurate forecasting will make or break
a sales manager's job. A forecast done sloppily or
incorrectly will cause the company will lose confidence
in that sales manager. The opposite is also true,
of course: If a sales manager is consistently
forecasting sales with a fair degree of accuracy,
the company will have increasing confidence
in that manager.
6. The trick to forecasting would be to have enough deals in the
pipeline to determine the number you will end at. If you don't
have enough in the pipeline, then you have to review the
possibility of each single deal closing. You also then need to
review deals scheduled to close next month or beyond and pull
those in early.
Forecasting is also a challenge because you are trying to guess
where you will end up at the end of the month in the beginning
of the month when things are the most unclear. Deals also tend
to close right at the very end which is the most risky.
— L.F., Sales Manager, Pipeliner CRM user
“
7. Accurate Sales Forecasting
There are 2 main components to sales forecasting: the people, and the technology.
Without technology accurate forecasting is pretty near impossible.
8. Accurate Sales Forecasting
But the other side of it is an understanding of people
—specifically the people in your sales team. They can
fall anywhere within the gamut of sales forecasting:
● Underestimating, because they're scared to really put their
necks on the line and know that if they underestimate and
come in over their estimation, they'll be heroes.
● Correctly estimating, which is what you'd really like to
have but rarely get.
● Overconfident, which is where many salespeople fall.
They're going to give you a fantastic-sounding forecast
which they know you want to hear, but for which they
don’t quite have the deals.
9. Accurate Sales Forecasting
You could say that people and
technology are the raw materials
that you as a sales manager have to
work with. Now, how do you bring
them together?
10. Accurate Sales Forecasting
Example:
Let us say your sales rep Arnold tells you that this month,
he forecasts his sales at $50k. It then falls to you to check out
how realistic Arnold's forecast actually is.
With a CRM solution like Pipeliner, it's quite easy:
With a couple of clicks, you can visually look over Arnold's
pipeline and see if his open opportunities add up to 50k.
Even more, you can readily see how likely those opportunities
are to close within the given time frame.
11. Technology and Accurate
Sales Forecasts
As far as technology goes, the more simple and
intelligent the approach to forecasting, the more
effective the forecasting will be. Unfortunately, most
CRM systems fail in this regard. Pipeliner, however,
utilizes the science of cybernetics—the science used to
simplify complexity—and hence is able to provide highly
effective forecasting facilities.
12. Learning from the Past
Part of accurate forecasting means reviewing past
performance. Your technology should allow this simply
and easily. With Pipeliner, for example, you can go back
into a previous sales period and readily tell which of the
sales were new business, which were renewals, and
which were upsells. You can see which rep brought in
how much sales. It allows you to rapidly see what really
happened.
13. Evaluating Your Sales
Process
The accuracy of your forecast has a direct implication
on the effectiveness of your sales process. If your sales
process steps do not provide the right tasks or actions,
it will surely show up in the accuracy of your forecast.
You can then take actions to straighten out your sales
process.
14. Much More
There is much more to know about sales forecasting—but these are the essentials.
Learn them, and you’re well on your way!