Every sales manager loves to do sales forecasting, despite the fact that it’s a very difficult undertaking and the further fact that forecasting accuracy is nearly impossible. There are managers who forecast data not just for the quarter but for the complete year.
In this situation, it’s typical to end up with forecasted numbers that miss the mark by a sizable margin. Most sales managers find themselves in a familiar situation: running around in a postmortem panic over why their numbers are off.
But instead of making an effort to get to the bottom of why the forecast was bad, the process of same forecasting predicament repeats quarter over quarter. How to improve the sales forecasting then?
3 tips to improve sales forecasting
This exercise of sales forecasting numbers is a wasteful effort if you as manager fail to identify the reasons behind bad numbers. What is causing the bad forecasting? How to really improve on this and if at all you have to forecast how to make sure you are not like the weatherman who predicts a sunny day when actually it is raining! There are many ways to improve forecast, but the top 3 we have narrowed down are listed below,
Make sure your data is genuine
There are a lot of times the first piece of data to forecast comes from CRM systems or marketing provided data. Unfortunately CRM data many a time may be missing or outdated or even inaccurate. Now relying blindly on these data can easily skew your forecasts.
To rely on CRM first, you will have to understand how the CRM data is captured. How many inputs are being fed to CRM and how updated it is.
You will have to direct your team to engage in data input as a best practice. Make sure everyone’s populating the fields of the complete sales pipeline. Productivity data matches field performance.
Unless you can confidently say that your CRM data is most up to date and you rely only on CRM for all activities, do not use the data to forecast. You will have to build a significant margin of error if you want to use CRM data.
Making forecasts too rosy
As Sales Manager, being aspirational is a given. So you want to be an optimist to the core. This trait will make most managers do not understand the current reality. Instead of seeing what is on the ground, most managers put too many ambitious forecasts and pray that things will happen by chance. This is something can be avoidable easily.
You’re Betting on the Wrong Horse
Another common mistake while doing sales forecasting is keeping your hopes on few deals. Emotion can be the driving force sometimes—you will chasing wrong company. A prospect who is too good to you in talk but doesn’t want to sign the cheque. You have to again realistic here.
If sales pipeline not moving with any customer for foreseeing timeframe, then you have to drop that from your forecast. Instead of gut feel, Focus on data management. Always rank and prioritize opportunities for reps, teams, region, or product lines, taking into account things like close probability, momentum, size, and market trends.
As people like to say, “No one has a crystal ball.” But, forecasting can be thoughtful or it can be pure luck. You can always prepare yourself and with enough preparations when you make thoughtful, intelligent predictions, it’s more likely then you have chances to be close bull’s eye.