This is how sales forecasting should work:
You not only have rich, complete, up-to-date information on all the leads in your pipeline, but also a thorough understanding of historic trends, market conditions, and any external factors that may impact revenue projections.
Assuming your sales forecasting method is ideal, you likely use your veteran experience and some cutting-edge technology to turn this data into solid predictions of future revenue. You use this to win your manager’s confidence, and the confidence of the rest of the company.
There’s just one problem: reality isn’t always ideal.
In the real world, you never start with a perfectly clean data set. In an ideal scenario, your salespeople always fill in the fields they should, but in reality that’s not always likely to happen. Sales processes vary, and sales forecasting tools aren’t always flexible enough to adapt to yours.
In spite of all this, you still have to create and deliver forecasts. Whether you manage sales for a startup and can still survive with a simple sales forecasting spreadsheet, or you head up a sales team for a much bigger team, there are a number of ways to cope with the unpredictable and not-so-ideal realities of sales forecasting.
We’ve compiled eight simple, practical steps that, when applied, will make accurate sales forecasting a lot easier than you’d expect.
1. Explain the ‘why’ to your team
You know just how vital it is that your team understands, and sticks to, your sales processes. This includes the manual (and often boring) admin task of recording all the data you need to make accurate forecasting possible.
But are you sure they know how important that is?
When clarifying your expectations to your sales team, always dive into the ‘why’ as well as the ‘what’ and the ‘how’. Your team is much more likely to follow procedures if they can see the value behind those tasks, and how it translates into better results for themselves and the company.
2. Make sales forecasting everybody’s problem
There’s one simple way to hammer home the importance of timely and accurate data entry: get your team actively involved in the sales forecasting process.
When your team members feel the frustration of forecasting with inadequate data first-hand, they’ll rapidly develop a deeper appreciation of the challenges you face and what they can do to help.
3. You need to lead by example
This one should be a no-brainer, but you’d be surprised how many sales leaders fail to hold themselves to the same high standards they expect from their team. You’d be less surprised by how quickly this reduces the diligence of the salespeople they’re managing.
The lesson is clear: be the shining example.
Always enter your own data correctly and in a timely manner. You’ll inspire others to follow your lead.
4. Expand your variety of sales forecasting input
Once your team is consistently entering data correctly, it’s time to take a closer look at the data you’re forecasting with.
Sales is complicated, and there are a broad range of factors that could impact your actual revenue extending far beyond entering data correctly. If your forecasts are going to be on the money, you need to monitor as many as of these factors as you can.
At the very least, you’ll want to consider the following stats when forecasting sales revenue:
- Your historic conversion rates
- Any seasonal differences in your sales
- Any current trends in your sales
- Recent developments in your industry
- Changes in the broader economic landscape
- Your product launch schedule
- Your marketing plans
- Don't forget to factor in holidays and vacations!
5. Get sales forecasting tools that actually help
You’ve gathered all the relevant data you can, but now you need to understand how all that information impacts your future sales revenue. Fortunately for you, there are some powerful tools that make this a lot simpler than it used to be.
Our sales CRM includes forecasting features designed to give you the insights you need to calculate future revenue. When using them you’ll be able to spot:
- Which deals have the highest value
- Which deals are closer to closing
- The number of deals that are likely to be closed during a certain time period
- A total-value summary including probabilities
When using Pipedrive’s forecasting dashboard, you can plot actual and potential revenue to track exactly how close your team is to hitting forecasted targets. Using this information, our software can project future revenue based on deal probability, which is the likelihood of a deal getting closed within a certain timeframe.
The more data you have, the more accurate your results. That’s why CRMs with built-in revenue forecasting tools that have access to a larger volume of data to work with produce superior forecasts to programs that don’t have access to that level of information.
6. Adapt your tools to suit your sales process
Whatever sales forecasting tool you choose you want it to be flexible, and here’s why.
Most forecasting tools will calculate your monthly sales revenue based on each deal’s expected close date. That’s all good, unless your business only gets paid when a product is delivered. If that’s the case, you’re going to be doing a lot of extra legwork to factor in the delay between closing the deal and receiving payment.
That’s why you should choose a customizable tool that allows you to create your own ‘delivery date’ field, and make this the basis of your forecasting calculations.
7. Extend your vision
Sales managers that use CRM-based forecasting tools have the advantage of a holistic overview of their current and future revenue.
The ability to instantly switch between individual salesperson pipeline views at any time allows you to see what each member of their sales team is seeing. This additional insight helps them pinpoint blocks in their pipeline and boost both actual and projected revenue.
8. Slice your way to success
To turn your raw data into an accurate sales forecast, you’ll also need to be able to slice it a number of different ways. Again, the right sales forecasting tool will make this task a lot easier. At the very least, it will help you organize and filter your sales information into clear chunks of data for specific analyses.
The ability to filter out deals by date started, for example, makes it possible to forecast the revenue coming from deals that may have stalled in the late stages.
Alternatively, you could also filter deals by sales rep. When one of your MVPs goes on vacation, you can use this feature to factor out her contribution when prepping next quarter’s forecasts.
Go for smarter sales forecasting
Pipedrive’s forecasting tools are designed for salespeople. Our CRM uses a large scope of data, from your team’s activities to how quickly deals move through your pipeline, to generate powerful and accurate revenue projections.