Five Things To Consider When Building Your Sales Forecast

Having an accurate forecast is one of the most important deliverables for any sales organization. It’s the guide for the company and it impacts teams across sales, finance, marketing and many others. Yet, many organizations struggle to build an accurate forecast. It’s not easy – it’s part art, part science and it takes a combination of people, processes and data to get it right.

We spend a lot of time with customers helping them to get their sales forecast accurate and communicated appropriately across teams. Here are a few considerations we talk about with customers.

Align Against Objectives

Strong sales leaders align their team behind the company’s objectives and rally the team to work together to meet those objectives. People need to know what their individual role is and why it is important to the team, the region and the company overall. That requires you to be transparent about the goals and how they link up with the broader objectives. The alignment doesn’t stop with the sales team. Rather you need to ensure that there is alignment across sales, operations, finance, marketing and even the product teams. Aligning the team requires ongoing conversations and the right technology to track sales data. To keep the team aligned you need to give them visibility into the progress against the goals. Sharing information in a publicly traded company is guided by certain rules, but it’s important to share as much as you can so the team knows how they are doing individually, how the region is doing and how the company is doing as a whole.

Define Your Sales Process

Most processes are either way too simple or too complex. The art of this is to build a process that works for your organization. First, define how reporting needs to work and how team members need to collaborate together. Part of that is time sequencing the activities clearly. If the sales forecast is due on a Monday, you need to have the latest numbers updated before your meeting. That way you go into the meeting with the most current information in order to drill into the details. Reporting also can’t be a full-time job for the sales team. It should flow out of the daily activities so that reps find it easy to follow. It’s up to you as the leader to hold the team accountable and instill in them the discipline to follow the sales process.

Create a Consistent Approach

Leaders often change the sales process and don’t always communicate it. That leads to confusion in the organization with some people doing things the new way while others are still using the old way. Sales leaders need to be engaged and clearly communicate and clarify the process so people are aligned on the goals.

Watch for Suspect Data

An accurate forecast requires accurate data. As a sales leader you need enough data to know what’s happened in the past, what is currently happening, as well as information about the future to set goals and objectives. Oftentimes the quality of the data is suspect because sales reps lack discipline in updating data about current deals, or worse, they’re sandbagging. You need insight into the opportunity lifecycle and information around when an opportunity was created, any changes such as an increase or decrease in the deal amount, and any upsell or cross sell opportunities. Inaccurate or incomplete information can lead to the wrong assumptions and the wrong sales forecast. As a leader, you need to set expectations with your team about sharing data on deals to ensure that information is posted promptly, deadlines aren’t missed and there are no conflicting priorities.

Invest in the Right Technology

Once you have the objectives and processes in place, it’s important you have the right technology to capture the data. The technology is the backbone of the sales forecast. Today, the best applications are cloud based and have mobile interfaces, making it easy for a sales rep to access and input data from on the road.

Creating and maintaining a sales forecast is a marathon; not a sprint. It’s not enough for a sales rep to do a good job updating their data one week or one quarter. Instead, they have to do it day in and day out. You need ongoing visibility into how people are doing to accurately maintain the sales forecast. No forecast or plan is ever 100 percent right. It’s the act of doing it that is important. It’s your experience, judgement and mastery of leading people that will get you to an accurate forecast. Refining that judgement and building the collective skills of the team will give you more confidence to set the forecast and hit the target.