Five Ways to Ensure You’re Better at Sales Forecasting than Picking Your NCAA Bracket

By Michael Lock

When picking my NCAA bracket last week in the ESPN challenge, I consulted the ‘experts’ and relied on gut feel. I watched two hours of ESPN analyst opinion, read USA Today online, and called on my 30 years of experience watching March Madness.

How’s that working out you ask? With my bracket, I’m currently in the 41st percentile. There are 11.4M people ahead of me! 11.4M people! That’s the entire population of the state of Ohio.

When forecasting, most salespeople apply these same principles, with equally bad results. How can you avoid finishing in the lower percentile in either of these instances?

Below are five proven steps I’ve used to set up a data-driven process to ensure that I’m better at forecasting than picking my NCAA brackets. Apply these best practices to your team to see immediate improvement:

1. Insist That Reps and Managers Meet EVERY Week to Review Pipeline

If you can only do one thing, do this! Regardless of the type of business you’re in, it’s imperative that reps meet with first line managers and review their entire pipeline. Anything else is sales management negligence.

This is harder than it sounds. Reps would prefer not to have a weekly accountability session. Many would prefer a more unstructured environment. Don’t let it happen. Insist on weekly rep to manager and manager to VP pipeline reviews sessions.

Also, these should not five-minute meetings where the rep calls his/her number. They should be meaningful discussions to review pipeline data, go over key deals, and track week over week pipeline changes.

2. Capture Key Deal Data on Every Deal in Your CRM

At a minimum four key data points should be captured, updated and reviewed every week: sales stage step, forecast category, deal amount, and next step. There are also likely other key data that should be universally captured – maybe industry or competitive data. Be aware that some CRM systems actually link sales step and forecast category and close percentage. Don’t allow that to happen. These are independent data variables.

Capturing this data can be important for several reasons. It can be used to assess the likeliness of the deal to close and make your forecast more accurate. More importantly, it can help you drive strategic sales actions to close the deal.

3. Implement a Forecasting System – Separate from Your CRM

Unfortunately, most CRM systems do not have strong forecasting modules. Even the most popular ones have the following shortcomings:

  • They are ‘single point in time,’ and do not maintain a history of the deal, so it’s often difficult to see what’s changed week to week
  • They do not provide flexibility in forecast category areas
  • They do not provide flexibly for reps and managers to input more complex forecasts and add negative of positive judgment to the forecast  
  • They generally do not allow analysis of the forecast and pipeline by segment, geography, product line, business segment, etc.

For these reasons, most formal forecasting processes live outside the CRM. When you have a small number of reps, you can write the forecast in a notebook (or on a napkin!). As companies grow, spreadsheets are typically used to keep a weekly log of forecasts and their changes. But the more complex businesses become, the more there is a need for a separate system.

If you have more than 20 reps, multiple products lines, different business segments, sales models, or international entities, then using a spreadsheet and data from single point in time CRM won’t cut it.

4. Analyze the Results

Anyone who has ever held the top sales job at a company knows that just “calling the number” is not enough. If the forecast is below quota, you need to figure it out quickly. If you’re trending above quota, you should be thinking about how you can get even more resources into the area of strength and grow even faster.

Unfortunately, most systems do not provide in-quarter visibility into the segments where you’re doing well or the areas in where you’re doing poorly. Most systems provide forecasts by geography, but have very limited visibility outside of that. If you follow steps 1-3 as outlined above, you will have much more data to analyze. Syncing CRM data from step 2 to your forecasting system, you’ll see forecast, deal, and pipeline changes, and easily perform historical analysis.

Companies that have gained competitive edge have started applying AI and machine learning to the huge pool of data they’ve collected.

5. Use Data-Driven Insights to Take Action

Most great sales leaders and salespeople are action oriented. I never worry too much that my team is working hard or taking initiative. But I do worry that they are working on the right things. Are they working deals that are a good fit for us or are they wasting time on deals that can’t close? Are they overworking deals in the pipeline that are likely going to close anyway? And most importantly, I always worry if they’re building enough pipeline for future quarters.

If you have a data-driven forecasting process in place, you can direct your sales management team to work on the right things, not just what’s most familiar to them. And better yet, if you’ve established the right sales forecasting systems and process, you can identify problem areas early in the quarter and take timely action. Most systems don’t alert you until it’s too late in the quarter to have any meaningful impact on results. Don’t be left with an ugly post mortem QBR where you’re forced to offer up justifications for the miss!

You’re on your own with your NCAA bracket, but follow these five steps to immediate accelerate sales growth. We’re living in a world of big data. Seize the advantages available to you and master forecasting and gain unprecedented business visibility.

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