3 Sales Forecasting Mistakes That Could Cost You Big!
Whether you’re a Salesperson, consultant or a sales manager coaching a team, or and individual rep trying to assess your pipeline, you should be using data to drive your sales forecasting.
But how accurate are your sales forecasts?
Unfortunately, many forecasts are based off a gut instinct or an emotional attachment to a deal.
Rather than relying on their feeling that they have a 90% chance of closing the deal, sales professionals should strive to be data-driven in their jobs. They should look at historical data and be able to say, “Of all leads that become opportunities, only 50% of those will close,” and refer to an objective set of variables that indicate the chance of each individual sale to be made.
This data often lives in our CRM (Customer Relationship Management) software. If you don’t have that data it's likely that you are not using a CRM. Sales leaders around the world recommend using a CRM for this alone.
If you are already doing so, using the data in your CRM based on each stage to determine average likelihood that a person will proceed to the next stage. This way you will eliminate as much guesswork as possible and het one stel closer ta a data driven sales forecasting process. You can use that data that you generated to forecast what the likelihood of closing is for each stage of your sales process.
The challenge lies not in creating an accurate sales forecast but in creating a defined sales process, properly qualifying leads and actually collecting and managing the data.
These three activities are the bedrock upon which forecasting is built, and if you’re making any of the three mistakes below, your ability to accurately forecast will be impacted in a serious way. Here’s how to address each problem.
1) Your sales process ins’t clearly defined.
A defined process that sales professionals have a set of measurable criteria they can refer to when advancing deals through the stages of the sales process. Without defined criteria, reps may prematurely move a deal to the next stage in the sales process. ate the very least, they’ll each rely on their own set of criteria to determine when a deal is ready to be moved forward or not, resulting in an inconsistent and inaccurate forecast.
2) You don’t have proper qualification criteria for each stage of the process.
Each step of the sales process should have a clear qualification criteria to move a lead to the next stage. Without a proper qualification framework, reps may move deals through the sales process and realise in the final stages that the lead isn’t qualified to buy. By accurately qualifying lead, reps know where they are in the buyer’s process and know the type of conversation to have with them.
By having that defined sales process and clear qualification methodology, the data you collect will be more reliable to use for forecasting.
3) Your data isn’t reliable.
Your sales team is eager to demo the product. Each appointment the complete is assumed to automatically be an opportunity because they spoke to the lead. Because of that, they move to the next stage of demoing the product. After the demo, the rep realised that the person isn’t ready to buy and still considering other options. Imagine if all your reps were doing that. Your sales pipeline would look terrible.
It would look like a lot of people were becoming opportunities and getting demos, but few were closing. It would make you think the problem lies in the demo stage. In reality, the problem is that far too many appointments are being marked as opportunities.
Define your sales process and implement a proper qualification method, and your data will be much more useful for forecasting.