Sales Forecasting Is Not an Oxymoron

Author: 
Lisa Clark

Although extremely important in determining businesses’ ability to meet its revenue targets, surveys show that nearly 60 percent of sales forecasts are largely inaccurate. More troubling is that businesses might risk their stock value, reputation and well-being on forecasts derived from something slightly better than hunches. Data analytics and predictive algorithms are quickly reshaping how organizations can more accurately assess their ability to achieve revenue, but many of these approaches don’t solve for one of the most crucial variables: people.

Using data to understand what each sales rep is humanly capable of bringing to each sales interaction is the missing link for most sales organizations today. By capturing thousands of data points on how sales reps are doing in their job, identifying skills gaps and serving up targeted
coaching actions to managers, organizations can more accurately determine whether individuals, and the sales team
as a whole, are capable of driving buying decisions, positioning against the competition and winning deals.

The Trouble With Sales Forecasts
It’s no secret that a majority of sales forecasting is based on sales rep intuition, which in turn is dependent on how conservative or overzealous the salesperson may be. Once the numbers are delivered to the sales manager, he or she may further modify each of the sales reps’ predictions to account for a margin of error and come up with a combined forecast for the month, quarter or year. At this point, it’s pretty difficult to pinpoint where inaccuracies may stem from without going through each sales opportunity and reviewing its viability to close.

While sales forecasting typically takes into account rearview data and process metrics provided by CRM systems, it doesn’t account for future performance of the salespeople themselves as they move deals through the pipeline to close.

What the Human Side of Sales Metrics Can Reveal
Consider this scenario: A sales manager at ABC corporation is poring over updated forecasts for the next few quarters and finds that the numbers look good across every region.  All the new products appear to be paying off in all the right accounts. He suddenly sees a new metric on his CRM dashboard scoring the capabilities of his team — including product and market knowledge, selling skills and mastery of key messaging and processes. He notices that one region — where most of the company’s largest accounts are located — has some significant skills gaps relative to other regions, particularly in their discovery skills.

This sort of revelation would lower anyone’s confidence in a sales forecast. But it can also provide a real picture of sales team readiness, and the skills gaps he can proactively address to ensure that no revenue or relationships are at risk. Without data-driven insights about the true capabilities of their teams —  especially at scale — time-starved sales managers cannot know for sure who, what or how to coach before it’s too late.

Knowing where sales skills gaps may exist, sales managers can act early to close those gaps and ensure a more accurate forecast. Busy sales managers can gain proactive insights on sales rep proficiency ahead of any revenue surprises and, when correlated with the company’s CRM metrics (such as pipeline, win rate and quota achievement), such insights can provide a more informed view of a rep’s true potential. As data continues to transform most business functions, addressing the human factor will help organizations manage with greater insight, instead of hunches.  

Lisa Clark is vice president of marketing at Qstream.  She has 20 years of experience building high-value software companies, brands and market share.