How to fix your sales forecasting process

A misleading sales forecast impacts all kinds of end-of-quarter decisions, and resources can be wildly misallocated. Running some reports in your CRM system can identify areas of the forecast that are at risk.

Sales forecasting is a surprisingly risky thing, which is ironic since its whole purpose is to identify risk areas in time to apply corrective action.  While everyone agrees that an accurate forecast would be a good thing, there are a surprising number of incentives – financial and political – to forecast with too much optimism. Want to know the definition of impossible?  A sales forecast that is too conservative.

So how do you spot areas of the forecast that are at risk?  There are reports you can run in your CRM that will give you some strong clues:

  • Deals that are past their projected “close date”
  • Deals that have been in the pipeline longer than 150% of your average sales cycle
  • Big deals that haven’t been updated in the last 30 days (unless there’s a specific “on-hold” flag that indicates a good reason for it)
  • Deals with a ridiculously low “amount” value, or a large-ish value that is a nice, neat round number
  • Deals that are supposed to be far along in your pipeline process but there isn’t much detail (e.g., no “opportunity products” or “order items” defined)
  • Deals that are supposed to be in or near the negotiation stage, but there’s no quote, no draft contract, or similar artifacts of a live deal
  • Deals that have little in the way of emails, meeting notes, or phone calls
  • A deal that represents >50% of the rep’s target for the year
  • Reps who have a total pipeline that is within a percent or two of their target or the latest “top down” mandated number for their region

Now, many of these red flags will appear for reps who just hate keeping the CRM system up to date.  There’s an easy answer for this: tell them they can avoid a lot of scrutiny from their manager if they just populated the CRM with halfway-realistic data. Sure, they’ll complain about how long data entry takes…but nobody wants to sit in more meetings with their manager.

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