Sales teams may perform actions that can have a negative impact on the sales pipeline and revenue forecasts. Here are four common ones.
In this article:
- Reps Make Mistakes – A Lot of Them
- The Four Bad Behaviors That Mess Up Sales Pipeline and Forecasting
- Inaccurate Sales Forecasting Costs Companies Millions
- How Artificial Intelligence Can Help the Sales Pipeline Management and Forecasting
Sales Pipeline | Get Accurate Revenue Forecasts by Avoiding These Bad Behaviors
Reps Make Mistakes – A Lot of Them
Sales teams can make actions that can impact the sales pipeline in a negative way. The sales forecasting process is riddled with errors in most organizations, whether human errors or the lack of predictability in the marketplace.
Around 79% of sales organizations miss their forecasting mark by 10% or more, according to SiriusDecisions data. In turn, they don’t reach their targeted sales goals. What we like to call human “errors” are often poor habits of sales reps or an entire sales team. Some of these occur repeatedly throughout the sales cycle.
One habit, in particular, is the end-of-the-month rush in sales, which can cost companies millions. It’s so widespread a customer now waits until the end of the month to buy a product. They know they have a chance to get a discount from a sales rep desperate to close a deal.
Data shows stakeholders are increasingly looking to invest in companies that are good at producing predictable and sustainable growth.
Sales leaders need to get used to handing over more accurate revenue projections.
The Four Bad Behaviors That Mess Up Sales Pipeline and Forecasting
There will be factors that influence your revenue projections outside of your control. These include the growth of the economy, the state of the industry, and the production costs. Some sales rep behaviors also play a part in inaccurate revenue forecasts.
Here are a few of the bad sales rep tendencies you need to cull to make forecasting more predictable and increase revenue:
1. Pipeline Stuffing
People in charge of lead generation and management stuff the sales pipeline with opportunities at the end of the month. It is to make sure they become high performers. Studies show that on the last day of the month, sales reps triple the number of opportunities they have in the pipeline. They also make many more calls to prospects. It’s a form of procrastinating and then panicking before your deadline.
2. Sandbagging Deals
There are different ways to describe the sales process. Two of the most popular are sales funnel and sales pipeline. Both can illustrate the buyer’s journey, but they do have notable differences.
A pipeline creates a visual on where in the sales pipeline stages the sellers and prospects are. Depending on the stage, they may be qualified leads or sales-ready leads.
Other reps might keep good opportunities from moving into the next stage in the pipeline in the current quarter. They will eventually move them into the next to make sure they make quota.
This might help them in the short term, but long-term, it paints a distorted picture of how the company is actually doing. This can have repercussions on how it can obtain financing or hand out compensation.
3. Overestimating Deal Size
Sales reps are notoriously optimistic. Hey, you have to be to work in this profession. Most of the time, they will overestimate how good sales opportunities really are. This leads them to input inaccurate numbers on the deals they have. They end up being disappointed at the end of the quarter due to not meeting their sales metrics.
4. Underestimating Sales Opportunities
Other times, they might simply pass up good opportunities. They follow their gut and intuition rather than the predictive scores. It often happens when they don’t have all the information about the factors that influence their deals or their sales performance.
Predictive sales tools that tap into crowdsourced data can change this. They can analyze billions of data points in an instant. They can send reps alerts in real time on internal factors that influence their deals. These can be past transactions and their outcomes, as well as changes in account information. They can also add information on external factors. These are weather, traffic, stock information, company acquisitions, and mergers.
Inaccurate Sales Forecasting Costs Companies Millions
Out of all these pitfalls of forecasting, opportunity stuffing at the end of the month is the most common. It is also the most toxic for accurate sales forecasting.
Sales reps are under the pressure of performance review calls, and this means they will either:
- Scramble to work harder than they did the whole month (and as a result, their closed won rates fall by nearly half)
- Try to push any deal over the finish line at all costs to increase their numbers, giving away discounts in the process (this leads to a median drop in the deal size of 34.5%)
The results are inflated sales pipelines and inaccurate forecasts. Overall, this lowers the confidence in the ability of the team to produce reliable financial projections.
How Artificial Intelligence Can Help the Sales Pipeline Management and Forecasting
New predictive sales tools powered by artificial intelligence (AI) is just one type of technology sales managers can use to avoid bad sales rep behaviors. AI can dramatically enhance human judgment when it comes to sales pipeline management and forecasting.
AI sales systems can analyze data from the company’s CRM software, as well as the external data and crowdsourced information, to reach more accurate conclusions about the following:
- What has changed in the pipeline and how can this impact deals?
- Which deals will close and which are at risk, and how do you to focus only on what matters?
- Who are the sales top performers, and how can you coach others to success?
To err is human, but some mistakes may be costlier than the others. They can hurt the pipeline velocity and conversion rate, among others. Sales managers can explore using an AI-powered sales pipeline platform. This tool can help ensure the reps avoid the above-mentioned behaviors.
Do you know of other sales behaviors that can hurt the sales pipeline? Let us know in the comments section below.
Editor’s Note: This article was published on July 16, 2018, and has been updated for quality and relevancy.