Around 79% of organizations miss their revenue targets by 10% or more, according to Sirius Decisions data. This despite the fact that sales reps spend around 2.5 hours a week on sales forecasting. Sales leaders can spend four hours each week just gathering data for their revenue calls. That’s a lot of time spent on just reading the tea leaves about a company’s future.
Sales leaders need to get tactical about how they run their pipeline calls and how they forecast revenue. There’s a key trend in sales to expect predictability of revenue results.
Forecasting With Data, Not Your Gut
Ideally, accurate forecasts are the result of a balance between human judgement and data insights. However, in most sales teams, forecasts are largely guided by intuition. Only 46.9% of deals close as forecasted (CSO Insights).
Data and science is the answer to sales leaders’ questions about revenue forecasting.
InsideSales.com has created a guide for sales forecasting that will help increase the accuracy of revenue projections and guide them towards a more accurate result. You can download “The 5 Secrets of Sales Forecasting Every Sales Leader Must Know”, to understand what factors influence forecasting and how to kee them in check.
In this white paper we discuss the following:
How to Identify and Promote the Right Rep Behaviors
Some reps are sandbaggers. Others wear rose-colored glasses. And a lot of reps stuff anything into their pipeline just to get their managers and sales operations off their backs.
Bad behaviors like these keep bad deals in pipeline 3X longer than good deals. Sales reps and managers must take a more data-driven approach to evaluating their people and processes.
How to Measure Pipeline the Right Way
Organizations often mistake a full pipeline for a healthy one. This can be a costly approach, because sales pipelines are often filled with deals that are not real or winnable. Reps end up losing over $200,000 a year in lost revenue chasing bad opportunities.
How to Capture and Understand Complex Pipeline Changes
Pipeline change can determine whether or not a deal will close, and what to forecast. Most sales managers hold weekly pipeline review calls with reps, but they can waste up to four hours just assembling data for analysis in Excel.
The more time managers spend evaluating the what and why of pipeline changes, the better equipped they’ll be at understanding deal progression and gaining confidence into committed deals.
Evaluating Data in Historical Context
Forecast accuracy is highly dependent not only on understanding what winnable deals look like but also on the path those deals follow to close. Historical data captures these insights, but most organizations don’t know where to look or they don’t account for the kinds of process and model changes a typical business experiences.
As a result, 79% of sales organizations miss their forecasts by more than 10%. Knowing what to look for and accounting for business changes will sharpen your forecasts.
Don’t Forget About Transactional and Newly Won Deals
Transactional and newly won deals (deals not currently in your pipeline, but which are likely to open and close within the period) can represent more than 30% of your forecasted number at the beginning of a period. For businesses with highly transactional sales cycles, it can actually reach to over 80%.
In order to eliminate the need for large judgmental plugs, adopt a model to more accurately account for gaps within your forecast at the beginning of the period.
The days of pure gut feel selling are over. Successful sellers today augment their intuition and experience with data supplied by predictive sales systems. We are working in the golden age of selling, and we have access to more data, insights and technology than ever before.
By leveraging these advances in practical ways, and by keeping up with industry trends and best practices, sales leaders and reps are able generate exponential revenue growth.
InsideSales.com can power your sales organization with the right tools to do this effectively. Just one example is the Predictive Pipeline software for pipeline management and sales forecasting. By using Predictive Pipeline and its machine learning capabilities, you can increase your sales forecasting accuracy by up to 30 percent.
Download the 5 Secrets to Sales Forecasting white paper to learn how to solve these pipeline management challenges and get to your goal faster.