Traditionally, sales forecasting has been done by the sales manager after lengthy consultation with sales reps.
The sales reps are providing information based on their own estimations of what is in their sales pipelines and what they think they can close. The sales manager is then modifying that data (probably on the conservative side) and then creating a forecast which they then forward onto company management.
While it may be “how it”s always been done,” this methodology is risky at best. There is actually a way to make this a much more winning game—from the salespeople on up.
Here are the three pillars of a successful sales forecasting:
It Starts With Sales Reps
Who is in the best position to understand the potential sales in a particular sales rep”s pipeline and what they are worth? Of course, it”s that sales rep. The sales manager understands that, and for that reason is constantly consulting the salesperson in order to create sales forecasts.
But the sales rep could do much better than taking an educated guess and, truth be told, would much rather. It would only be in the sales rep”s best interest to fully be on top of his or sales, and to be able to accurately predict them as well.
A sales rep can do this—if equipped with the right analytical tools. A leading-edge CRM software provides a quick, easy view of a sales rep”s pipeline, taking into account that rep”s closing ratio, rating of each sale as to its value, average length of time from lead to close and other key factors.
Providing a sales rep with such functionality actually makes way for a potential organizational shift, one which benefits the entire company. A sales rep can then produce his or her own sales forecasts and send them along to the sales manager. Instead of the sales manager gathering what amounts to guesswork and producing a hopeful forecast, suddenly the sales rep is armed with useful, accurate data that the sales manager can put into a combined forecast and send on.
At the sales level, salespeople can operate far more confidently and accurately. A lack of leads can be spotted and rectified rapidly. Needed actions can be isolated and taken much more quickly than was earlier possible. It puts salespeople directly in control of their own sales.
Sales Manager Change
This organizational shift means considerable benefit for the rest of the company in addition to the reps. An organization is only as strong as its foundation—and for a company that’s engaged in selling, the sales reps are the cornerstones of that foundation. If sales reps are strong, confident, accurate and successful, so will that organization be.
In such a scenario, the sales manager becomes more of a coach. Since the sales manager is not constantly having to worry about gathering data for forecasts, help can be provided in the area of selling technique, tagging, collateral materials and much more. Since the bookkeeping and sales forecasting aspect of the job is well taken care of, it becomes a game of helping sales reps become more skillful—which can only result in improved closing ratios.
Executives
What of others in the company?
At the top level, corporate executives count on sales forecasts to inform their decisions regarding the direction of the company, corporate and marketing strategy, and where resources should be invested. Making such crucial decisions based on potentially inaccurate sales forecasts is the stuff of ulcers for an executive—and for good reason.
But with accurate sales forecasting in place, executives can make such decisions knowing there’s a much more positive chance of success. It means strong and confident strides for the company and everyone in it.
Sales forecasting and analytics are an integral factor in company success—and we will be taking this up further in this series of articles.
