Best Practices for Sales Forecasting
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Sales forecasting is an essential exercise for businesses. The practice of sales forecasting helps leaders identify issues while there is still time to address them, allowing for the opportunity to correct course before deals are lost and targets are missed.
At the strategic level, accurate forecasts are critical to understand budget needs, distribute resources, and plan for growth through things like hiring plans. On a more tactical level, sales forecasts are also important for managing individual rep performance and can be a strong tool to motivate sellers into action.
While sales forecasting is necessary, it is also difficult to get right. In fact, a recent study from CSO Insights found that the average win rate for forecasted deals is just under half at 47%.
As a function that is responsible for making it as easy as possible for sales reps to close deals, sales enablement has an opportunity to partner with the sales org to improve sales forecasting accuracy. Here are four best practices for sales enablement to help impact sales forecasting.
1. Standardize sales processes
A standard sales process provides a common framework and consistent terminology across the business so that everyone uses the same language in every interaction with a customer. This includes defining each stage of the buyer’s journey for your organization so that every customer-facing role knows what it means for a customer to be at stage one versus stage two and so on.
When looking at their own pipeline, sales reps tend to be very optimistic. CSO Insights found that 47% think that sales reps are too subjective about close possibilities. A simple, standardized sales process minimizes gray area between stages and can help sales reps more accurately predict the likelihood of their deals closing and report on that progress.
“Sometimes reps will say, ‘it’s pending’ or ‘it’s close to closing’, things that are very wishy-washy,” said Brian Trautschold, chief operations officer at Ambition. “You want it to be simple, where they can say, ‘legal is reviewing it, so that’s the stage it’s in.’”
And most importantly, the sales process needs to be realistic and reflective of how the customer actually interacts with the specific organization. Often, companies implement sales processes based on their own views rather than how the customer thinks. Sales enablement needs to approach the sales process through a customer-centric lens and ensure it is effective in engaging customers and meeting them where they are.
2. Partner with frontline managers to enforce accountability
Sales managers are responsible for keeping track of deals across their entire teams. Often, this occurs in the form of things like pipeline reviews during a weekly one-on-one with each rep. While it is important for sales managers to understand the status of deals at a high-level, it is even more essential for them to be embedded in the day-to-day activities of sales reps to coach reps and enforce accountability.
“Most of the people that are out there in sales management roles have been doing sales long enough that they are able to see how the tea leaves lie, but what they’re not as good at is staying up on the day-to-day things when it comes to helping their reps,” said Joe Booth, senior director of sales enablement at SecureAuth.
Sales enablement can partner with sales managers to help them better support their teams on deals to improve performance. For example, set aside time on a regular basis to discuss sales enablement with frontline managers, including what the initiatives are for the week, what the priorities are, and why they are priorities.
Also, consider creating a dashboard to depict how their teams are trending compared to one another, and where some of their individual contributors might be struggling. This will help frontline managers know what to check in with their sales reps on and activities to pay attention to as it relates to the deals in their pipeline.
“Just giving them bite-size chunks and helping them have visibility is going to help them be more effective,” said Booth.
3. Streamline internal processes
Part of making it easier for sales reps to close deals comes from training and coaching, but it also comes from uncovering where bottlenecks exist in internal processes to boost productivity. When administrative processes like logging data into the CRM are difficult or time-consuming, sales reps are more likely to take shortcuts or avoid it altogether, meaning data can lose its integrity.
In sales, time is money. Sales enablement can help sales reps be more productive by streamlining processes and giving them time back to spend selling. In turn, sales reps will have the capacity to move more deals along faster, and more data on those deals will make it into systems to track and use for forecasting.
“You have to be able to go internally and look from a really strong business perspective and say, what are the operational efficiencies that we can figure out now that are going to make it easier for our sales reps to get their jobs done,” said Booth. “And ultimately that’s going to help with things like deal velocity, deal size, and also just overall morale when it comes to your sales team because you’re not sitting around waiting or scratching your head on why everything takes so long.”
4. Participate in sales pipeline meetings
Sales enablement must have a seat at the table in terms of goal setting and forecasting with the sales team in order to establish the right priorities that will have the largest impact.
“If sales enablement is hearing second-hand that we’re missing our number…they’re not able to contribute to how those priorities get established and measured,” said Edwin Castillo, global sales and customer enablement at 8×8. “The more engaged sales enablement is with prioritization, with the identification of gaps that a company has in terms of trying to get deals across the finish line, as well as which products in which geographies are challenging, the better they’re able to help the sales force execute against those.”
Sales enablement needs to hear sales leaders talk through deal health first-hand in order to have a solid understanding of the underlying symptoms causing deals to slip or close faster than what was forecasted.
By having a seat at the table, sales enablement can also ensure that the forecast is based on both qualitative and quantitative evidence. Often, forecast reviews turn into anecdotal stories of all the things that went well the previous week. While this qualitative information is important, sales enablement should also help ensure that forecasting is data-driven by bringing insights on sales performance, proficiency, and productivity.
The impact of sales forecasting trickles into almost every area of the business, from budgeting and resource planning to hiring and scaling strategies. As such, it’s an integral part of managing a business.
Making accurate sales forecasts is important for every sales team, and sales enablement can play a key role in helping to ensure that accuracy. By implementing a standard sales process, partnering with frontline managers to enforce accountability, streamlining internal processes, and taking a seat at the table in pipeline meetings, sales enablement can help improve sales forecasting and impact sales performance as a result.