Leveraging Technology to Improve Your Sales Forecast
From basic spreadsheets to CRM and SFA applications, there are myriad technologies designed to assist in creating a quality sales forecast. Regardless of what technology you use, it’s important to remember that it doesn’t just forecast for you; rather, it’s a tool that you can leverage to manage the forecasting process and, hopefully, improve your accuracy.
In order to help you better leverage forecasting technology, this post covers how those applications work, and some of the best practices for using them.
Most CRM/SFA applications work by allowing reps to track deals/opportunities on a page or form with fields for specific information. Those forms then feed into a database table that allows you to report on all of the deals in a spreadsheet format. You can think of the fields on each form as the column headers on the spreadsheet, and each deal as a row on the spread sheet.
For the purposes of forecasting, all you need to do is make sure the key pieces of information required for the forecast are included on the deal/opportunity form in your system. Then, as long as the reps are filling out the form for each deal, you should be able to easily run a report that spits out your forecast for the period. If your system is set up correctly with at least the basic fields required for forecasting, it should look something like this:
And, if your reps diligently fill out those forms for each of their deals, you should be able to easily run a report on all of the deals in the “Commit” and “Best Case” categories. Based on the probabilities, that will paint a very clear picture of the deals your reps are forecasting – and then some. By having those deals and relevant account level information in the system, you will also be able to look deeper into each rep’s pipeline and examine the deals that they may not be including in their forecast. The resulting report will look something like this:
Now, each rep can easily send this simple report via email, but that would require a lot of administrative work to put the reports together and consolidate them into one view. It would also require your reps to fill out the report and email it on a weekly basis. Even then, you would only have access to the forecast when the email is sent. On the other hand, if you had all of this information in your system, you could access it in real-time, any time, via a simple report like the one above.
From that report, you can see that in the March 2012 forecast, Tom is comitting to $26,500, with a best case of $44,700 (Commit + Best Case). You also know that Joe is comitting to $45,500. However, another critical piece of information is that Tom’s best case deal is still in the Discovery stage with 30% probability. Depending on the sales process, that may indicate a soft area in his forecast that you should discuss in the forecast meeting. Going back to Joe, you can see that his deal is in Technical Evaluation, so you may want check with your Sales Engineer to find out how that evaluation is going prior to the forecast review meeting with Joe.
The good news is that it isn’t as difficult to do that as it might sound. Once you have the data in your system, it’s really easy to run different reports to look at your forecast by rep, close date, deal size, or any other key field that you include on the deal form in your system. If you don’t already have your system set up to support your forecasting process, you should adjust it today. If your system is set up but you don’t have the data because people aren’t using it, that’s a different problem altogether.
One of the best practices for leveraging technology is having the leadership team using it, too. You have to set the example. If the VP of Sales and Sales Managers are not using the forecast reports in the systems, then the reps don’t have any motivation to put them in there. It will be double work to put them in the system and email them. A simple way to encourage good behavior is to institute this binary rule: “If it’s not in the system, it doesn’t exist.” Treat the system as reality. If a rep’s forecast is off on the system report, even if you know that it’s off because they are not putting the data in the system, ask them why their forecast is off, and don’t accept “I didn’t update the system” as an answer. Updating the system is as much a part of a rep’s job as forecasting their number.
For some great forecasting tips, check out OpenView’s eBook, “Sales Forecasts: A Question of Method, Not Magic.”