Sales leaders rely on forecasting techniques to achieve consistent revenue growth year on year. But sales forecasting can also help in making critical business decisions to set the course for this growth – from staffing and budgeting to resource investment, and future earnings. Sales leaders spend hundreds of hours thinking about sales forecasting techniques that lead toward predictable revenue and accurate, actionable data. The best sales forecasting techniques usually answer two simple questions: How much do we plan to sell? And when will we deliver those numbers?
As sales teams work on forecasts , unpredictable events can dramatically change them. But there are reliable techniques to help to navigate these changes. Here are 5 ways to start taking a more strategic approach to your forecasting challenges.
1. Be ready for your forecast to change in a flash
Economic uncertainty and unforeseen challenges can dramatically change your forecast. What you thought you knew about expected revenue growth can suddenly start looking very different.
When that happens, it’s okay to put your forecast aside. First and foremost, sales leaders and reps can focus on showing empathy and nurturing relationships with one another as well as with customers. By maintaining customer relationships in times of uncertainty, those relationships will help you grow again when the outlook improves.
Though forecasting is tough in uncertain environments, it’s also important to review and revise as needed. The forecast is a critical resource to plan for the months and years ahead. As soon as an extraordinary event hits, sales and finance leaders at your company will quickly want to know:
- How is your pipeline looking today?
- What are the best- and worst-case scenarios?
- How has the forecast changed from a week or a month ago?
It can really help to analyse this data by region, leader, rep, product, and more. To make this possible, reps need to have a stronger focus on keeping all their data up to date. This is easy with tools like Sales Cloud’s built-in Pipeline Inspection. On one screen, you can easily filter opportunities by team or time period and see the most recent activity. This helps your team know what’s happening now, what’s likely to happen next, and what data is missing.
2. Use these five simple questions to build forecasts
Before your sales forecasts can appropriately predict ‘how much’ and ‘when’, there are five important areas to consider: who, what, where, why, and how.
Here are a few key questions to help your sales teams build their forecasts:
- Who? Sales teams make forecasts based on their prospects. Depending whether the prospects are the decision makers or just influencers, the forecast will be more or less exact.
- What? Forecasts should be based on exactly what solutions you plan to sell. Base them on problems your prospects have voiced, which your company can uniquely solve.
- Where? In what location is the prospect making their buying decision, and where will they use the actual products? Sales teams see better accuracy when they get closer (at least for a visit) to the centre of the action.
- Why? Why is the prospect or existing customer considering new services? Is there a big event making them consider it now? Without a compelling reason, the deal may stall.
- How? How does this prospect make purchasing decisions? Taking into account how they’ve done it in the past can offer useful insights.
Some of these items are easier to get an understanding of than others. But it’s important to keep adjusting the data based on what’s happening in the field. A high-pressure scenario is not the time to give up on your forecast.
Some of these elements are plain facts, while others can involve speculation, without having all the information you need. The more you sell, the better you get at forecasts. That’s why it’s a balance of both art and science.
3. Use negative forecasting to highlight business risk
You can also use your forecast to assess current risk to your business – also called ‘negative forecasting’. For example, when a customer added a COVID-19 field in Sales Cloud to tag deals and see pandemic impact, they realised two key benefits:
- The sales team could expedite deals involving a customer needing a product related to COVID-19.
- The company could track deals lost or pushed due to the pandemic.
By doing negative forecasting to assess risk, your forecast can evolve with your business.
4. Create sales forecasts the entire company will use – not just the sales team
Every department relies on sales forecasts, because there isn’t a part of the organisation that is not affected when forecasts are off.
Sales forecasts help the entire business plan to ship products, pay for marketing, and hire employees. With accurate forecasts, a company can make better investments, like hiring new developers or opening a new sales office in a prime location.
But if forecasts are off, the company can face challenges not only in sales management but across all business functions – from pricing to product delivery, to customer service. Everyone relies on the sales organisation’s ability to pull off an accurate forecast. So don’t underestimate the importance of your forecast. Even when things change rapidly, tweak your guidance to help everyone make informed decisions.
5. Make technology the foundation of your sales forecasting techniques
Traditional methods of making predictions can’t compare to today’s sales forecasting tech. This is making sales operations look at very sophisticated and accurate tools to help sales leaders make better forecasting decisions.
In Salesforce’s own internal deployment of Sales Cloud, we forecast revenue by:
- Monitoring our entire business with a complete view of the total pipeline.
- Tracking our top performers. We look at which reps are on track to beat their targets with up-to-the-minute leaderboards.
- Forecasting for complex sales teams. Overlay Splits allows us to credit the right amounts to sales overlays by revenue, contract value, and more.
We also use artificial intelligence (also known as predictive analytics) to make our forecasts more accurate and our sales teams more efficient and productive. For instance, Sales Cloud Einstein Conversation Insights can track mentions of specific terms during sales calls, then map out trends. This helps managers reconfigure sales strategies to deliver the right products in the right way to prospects and customers.
A good sales forecasting technique helps you make better decisions about the future and plan for sales growth. Should you prepare for an uncertain period ahead? Or will it be a favourable time to keep driving revenue growth? Our blueprint for sales leaders shows how the right tools can help you predict, plan, grow and succeed. Get the blueprint to becoming a forecasting pro.
Forecast your way to revenue growth: A blueprint for sales leaders.
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This post originally appeared on the US version of the Salesforce blog.