“Sales forecasting is easy!” — No sales executive, ever

Part art, part science, sales forecasting is an incredibly complex and nuanced business process. Like the best sports plays, forecasting must be carefully choreographed to ensure seamless success. After hearing thousands of sales organizations detail their forecasting challenges, I can tell you that everyone does it a bit differently. But often, they share the same mistakes.

And even if you avoid these common pitfalls, 100% accuracy is never guaranteed. In my experience, structured planning and a solid sales forecasting process can bring sales teams close to that target. Though still a projection, a sales forecast can be made infinitely more predictable, which makes the job of managing much simpler.

Here are my tips for avoiding common issues and delivering an accurate sales forecast:

The idea that sales forecasting is important only for late-stage and publicly traded companies is false. Sales forecasting should be done on day one of your go-to-market execution plan, not 90 days or six months in. A good forecast shows the entire business — not just sales management — where to allocate resources and it drives the operational rhythm of the company. If you wait too long to forecast, your business may veer from that direction.

Everyone on the sales team should be focused on narrowing the gap between commit and goal. No later than one week into a new quarter, the best organizations ask their sales teams — from execs to managers to reps — to commit to a forecast. Sales managers then revisit that forecasting discussion every week in their regular 1-on-1 meetings with reps.

Most sales organizations strive to build a sales process that maps to the buyer’s process, and in turn corresponds to forecast categories. Problems arise when salespeople get too excited and commit to the deal based on “happy ear” comments. Clear, strict sales processes and definitions can help avoid this issue. Implementing a sales methodology such as MEDDIC will complement the sales process and clarify the forecast. What are the key attributes that qualify a deal as “commit”? Deal-level definitions within the forecast need to be clear and specific as well.

Each minute spent putting data into spreadsheets is a minute lost on identifying forecast risks and how to mitigate them. Complicated, stale CRM data — along with manual processes and disjointed spreadsheets — will make forecasts not only inaccurate but also a terrible chore. By simplifying the collection of forecast data, the best sales organizations empower their sales managers to inspect and analyze the quality of activity. Many technology tools and apps are available for automating, connecting, and keeping your data fresh for up-to-the-minute forecast reviews.

Sales managers can easily fall prey to placing too much weight on reps’ verbal deal-progress updates — especially given that reps are closest to the action. But reps can be biased and mistaken. The best sales managers inspect the data that shows their reps’ activity and deal attributes to determine the accuracy of those calls. Over time, managers will discern which forecast commitments to trust and which to probe or readjust.  

Somrat Niyogi is the VP of business development at Clari. Before joining Clari, Somrat was the co-founder and CEO of both Stitch, a mobile-first sales productivity platform, as well as Miso, an early pioneer in the social TV space. At Miso, he led the overall vision of the company through multiple rounds of financing with top-tier investors, including Google Ventures, Hearst, and Khosla Ventures. Niyogi has worked at early-stage startups most of his career in various roles, including business development, sales, and product. Niyogi started his career at Salesforce in 2003. Somrat graduated with a BS in computer science at the University of Texas at Austin.

Each minute spent putting data into spreadsheets is a minute lost on identifying forecast risks and how to mitigate them.”

Somrat Niyogi | Vice President of Business Development, Clari
 
 
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