CEO Has Solution for Inaccurate Sales Forecast

Producing an accurate sales forecast seems like a problem that has existed since the beginning of time.  It impacts every business and despite this there has not been a good resolution to this nagging issue.  I remember as a sales executive dreading going into our board meetings to present the quarterly forecast because I knew that the numbers I was presenting were not rock solid. The forecast was a combination of fifty or more sales opportunities from five different regional managers across the country.  Of course I grilled them for days leading up to the big meeting, but despite this the forecast never ended up as accurate as I presented.  Why this happens is no secret. It’s called human intervention.

There is no magic formula for creating a monthly or quarterly forecast because every sales representative or manager views new business opportunities differently. What one person believes is a guaranteed win might be viewed as questionable by someone else, but I can tell you this. Going into a board meeting with a forecast that is more often wrong than right does not bode well when you are trying to keep your job. This provided me with a good incentive to do something about it.

I came up with a clever way to improve the situation using an excel spreadsheet with two columns, “F” and “U”.  I know what you are thinking, but stay with me here. The “F” was for forecasted in concrete, meaning I guarantee this business is going to happen. The “U” was for upside meaning I will not forecast it 100 percent, but we have a good chance of winning some of the deals in this column.  This really helped, but it was not until I became the president of a CRM solution provider that I was able to really address this problem not only for myself, but for customers as well.

At the new firm the sales team was like any other. Some experienced people, a few with 2-3 years in the business and a few just starting out.  I knew right then and there that I would have the same challenge I have had for more than a decade. But this time I had a CRM product that was designed to automate and streamline the sales process and a development team that I could direct to fix this problem once and for all.  So that’s what we did.

We created an “automated business process” that ranked and color coded each new business opportunity based on a set of qualification criteria built right into the CRM software.  The criteria or questions included things like; do they have a critical need for our solution, what is the time frame for their decision, do they have a proper budget to purchase our products or services, and are we dealing with the economic buyer. What this did for the company was to ensure that every new business opportunity was being qualified based on the company’s criteria and not the gut instinct of the sales representative.  The questions were designed for our business but can be tailored to any business environment. Finally I could rely on a forecast that was based on a real facts versus one provided by a sales representative or manager who was trying to impress me with how many deals they had in their pipeline.

The screen shot below highlights what I am referring to.  Without drilling into any of the opportunities I know from the color coding that the ones coded red are our best new business opportunities based on the criteria I have established in the CRM system.  The yellow ones are promising, but would never make the forecast and the ones coded blue are in the beginning of the sales cycle.

Lead Rating, Account Ranking

The results of this simple, but clever feature have been impressive and continue to provide substantial value to our company and our customers that utilize our solution.  Here’s the value realized.

The rating system has ensured that our sales team is focused on the most promising new business opportunities based on the company’s criteria and not their gut instinct.

Those rated as ‘not highly qualified’ are placed in an automated drip marketing program so that they are nurtured by the system on a monthly or quarterly basis.

Management can see a snapshot of the most promising new business opportunities based on the color coding and can take immediate action to help close them.

The accuracy of our monthly and quarterly forecast has improved substantially because only those opportunities rated as highly qualified and properly vetted as ‘deals we can win’ end up on the forecast.

If you are frustrated with the inaccuracy of your monthly or quarterly forecast, you can try the “F” and “U” methodology described above or give us a call and we will address this problem with our top rated CRM software.

About the author:

Larry Caretsky is the president of Commence Corporation, a provider of Customer Relationship Management software (CRM) and consulting services for sales automation, marketing SEO and customer service.  He is considered an expert in the CRM sector and was recently voted as one of the Top 40 inspirational leaders in sales and lead management.   He has written numerous articles and an e-book about CRM that are available on the company’s web site at commence.com.

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