Every business would flounder without a steady stream of sales. And what sets top, high-performing businesses apart from all the rest is their ability to master their sales tactics. Not only are their strategies successful, but they’re consistent.
As the famous saying goes, ‘long-term consistency trumps short-term intensity.’ But delivering consistently isn’t that easy. With things like the changing economy, lack of demands, and budgetary restrictions, consistent sales pipelines can seem like a fairy tale. What makes sales a little more predictable, however, is accurate sales forecasting.
If you know what’s coming in the next month, you can set B2B goals that are both ambitious and achievable. You’ll also know how to beat those goals, as the process of forecasting itself reveals a team’s strengths and weaknesses.
Before we get ahead of ourselves, let’s dive deeper into what sales forecasting is.
What is Sales Forecasting?
In short, sales forecasting is predicting sales to help you boost your business efficiency and better allocate resources for the months to come.
Sales forecasting is quite important for small businesses in particular. They’re the most vulnerable to seasonality, change of the market trends, and new competitors in the area. Likewise, a big company gets the luxury of many variables canceling each other out. A small business, however, can be dramatically impacted by a single big deal that fails to go through.
Having a perfectly built sales pipeline gives you an edge over the competition and helps your company to adapt to any shifts early by developing revenue that’s predictable.
Here are some tips for accurate sales forecasting.
1. Rely on Data, Not Wishful Thinking
To forecast reliably you must consider what has happened in the past. That means you need to rely on hard data, not guesstimates or gut feelings.
To rely on this data, you need to be collecting it. Before you freak out over how to even go about doing that, rest assured that there are plenty of ways to measure sales success, as well as tools and software out there that can assist you, which brings us to our next tip.
2. Choose the Right Software
There’s plenty of forecasting software tools out there. But it’s up to you to choose the right software for your needs. You’ll want access to both qualitative and quantitative types of data so you can track the decrease or increase of performance numbers as well as why those increases or decreases are happening.
Another hallmark of good forecasting software is automation. Marketing and sales automation tools help track and store your data, eliminating the possibility of human error and thus making your forecasts more accurate.
3. Define Your Key Metrics
Aside from a lack of accurate data, many small businesses fail to forecast efficiently because they rely on outdated or vanity metrics.
A vanity metric is something that feels good but doesn’t lead to improvement. For that reason, you must become very specific about your sales KPIs and the kind of sales and marketing metrics you collect and use.
The formula is simple; a good sales performance metric is actionable, comparable, and is a rate or a ratio. That means you can use it to improve and measure progress by comparison.
4. Schedule a Weekly Forecasting Meeting
It’s important to meet with your sales team regularly to make sure you’re both on track with your goals and to gather any insight into what’s coming in in the following weeks. At the same time, pay close attention to any red flags that come out and can dramatically deviate your final numbers from the original forecast.
Your weekly meetings are crucial, as they help you identify issues before they become larger concerns, and they encourage your team to brainstorm ideas that can lead to improvements. Plus, they’re just a great way to get your teams aligned.
5. Manage Your Forecast Killers
Creating an accurate forecast isn’t just about collecting and interpreting data. It’s also about finding the red flags and taking them out before they have any measurable effect.
Some red flags include deals that have been in the pipeline for a long time and are experiencing stagnation or ones that missed their close dates multiple times. Since time kills sales, these are unlikely to progress, so identifying these red flags will allow you to be better prepared for future ones.
Big deals should be flagged too. Since they have a more significant impact on your final figures, you don’t want to rely on them to make up most of your forecast. Calling them out will help you get a bigger picture of what other deals you should be focusing on to help close the gap.
Other red flags include:
- Late forecasted closing dates, as these deals are likely to slip
- Lack of activity on a deal. The more dormant a deal is, the harder it is to revive it.
- Lead source. Look at where certain leads are coming from and if they’re a high-quality lead source or not.
- Buyer’s job title and if it indicates decision-maker status.
Once you consider these red flags, your forecast should be a lot more predictable.
Arm your sales strategy with a forecast that is both achievable and ambitious. You want to make sure you can hit your goals and create a healthy stride, but also continue to move forward and improve your numbers month over month.
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