Sales forecast is a very important indicator of business performance. Although, customer behaviour and current health of the marketplace often dominate sales success or failure but incorrect forecasting is also one of the very common reasons for failing to meet sales targets.
Proper sales forecasting method requires thorough anticipation and preparation which include accurate mapping of deals, identifying trends and interpreting customers correctly. A good sales forecast allows businesses to foresee changes in revenue flows and helps in keeping costs in accordance with earnings. It also brings attention to things that require action such as forthcoming deals, new opportunities, and hidden issues. However, a disconnect between sales forecast and the actuality of your sales environment can lead to a big failure.
Here are 7 sales forecasting mistakes that sales teams can make and how to avoid them:
Overlooking Sales History
Past sales performance is usually a perfect indicator of future sales results. Unless you have commenced a new business or launched a new product or reconfigured your sales and marketing strategies, there is no point ignoring the previous years’ sales performances. Gaining valuable insights from sales history such as customer buying trends, duration of the sales cycle and conversion rates are powerful indicators of future sales possibilities. Past sales performance definitely aids in refining your sales forecasting approach and building an accurate model that helps in anticipating the end results.
Depending on Instincts to Dictate Sales Forecast
Relying on gut feelings is not necessarily the trustworthy indicator of your sales performance. Feelings and intuitions, whether positive or negative, are ultimately guess work as they are not based on measurable data and genuine customer behaviour. Undoubtedly, there is no guarantee of a forecast to be fully accurate but predictions derived from trends and actual data will always outpace one based on emotional indicators and hunches.
Not Specifying and Managing your Sales Stages Efficiently
Sales Forecasting needs to have a pipeline with stages. Deals move through various stages from qualification to evaluation to closing. Sales teams must understand these stages clearly and know how to keep each stage filled with deals and also make sure that deals move from stage to stage on a regular basis. The problem occurs when leads do not move properly through these stages and you are not able to accurately predict the customer’s readiness to buy. Ensure that the sales pipeline doesn’t get clogged due to inefficiency in defining the stages meticulously. Make use of a good CRM system to avoid these circumstances and ensure that the forecasting process is more transparent and efficient.
Banking on Limited and Conflicting Data
Often, sales people depend on an array of spreadsheets and reports to track and assemble data. But sometimes they tend to miss important data points required for sales forecasting. Spreadsheets might provide conflicting indicators as they generate many versions of the reality and soon become out of date due to changing sales environment.
There is a need to take necessary actions to ensure that the data being referred to is correct and accurate. As spreadsheets are used by many people at a time, salespeople should collaborate with other team members to resolve any conflicts in data and identify any key metrics missing from the list.
Ideally, sales teams should have a forecast tool which is a real-time collaborative platform that takes into account changing circumstances and new developments. These tools help in automating and streamlining the analytical and forecasting processes.
Failing to Align Key Sales Metrics
The whole sales team and senior management have to be on the same page when it comes to key sales metrics. Otherwise, different teams will measure different metrics and evaluate sales performance based on different indicators and develop their own forecasts.
It is crucial to ensure that there is no misalignment and everybody is tuned to a decided set of metrics and measurement criteria.
Not Getting in touch with Decision Makers
If you are not in touch with a person who is in a position to make purchasing decisions, it is difficult to analyze how much time it will take to close the deal. You should be familiar with the timelines of your prospective customer and this will happen only when you involve yourself with the right people and be well-informed as to by when the deal is likely to get closed.
Customers are not bothered about your sales targets and pressures. So, instead of forcing your timelines on them, focus on your buyer’s needs and their timelines.
Assuming Discounts and Incentives will Quicken Buyer’s Decision
Offering heavy discounts might not end up buyers getting on your side. Price is not the only factor that buyers consider before deciding on a product or service. You need to get them deeper into the sales cycle and nurture them and never try to close the deal too early.
Avoiding these mistakes will definitely help you to have more confidence in your predictions and enhance the effectiveness of your sales forecast.