Q1 is over and a strong indication of how the remainder of 2022 will unfold. Sales bookings are the starting point for predictable and sustained revenue performance, thus, having a consistent forecasting and pipeline process allows executives to adequately drive business objectives aligned to revenue growth targets.
While SalesTech and AI capabilities can certainly help identify and predict forecast and pipeline accuracy, solidifying the fact base, operations, and management of the forecast and pipeline remains critical before implementation of any commercial tools.
Four Suggestions to Improve Forecast Accuracy
- Establish consistent definitions. Lacking defined and delineated forecast categories, most companies suffer from inconsistent categorization. What is a “Commit” deal to one sales manager is a “Pipeline” to another. It is therefore important to categorize opportunities with consistency.
- Set the forecast cadence. Top companies develop a cadence with pipeline calls mixed between forecast calls to allow management to keep an eye on the future. Towards the end of the quarter, when the urgency to hit the plan increases, companies focus on forecasts.
- Set the forecast call agenda. There are four components here:
- Overview: Current state, how the sales leader is tracking against plan, sales reps are under/over performing against plan.
- Deal Review: Inspect most critical deals to validate the dollar amount, forecast category and close date.
- Risk/Remediation: Evaluate opportunities that look inaccurate to help the revenue team maintain data hygiene, creating opportunities for coaching and mitigating controllable risks.
- Smart Actions: Actions or direction given during a forecast call should be logged and distributed, then referenced at the start of the next call to close outstanding activities.
- Forecast Calculation. Review the method used to calculate your sales forecast and if it has historically identified accurate patterns. Does this method accurately account for the size and number of deals plus sales cycle length? Are there areas for improvement by incorporating different methodologies beyond conversion rates?
With disciplined actions by the sales organization, maintaining an accurate forecast helps the sales leader identify trends and provides transparency into future bookings and revenue ultimately supporting operating plans and investment models. The sales leader can drive these disciplines, avoid a potential scramble for data, and have the availability to communicate what is happening in the business from a sales perspective to the CEO and stakeholders at any given time—not just during a QBR.
Next week, SBI will continue with recommendations on how to improve sales pipeline management and later in the quarter, provide a comprehensive guide for sales leaders.
