Improving sales forecasting is critical for the long-term sustainability of any business. This is especially true at an agency, where the majority of expenses are tied to personnel. Forecasting requires you to have accurate information and a steady pipeline to make the best decisions for both immediate needs and long-term growth. That’s what drives sales performance and maximizes revenue potential. Your goal is to avoid what I call the curse of, “I have a good feeling about this one.”
The following outlines the first steps to take to start creating more accurate forecasts:
1. Be consistent, and track all of your pending business the exact same way.
Tracking information consistently is the only way you’ll be able to gauge results. But don’t just stop there. Analyze the results to help you predict outcomes in the future.
By consistently tracking the same information, you will see patterns form that will help improve your forecast accuracy. You should be tracking:
- Intro calls completed
- Discovery Questionnaires completed
- Demos conducted
- Pre-proposals presented
- Final Proposals delivered
2. Increase your closing percentage.
In other words, close more of your pending business. Nothing bolsters a forecast report better then making sure you close the deals you have presented. Below are three questions you can ask to ensure the deals close. If you can’t answer these, don’t even bother to forecast the revenue.
- Has the prospect already seen and agreed to everything that is in the proposal?
- Can you make a list of why the prospect should do the work you've proposed?
- What reasons might the prospect have to want to reconsider or say 'no' to your proposal?
3. Be a stickler for accurate information, and show your team your interest is in closing deals.
Often, when we think about forecasting, we are concerned with pending reports that are too big and unrealistic. If salespeople know you value a big pending report, they will work hard to show you they have “a lot out there.” But if they see that you care more about which deals are closing, they will start to become more honest about what’s really “out there.” Emphasize that you’re more interested in knowing how to predict revenue so salespeople don’t hold back information or inflate numbers. Have them share not only the deals they know will close but also everything they’re working on so that you don’t over forecast.
It is important to have reliable, current, and accurate information, as those are the cornerstones of accurate forecasts. Don’t settle for the “I’ve got a good feeling” list as that is never going to get you the predictability you need.
If you want to take sales forecasting to an even higher level of accuracy, you should invest in a sales forecasting tool such as the Pipeline Accelerator or another that is algorithm-based. These resources are proven to predict with more accuracy what business will close and when it will close. It will also give you insight into what information you are still missing that if obtained would increase your probability of closing. This takes you from managing with your “sales gut” to reliable sales data.