3 Steps to More Accurate Sales Forecasting

Matt Sunshine
Matt Sunshine



Emotion doesn’t have much place in financial statements or management reports. So why is it so firmly entrenched in sales forecasting?

During my 25 years in sales and sales consulting, I’ve seen reps base their forecasts off their emotional state countless times. Ask a rep who just had a fantastic phone call to report on their forecast, and I’ll bet the numbers will be pretty rosy. On the other hand, a rep who has just had a terrible interaction is going to have a much darker outlook.

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Other times, the forecasting process comes down to sales managers asking their reps to go around the room and say what business they feel 80% positive will close in a given timeframe. But what does “80% positive” mean? The results are going to be drastically different from person to person, and day to day.

Too often, sales forecasting is based on little more than gut feeling and wishful thinking, which leads to inaccurate reports. And inaccuracy is the enemy of good decision-making.

I often liken managing sales forecasts to balancing your personal checkbook. It’s hard to know whether you should buy that new car or book that vacation if you don’t have a firm grip on how much money you’ll be bringing in next month. If you go ahead and buy the car and then take a pay cut, your budget is in trouble. But if you don’t buy the car and you come into some unexpected cash next month, you might’ve missed out on a good deal.

In the agency world, accurate sales forecasting is particularly salient for staffing. If the forecast says three new clients will be signing on next month, the owner will probably hire new employees or make other personnel adjustments. If those clients don’t materialize, the business now has too much overhead and not enough revenue. On the other hand, if new clients are brought on without notice, service could suffer due to understaffing.

The reason many sales forecasts fall short is clear: too much gut feel, not enough data. At this year’s INBOUND conference, I’ll be speaking about how to tip the scales the other way with three tweaks. Here’s a preview.

1) Select the best prospects to get the best outcomes.

Simply calling on everybody and anybody doesn’t work. Identify your best targets, and go after them.

But this is easier said than done. How can you figure out which opportunities you should be pursuing? I recommend developing an Ideal Customer Profile, which covers five aspects:

  • Dollar potential. Does the prospect have enough money to spend what it takes to be successful? Note: this is not the same as simply having a marketing budget. Dig deeper to truly assess their viability from a monetary perspective.
  • Access and credibility. Does your firm have access to a decision maker? If so, will that person see your agency as credible?
  • Value-add. Does the prospect appreciate the value of your service for their money, or are they simply looking for the lowest price?
  • Leverage. Will this prospect open doors for the agency, in terms of getting into a new segment or leading to additional business in the future?
  • Personal conviction. Does the firm have a deeper, more personal connection with the prospect? Does the prospect seem like an enjoyable person to do business with?

Go one step further and compare each deal in your pipeline to previous deals that have closed. This kind of "relative forecasting" will help you gauge not only whether a deal is a good fit, but if based on historical factors it's likely to close.

2) Slow down the proposal to speed up the sale.

It sounds counterintuitive, but let me explain. I find that salespeople like to get proposals out as quickly as possible in order to look good to their managers. But issuing a proposal too soon results in a response of “we’ll think about it” more often than not. And no salesperson wants to hear that -- I’ve never heard of any sales rep being paid on pending business.

So before you rush to put together a proposal, pump the brakes. Ask a few more questions about the prospect’s needs. Give your prospect a homework assignment to complete such as a questionnaire or brief write-up of projects they’ve done to learn more about their background. Put together a few concepts and float them to the prospect to see if your vision matches theirs.

There shouldn’t be any surprises in your final proposal. Aim to get enough feedback and participation from the prospect throughout the sales process that they’re ready to close as soon you send the proposal.

3) Have your salespeople ask themselves three questions about every pending deal.

Ask yourself or your reps these three questions the exact same way, every time: 

  • Has the prospect already seen and agreed to everything in the proposal?
  • Can you make a list of reasons why doing business with your agency would be good for the prospect?
  • What are the reasons the prospect might reject the proposal, or ask for time to think it over?

The answer to the first two questions should be yes. If they’re not, then it’s not the right time to present your proposal.

The purpose of the final question is to identify potential stumbling blocks and come up with solutions before you’re face to face with the client. When it comes to objections, preparation is critical.

I’ve seen too many agencies fail not because of poor service, but because of bad sales forecasting practices. Don’t let your talent and vision go to waste. Reform your forecasting like your business depends on it, because in many ways, it does.

Want to dive deeper into each of these three practices and learn how to apply them at your company? Attend my session at INBOUND on Thursday morning. Hope to see you there.

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