Accurate forecasting requires doing the fundamentals really well
Here at Infer, we speak to sales and revenue leaders all the time. Each and every one of them shares acute pains when it comes to their forecasting accuracy (or lack of)
Being an elite forecaster doesn’t make you an elite sales organisation but to be an elite sales org you need to be an elite forecaster. The general rule of thumb to be considered a good forecasting org is to have accurate visibility 1 deal cycle into the future. So if your avg deal cycle is 90 days, then you should have an accurate projection of what you will close 90 days from now.
Now, this does raise the obvious question of “Senior leadership make plans that affect the future way beyond that 90 day deal cycle, so how can they do so effectively without proper visibility into cash flow etc”
But first, in order to get to one deal out forecast accuracy here are some of the things we think most businesses should be doing.
- Understand your demographics. What are the biggest driving factors when it comes to predicting deal length. Think about size of company, industry, role and seniority of champion etc. Understand how each segment performs
- Understand your behavioural information. Think about factors such as, how fast do leads that come from webinar XYZ close, how fast do opportunities close when they show this level of intent on calls, emails, on the trial etc
- Use a qualification framework such as MEDDICC, MEDDPICCR etc. Reps should play their part in forecasting. It’s also a critical skill development piece.
- Look at seasonality data to assess future months. Do you perform better during particular times of the year?
- Conduct deal reviews to assess gaps and risks in opportunities.
Ultimately, being good at forecasting one deal cycle out is about doing the fundamentals really well. Only when you get great at forecasting in the near term can the same logic be applied to further into the future.
CRM’s will be able to track deal stages, report on time in each stage and elements of the qualification framework not filled in, but in order to assess your data you will likely need an analytical resource.
Such a resource will also be able to surface deals that are at risk of slipping or being lost that perhaps the reps haven't noticed. It can be really hard as a rep or a revenue leader to be on top of all deals and assess all data within each deal. The human brain isn’t designed for such large computations!
The very best forecasting tools will give you a fairly accurate reading of revenue far into the future. They’ll be customisable to your business, not black box and the models used will constantly learn from your data, becoming more accurate over time.
Get in touch with the Infer team to see how the answers to your forecasting challenges might be lying in your own data: https://getinfer.io/book-demo/
