Being one of the most crucial parts of the whole sales process, forecasting helps you to understand what amount of revenue your business is expected to generate in a certain period.
Without sales forecasting, you won’t be able to make proactive and well-informed decisions about the sales process. This allows you to see the issues impacting the sales quota before they even occur. Of course, it will help you to save some time and money!
Now, we want to share with you some tips on how to build more precise forecasts by relying on proven facts, not guesses.
- Use the right tools
You can choose from a huge variety of tools to build your forecasts and even combine these tools to gain the best results. For instance, salespeople use Spreadsheets, CRM or various combinations of CRM/Spreadsheets/business intelligence tools for creating forecasts.
But keep in mind that in our age of automation and AI, there are new, advanced tools available, and you can use them to make your forecasts more accurate, efficient, and connected. And all-in-one sales forecasting platforms like Revenue Grid bring a brand-new way of generating revenue with the high level of rigor and transparency that businesses expect.
Revenue Grid’s sales forecasting is based on real-time data and risk assessment:
- predict your sales in the future: forecasting is focused on complete sales data and AI insights that will help you to see where your sales are going;
- assess your risks: determine the amount of the committed forecast that is at risk right away. Find out why there’s a risk, how to mitigate it, and what your team should do at the moment;
- influence how your sales will play out: set up triggers to send notifications and alerts, sounding the alarm as soon as there are changes in any part of your forecast, like deals being pushed out or renewals being canceled;
- see what’s behind the trends: check out past and future periods, compare them, and find out what has changed. Investigate the patterns in your forecast changes and spot the reasons behind them.
- Discover your sales forecasting method
Company sales goals are the basis of the sales forecast. Of course, each team must constantly monitor the metrics for sales forecasting, but keep in mind that each team and company has its own, individual goals:
- Sales Forecasting by Total Revenue (TR) can be used both by small and large organizations that build their forecasts based on a single revenue number. For SaaS, for example, it’s annual recurring revenue. If the organization incorporates a subscription business model, the TR number includes net new ARR, renewals, cross-sell and upsell.
- Choose Sales Forecasting by Business Segment method if your business goal is to grow your customer footprint in a particular segment.
- Forecasting sales by Product is naturally used by more mature businesses that have multiple product lines. This method allows companies to account for each specific product or product line.
- Set up a sales process for the team
If your team does not adhere to the constant use of the same steps and stages, you have little chance of predicting the probability of an opportunity closing. To begin with, you should form a unified, structured, and well-documented sales process that each member of your team will use to convert prospects into buyers.
The sales process should also establish standardized definitions of leads, opportunities, and closing deals. All team members must agree on when and how they should count leads that enter and leave the sales funnel.
- Set team/individual quotas
When creating sales forecasts, it is very important to analyze the team’s and rep’s performance. Also, it is crucial to come to a common understanding of “success”. Discuss sales quotas with your executives and sales reps: these will become the baseline financial targets for comparison with your sales forecasts.
- Make sure all teams are there
Ideally, when it comes to customer and sales data, your CRM should be the main place where you get the data from to build your forecasts. Therefore, it is extremely important that all the necessary data is present in your CRM, and that all teams (even those that are not directly related to the sales process) are using it.
The advantage of CRM is that it can cover the requirements of various departments, making it easy for each team member to contribute to accurate sales forecast reporting. Actually, leading CRMs like Salesforce have lots of advantages and while you start using them, you just can imagine things going on without them, taking into account the fact that Salesforce pricing plans offer a good set of features for businesses.
- Keep you sales forecasts up to date
A lot can happen even in a year, and sales forecasting is tightly linked with the sales process of your company and should change along with it.
Any global changes in the company can affect the sales process, starting from the introduction of a new marketing direction and ending with a shift in company OKRs.
Therefore, it is very important that your forecasts remain relevant at all times. By updating them, you will always have the most accurate numbers and ensure the maximum efficiency of the corresponding sales process.
- Implement an efficient sales management system
The easiest way to forecast sales is to use an automated sales management system. Modern specialized software greatly simplifies sales chain management.
For example, it allows you to track every process along the way to the close, which will help you estimate the time it takes to close a deal and the level of income you can expect.
An advanced sales management system offers forecasting functionality to generate accurate forecasts in no time.