2 Simple Steps to Improve Sales Forecasting AccuracyNearly everyone in sales management would agree that the ability to accurately forecast sales results on a timely basis is the Holy Grail of sales management. Accurate sales forecasting is the culmination of all preceding activities and allows for enhanced cash flow, proper resource allocation, improved product development, sales trends, and investor/board credibility.
The ability to accurately forecast sales is key to improving sales performance. In fact, the recent CSO Insights 2013 Sales Management Optimization Study demonstrates the sales performance improvement when sales managers are measured and compensated on forecast accuracy versus the performance when forecast accuracy is not considered or seen as a critical sales manager function:
In the quest for the Holy Grail, most organizations have, or are currently looking to install CRM systems that help track and report on sales pipeline activity. While these systems have helped to build a reporting infrastructure that helps to view and organize sales activities, sales leaders and managers continue to be frustrated with the quality of the output, especially as it relates to the accuracy of the sales forecast.
So how does sales leadership improve forecasting accuracy? Offered below are two simple steps to mitigate the frustration:
Step One: Define the information that drives client buying decisions
The foundation for forecasting accuracy lies in the information we elicit from our clients during the qualifying step of the sales process. You see quite simply, information defines opportunity. More often than not, sales are either won or lost by the information we gather while qualifying. The more meaningful the information is in helping us determine what, why, and how the client will make a buying decision, the better our ability to predict sales success.
Since client information is so critical to accurate sales forecasting, it is imperative that sales leadership define a clear and standard set of information requirements that will consistently determine when a client is well qualified.
The identification and implementation of information requirements is a prerequisite for step two.
Step Two: Integrate your information requirements and CRM application
Once information requirements are in place sales leaders can further leverage their investment in CRM by integrating those requirements into their core CRM application. The integration of information requirements into CRM provides the following benefits:
• It is a visual reminder to reps of what information is required
• It allows for a single view of the client
• It is a standard repository of client information that can then be analyzed for new product introductions and product life cycle management
• It allows sales managers to coach against a standard when coaching the qualifying step of the sales process
• It allows the sales managers to understand which reps needs improvement on how to qualify accounts
And perhaps most importantly:
• It improves forecasting accuracy since sales forecasts are based on a consistent set of information requirements, not the opinion of the seller on sales probability. In fact, the CRM application can assign a probability of sale based on the completion of the information requirements, which can be weighted, and can also alert reps to areas that need further development to increase the probability of sale.
Does your organization have a standard set of information requirements based on what, why and how the client will buy? Does your CRM application generate sales probability or are your reps assigning the probability themselves?
If you would like to learn more about the emerging sector of CRM2.0 space – integrating predictive sales management analytics with core CRM capabilities, contact AXIOM Sales Force Development at 1-800-933-8503 or outside of US call +1-972-469-2450.
More Business articles from Business 2 Community: