What Should You Do When Sales Forecasting And Velocity Don’t Match?
Sales forecasting is often a funny exercise. Perhaps managers know to view forecasted sales with a grain of salt, but it’s difficult to make decisions based on data you don’t trust.
How untrustworthy are your sales forecasts? CSO Insights conducted a study of more than 1,200 companies worldwide and found that only 45.7 percent of forecasted deals actually close. From their blog: “What happened to the rest of the forecast? It wound up in the win column of a competitor or it faded away into a no decision.”
Rather than wallow in that frightening statistic, let’s address the relevant question:
How do you better align sales forecasting and velocity to develop a more accurate picture of if (and when) your deals will close?
The key is to understand your prospects and the buyer journey. The more you know about your prospects, the better.
Good or bad, salespeople are optimistic. But CSO Insights indicates that they might be a tad overly optimistic. While your sales conversations may be great, that doesn’t necessarily mean your prospects are sales-ready or even going to sign on your dotted line. With the rising number of decision-makers in every deal, you must realize the new level of collaboration taking place.
In addition, salespeople tend to be overly optimistic with an absence of data. The more you measure, the clearer the picture of your sales cycle is.
Given this knowledge, it’s also important to understand the order of milestones and conversions in your sales process. Analyze which milestones are the best indicators of closing deals. The more you know about how your prospects navigate the buyer journey, the more accurate you’re going to be at sales forecasting.
Your next logical question might be: “How do I improve my sales velocity?” You won’t find success if you view velocity as something that’s controllable in the short term. It’s a marathon, not a sprint.
Instead of focusing on the end of the quarter when it rolls around, take a proactive approach. Make sure your buyers are able to easily and efficiently do what they need to do – for example, share one of your sales assets with a decision-maker. With the number of decision-makers along for the ride, coordinate their involvement in the process and monitor their engagement in the process.
Again, the more you know, the better.
At the end of the day, this is about a culture shift as much as anything else. If you start thinking like the tortoise, you’re bound to build sustainable success.
The Tellwise Nutshell (TTN): Sales forecasting is a necessary, but oft-inaccurate activity. When your sales velocity doesn’t match what you forecasted, you must take a high-level look at your analysis. Measure as much as possible and understand everything there is to know about your prospects and the buyer journey. With a long-term mindset, you’re more apt to sustain the success you build.
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