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Seven Ways to Improve Your Sales Forecasting

Business becomes much more enjoyable when you can predict what your sales and profit margins will be. The problem is sales forecasts are usually less reliable than predicting the weather. Mark Denning, CPA and Author of  Drive Your Business to Financial Success  states in his book, The key variables with the highest risk and level of difficulty to forecast are revenue and gross margin.”  These are two areas your sales team plays a big role in setting and achieving. Rather than use a crystal ball, here are seven ways to have 20/20 vision with your sales forecasting.

It all starts with being real. Find a healthy balance between stretching yourself to grow and being honest about your resources, capabilities and follow-through record.  Too often sales people are asked to plug in unrealistic numbers into a spreadsheet to help a sales manager or owner look good in a meeting. If you keep it real, your sales people will respond when you ask them to stretch.

Make sure you have the resources to meet the forecast. I was privileged to watch a team of 30 great people move their forecast attainment from 8% to 92% in one year. The ownership of the company invested in infrastructure improvements to help the team be their best. Instead of working hard to make up for poor systems and products, the energy went into growing the business. Ownership wanted higher growth and realized part of being real was helping people with what they needed.  Do your sales people have the tools like CRM, smart phones, or tablets? Is the communication and systems between support departments flowing smoothly? Are your products and delivery resulting in referrals or customer service tickets?

Don’t leave it all up to the sales team, get other departments involved in sales forecasting. The last point made was about having the resources to attain your forecast. By getting more departments involved in the sales forecasting process you might discover what resources need to be added or changed to be on target. You’ll also gain more buy-in from support departments to help sales meet the goal.

Are sales people afraid to be honest if things are slow? This is a killer to forecasts. Honesty helps you make the right adjustments in your tactics so you can achieve the forecast.  If people believe they’ll get belittled, you may hear more about a big deal they are working on that someday should close. The someday that never arrives.  This is where coaching with backbone and heart proves very useful. Don’t let people get away with giving up on their goal, but listen and coach them into how they can improve. Sometimes they might need support through marketing or service, as well as a better effort on their part. The main point is to believe in your sales people and allow them to tell you “bad” news without repercussions.

Is your sales process one that is being practiced by all sales people? When you can add more predictability to how sales people are working, the easier it is to manage performance. You don’t need to create sales robots without decision-making ability. I would suggest you have general milestones (sales steps and stages) and confirmations of buyer commitment that serve as indicators of a more qualified buyer.  If you’re still basing your forecasting on how your sales people “feel” about the deal…well, you know where that leads.

Make sure your CRM is designed well for your sales process and business so sales people will find value in keeping the data current. This is where your forecasting reports come from and as they say, “Garbage in, garbage out.” The CRM can be a tool that adds accountability and a real time status of where you stand against your forecast today and in the future.  In addition, it’s a management and marketing tool to help sales people close more business. If it’s more of a burden, you might consider looking at how you are using it and also examine if you have the right system. Things are very affordable today, especially if you’re growing sales. My personal favorite for most small businesses today is Zoho CRM and Google Apps as your email management system. The two together allow for customization and most importantly incredible integration to do work in the CRM from within your email.

Make your goals and forecasts important to sales. Keep the forecast and results in front of everyone on a weekly or at least a monthly basis. When you recognize someone for sales attainment, tie it back to how they are doing regarding their forecast.

When your sales team becomes one that is counted on to meet the sales forecast, budgeting and planning becomes so much easier. Why not try these ideas out and see if you can improve your sales forecasting vision to 20/20.

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