sales forecast

5 Ways to Find the Gaps in Your Sales Forecast Before Your CEO Does

If your sales team is falling short again and again when it comes to making their number, it’s because you don’t know about the gaps that exist in your sales forecast on time. Your CEO may set overly ambitious targets, but as a sales leader, you have an obligation to set the appropriate expectations in the run-up to the end of the month or quarter – and to meet those expectations.

A gap in your sales forecast is a difference between what a team or rep is forecasting and what you can reasonably expect them to close. Identifying gaps early on is important because it gives you time to put plans in place to backfill the pipeline. After all, you can’t fix a problem if you don’t know about it.

Here are five ways to find out if you do.

1. Have Regular, One-on-one Meetings with Your Reps

You should be having individual meetings at regular intervals with your sales reps whether you believe there’s a gap in your pipeline or not. One-on-one meetings are a valuable way to connect with your employees and provide effective coaching.

They also enable you to sense-check individual deals to ensure that your reps are following the process and have engaged the right influencers and decision makers.

However, one-on-one meetings have an additional value: they help you keep an ear to the ground. If there’s a gap in your sales pipeline and your sales reps are aware of it, they’ll be the first ones to let you know.

2. Understand Your True Sales Cycle Length

The longer your sales cycle is, the earlier you need to know about gaps in your pipeline. However, sales reps and managers are often unsure about how long their average sales cycle is, or even what exactly constitutes a sales cycle in the first place.

Sales cycle length is the time between when you first qualify a prospect and when you eventually close the deal. Being aware of the length of your sales cycle is knowing when deals are going to come in. It can also help you weed deals out of your forecast.

For example, if your typical sales cycle is four months long but the deals in your pipeline are but a few weeks old, you probably can’t count on them for this quarter. On the other hand, if the deals in your pipeline are all over six months old, they’re probably dead and have no chance of closing.

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If your reps don’t understand or know your sales cycle length, educate them. Show them how to exclude the under-developed and zombie deals from the forecast and you’ll know sooner if you’re falling short.

3. Know How Long Each Step in Your Sales Process Should Take

You may already have a well-defined, formal sales process in place, but still no concept of how long each step should take you. Without staying on top of this, you often won’t realize you have a gap until it’s too late.

For example, if a prospect has been in the evaluation stage for twice as long as the average, the deal might be dead. If this happens too much, you could end up without enough quality deals left in the pipeline to reach your numbers.

When interacting with a new prospect, your sales reps should ask them to commit to a timeline for the transaction based on your team’s experience with previous deals. Maintaining rigor in your sales process and tracking the average times for each stage will highlight gaps earlier and help you avoid last minute freak-outs.

4. Understand Pipeline Coverage Down to the Sales Rep

Your pipeline coverage—the ratio of the amount of business in your pipeline to your sales target—is another important metric. The traditional wisdom is that you should have at least three times the amount of your quota in your pipeline, although this will depend on your own team’s win rates and sales cycle length.

If your reps don’t already know how to calculate pipeline coverage, teach them how to do it for themselves. This will help them understand whether they have enough deals of their own to meet their personal goals and will alert everyone well in advance if they need to hustle to drum up some more business.

5. Build Monthly Milestones Into Your Quarterly Plan

The question of whether to have monthly or quarterly sales quotas is an old one, and everyone has a different opinion. Tracking monthly is more useful to understanding the trend lines of your business, especially if you are selling to small or medium size businesses. Tracking quarterly may be more appropriate if you have a long sales cycle as well as a large average deal size.

However, if you decide to use a quarterly system, you should also subdivide each quarter into months with their own milestones attached. For example, you could set a target to get to 20% of your quota in the first month of the quarter and 50% in the second.

This will help increase accountability and prevent your reps from trying to squeeze all of your deals into the last month of the quarter. If you miss your number in the first month, this is an indicator that gaps exist in the longer term forecast.

Final Thoughts

The value of being rigorous with pipeline management and forecasting is that you can find the gaps in your forecast while there is still time to fix them. This early warning system is one way to ensure you deliver on the commitments you are making to your CEO, board, and investors.

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