sales forecasting

3 Reasons Why Modern Sales Forecasting Starts With the Rep

Sales forecasting is an essential tool for many organizations. Forecasting makes it possible to make plans based on future cash flow. The business has the opportunity to make proactive changes rather than dealing with poor revenue visibility that could throw off a company’s growth.

Inaccurate sales forecasts are the bane of every leader in the organization. The last thing you want to deal with is an angry CEO who based most of their plans around revenue that doesn’t end up coming in like the forecast said it would.

While many factors can cause a prediction to go off the rails, one of the biggest issues is putting management in charge of the entire process. They’re too far removed from the front line to create a sales data foundation that is essential for putting together a sales forecast that comes close to the truth. Modern sales forecasting has to start with the rep.

Find Out When You’re Light on Pipeline

Your pipeline might seem healthy with a top-down view, but in reality, the amount of gaps makes it look like Swiss cheese. Overly optimistic sales managers may want to paint their team’s numbers in the best possible light. Everything they contribute to the forecast is dependent on best-case scenarios, rather than the most likely outcomes.

Sales reps may think they’re doing great but don’t realize that the team as a whole is lagging far behind expectations. They may push back a few deals here or there, assuming that it’s not a big deal in the grand scheme of things. Near the end of the quarter, they discover that everything is a lot worse off than expected. The sales rep has to scramble to try and make up for the numbers.

When the forecast starts with the sales rep, they’re paying much closer attention to what their pipeline looks like. If it’s light, they know well in advance and can proactively fix that problem before it requires the rep to try and rush deals to meet their sales quota. They also become more accountable for the deals that they report, with more thought put into the potential closing date and the deal size.

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Get Focused on the Must-Close Deals

Do you run into a lot of deals slipping into later quarters? The sales reps may not realize how much these slips throw off the overall numbers. Once they work on their own forecast, they see exactly what impact that has on the rest of their deals. They can focus their attention on the ones that must close before the end of the quarter.

Rather than spreading their attention to many prospects and accounts, they spend most of their time working on the deals that need the most attention. Sometimes this process involves the biggest deals, or they may favor those with a fast pace in the sales cycle. The sales reps start to recognize patterns with the deals that should be first on their closed list. Over time, they become effective at prioritizing their leads and optimizing the sales cycle for their particular style.

The pace of the deals begins to even out. You don’t see a lot of unpredictable ebbs and flows of revenue with the sales reps’ visibility into the pipeline. They have more insight into their sales efforts, as well as an understanding of what needs to close and when to best support the company’s growth efforts. While they might not be privy to the discussions that go on at the executive level when it comes to revenue, the team ends up with a good perspective on how well the company is succeeding at meeting its goals.

Front-Line Forecasting Develops Leaders

The discipline required to work on a sales forecast, react to changes in the pipeline and shift attention to the most promising deals ends up developing leaders among your sales reps.

The skills that you value most in effective managers start by putting sales reps in charge of their own forecasts. You see who can rise up to the challenge, those who truly stand out and the others who aren’t cut out to become leaders.

Many organizations struggle with retaining good people and bringing in sufficient leadership talent. This approach gives you the opportunity to kill two birds with one stone. You have sales reps excelling at their new responsibilities, and you can avoid a costly future recruitment cycle when it comes time for new managers to step into their roles.

During the weekly sales calls, pay attention to the reps who sound particularly confident in their numbers, as well as those who contribute valuable information to the phone conference. You gain insight into their strengths and weaknesses as part of the leadership evaluation.

If you make each of your sales reps into a skilled forecasting machine, they’ll quickly learn where in their own pipeline they need to focus their efforts. You also end up with a crop of leaders ready to step into the roles that open up as people retire, move upward or seek other opportunities outside the organization.

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