sales forecasting

How to Remove Unnecessary Layers of Management in Your Sales Forecast

Sales forecasts are hard enough to get right. When your sales team is bogged down with redundant management layers, you face even greater difficulties. Use these four strategies to cut out the dead weight that gets in the way of an accurate report.

Forecast From the Bottom Up

Start by flipping your forecasting method, so you take a bottom-up approach. While top-down forecasting may have a place in some situations, the numbers are too disconnected from what’s actually happening on the front lines. Each management layer adds their own two cents into the report on a top-down process. Their information may not be based on quantifiable data, which makes it difficult to discover the objective truth about upcoming cash flow.

The bottom-up approach pays close attention to the deals in the pipeline, uses data to determine which are likely to close by the time the forecast is due, and accounts for the sales activities of the team. You look directly at your figures with real-world results, rather than starting with an aggregate view. When you implement this process, put safeguards in place to reduce errors when the sales reps estimate their potential deals. Otherwise, you may end up with incorrect results that make their way through each management layer for a compounding effect.

Flatten the Team Structure

Do you have more layers than an onion? Extra management does more harm than good when it comes to the forecast and many other aspects of the sales process. Go through the existing structure and ask yourself whether a particular management position actually has a purpose on the sales team. You may find that some roles add more complexity than they’re worth, especially if you end up with a lot of middle-management positions.

Every time the sales forecast moves from one layer to the next, it’s going to step away from the first-hand deal knowledge that the sales reps have. By the time it gets to you, it looks like a game of telephone gone wrong. Flatten the structure and only leave management in places where it’s doing an effective job at improving performance.

Make Reps Responsible for Their Own Forecast

Another way to get around management problems is by putting the sales forecast directly into the reps’ hands. When you make each salesperson accountable for this report, they’re going to take a hard look at anything they claim is going to close. If the deal seems like it’s going to fall through and make them look bad, they’ll be less likely to treat it with an optimistic viewpoint.

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The sales reps know the stage that the deal is at, the average amount of time that it takes to close, how close the decision-makers are to the final purchase and what steps are necessary to win the account. Another area where the sales rep has a better idea of the incoming revenue from an account is with upsells to current clients. They know the details of the original deal, information from the previous interactions and the solution provided at that time.

Using this data, the rep can figure out the most-likely upsells that the client needs. The increased deal value can play a significant part in shaping the forecast, plus existing clients have a better chance at conversion than a new prospect.

Override Only in Exceptional Circumstances

Limit sales forecast overrides as much as possible. If you or the sales managers are constantly adjusting the forecast provided by your reps, their confidence will suffer for it. You also run the risk of conflicting overrides, where multiple people in management will make changes to the original forecast.

Have Company-Wide Rules for Forecasting

A lack of consistency in forecasting rules creates many of these problems. You encounter the sales reps using one standard and managers using an entirely different standard. The forecast varies from person to person because no one’s on the same page.

Company-wide rules for forecasting are a must. The data that is included, the systems used to make the estimates and the procedure itself must be consistent at all levels. That way, you don’t get multiple versions of the same forecast, depending on which manager you’re talking to.

The other benefit to putting these rules in place is to quickly get new managers and reps up to speed about what they need to do to help with forecasting accuracy. The training is straightforward since they only need to learn it a single time. You can address any problem areas that come up over time, such as reps that fail to complete necessary data entry on the deals. Accurate record keeping is a must if you want to be able to look at a deal two months down the road and include it in a forecast.

You may face initial resistance into changing up the forecasting process. People will complain that “this is the way things are always done” or that their way is the best for their needs. Put a change management plan in place that brings everyone over to a standardized method without generating a lot of frustration or unproductive behavior from the team.

The forecasts that you present to the board have an easier time reflecting the reality of future cash flow when you’re working with a solid and tested process. Reducing your management layers and getting the remaining roles to work together on forecasts that are accurate and drive decision-making is an excellent way to improve shareholder confidence in your team. Don’t give everyone in your organization a chance to wipe 20 percent off the forecast.

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