The Top Four Challenges in Sales Forecasting—and How to Right Them

Last updated: 01-28-2020

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The Top Four Challenges in Sales Forecasting—and How to Right Them

For sales leaders, it seems forecast accuracy is as elusive as the white whale. Miller Heiman Group research finds that fewer than 20% of sales organizations have forecast accuracy of 75% or greater, which causes plenty of trouble when it comes to predicting sales performance and meeting revenue goals.

Yet there’s significant payoff to getting it right: Sales organizations that leverage a formal and structured review process increase their win rates of forecasted deals by 25% versus those that take a less formal approach.

In the new Sales Operations & Technology Report, Miller Heiman Group researchers identified the greatest challenges that sales organizations face in forecast accuracy. Read on to learn about the four most prominent challenges and the sales operations best practices that help you address them.

This classic challenge stems from sellers who rely on gut feelings about an opportunity’s possibility, rather than objective data. But as the old saw goes, almost only counts in horseshoes and hand grenades—and that’s why more than 40% of sales operations leaders identified seller subjectivity as their greatest challenge to forecast accuracy.

While a seller’s instinct is an asset, it can’t be seen as a fully accurate source of truth when it comes to forecasting. Sellers are often too subjective on those deals that are close-but-not-quite-closed opportunities, particularly as they struggle with a lack of pipeline and increasingly limited time to sell.

What sales leaders can do: Invest in coaching, processes and technology—and bring them together. Sellers learn how to more objectively evaluate an opportunity when their managers coach them to evaluate opportunities based on prior experience, buyer roles and decision-making process, using accurate and current data.

Despite the prevalence of CRM in sales organizations—more than 94% of companies use it—many sellers see entering data into it as an administrative task that takes away from selling. This data causes more than short-term pain for current deals. It causes long-term challenges because it prevents sales organizations from having historic information to feed predictive patterns. Only a little more than 25% of sales operations leaders indicated that they had a sufficient set of tools to supplement CRM functionality.

What sales leaders can do: Employ a data strategy. By investing in a documented plan to manage and use data as a sales asset, sales leadership puts an emphasis on ensuring data quality and process and system integration. Show sellers why keeping their data up to date matters, invest in making sure it’s accurate and then find a tool to connect it to show how past performance can apply to current opportunities.

Sales teams don’t lack for investment in technology. On average, sales organizations routinely use more than 10 sales technology tools with a plan to add more than four in the next year.

The challenge in sales tech comes more from a lack of planning and integration. Nearly 30% of survey participants indicated that their sales technology stack integrated closely with all of its applications, including CRM. Roughly the same percentage believed that their sales tech stack seamlessly supported a seller’s daily routine.

What sales leaders can do: Integrating technology tools to work together seamlessly requires time, effort and resources. This is a case where you need to go slow to go fast. By bringing together the right resources and following a structured plan for implementing sales tools—along with a data strategy and an enablement plan—sales organizations can make sure that their CRM and other critical tools play nicely together and lead to better performance.

Sales managers report spending twice as much time on forecasting and internal reporting as they do on coaching salespeople—yet more than 30% of our study respondents indicated that sales management rigor is one of the major challenges to forecasting.

This is where the challenges we’ve laid out here culminate. Sales managers cope with seller subjectivity and coaching them through it, inaccurate data that makes predicting patterns impossible and technology tools that don’t work together. That’s a difficult base upon which to build an accurate forecast and a successful, rigorous sales process to underpin it. But sales managers can also take the lead in modeling sales operations best practices to show sellers a better, more consistent approach by implementing a formal cadence for forecast review, investing in data strategy and being strategic with technology.

What sales leaders can do: Work with sales managers to determine where they may struggle to put rigor into the forecasting process. Help them define a cadence for forecast reviews—not just between leaders and sales managers, but between managers and sellers. Define expectations and develop a plan to improve data quality. Finally, invest in enablement, giving them structure around the process, the technology they need to use and the schedule they need to follow, making it a repeatable behavior rather than an initiative.

An accurate sales forecast is a science as well as an art. But it doesn’t have to be complicated: by meeting these four major challenges head on, you’ll equip your frontline sellers, managers and the operations team that supports them with the tools they need for success.

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