PART II: Sales Forecasting - 5 Best Practices for Improving Forecast Accuracy Table of Contents 01 An Accurate Sales Pipelines 02 Forecast Accuracy 03 Best Practices for Improving Sales Forecast Accuracy 04 Conclusion i alithya.com An Accurate Sales Pipelines Creating and maintaining an accurate sales pipeline is one of the top goals and responsibilities for any sales leader. Organizations count on their ability to accurately predict revenue so that it can be used to effectively manage operations, the supply chain, and even the market. Without it, it is likely that an organization will operate ineffectively, and the tenure of the sales leadership is always in question. If it’s strong and well-built, a sales pipeline means your company is likely to hit growth targets. However, building pipeline comes with its own unique set of challenges. Part one of this eBook series covers how to overcome three common pipelines challenges. The sales pipeline and forecast go hand in hand. Let’s dive into the forecasting aspect. 1 alithya.comalithya.com Forecast Accuracy While the sales pipeline consists of all opportunities at all stages in the sales cycle, the sales forecast is the salesperson’s prediction of which sales will close within a given time frame1. The main difference between the pipeline and the sales forecast is the prospect must have a need that the organization can address within budget and timeframe considerations to qualify for the sales forecast. There also must be a clear understanding and agreement about the “next step.” (e.g.: the proposal is to be reviewed with the decision maker; the budget process is clearly understood; the prospect has made a verbal commitment to buy.) Forecasting helps you to put things into perspective: to see the possibilities and challenges of the pipeline management and plan your further actions based on that. Accurate forecasting helps you to maintain full control of your pipeline and its management2. While sales forecasts use historical data to project future reality, the truth is most sales reps end up inflating their numbers to please their managers, even though these goals are often unattainable. As a result, reps and managers may spend hours contorting themselves to project a bright revenue future based on a sales pipeline that is only 25% accurate3. “Forecasting is the most comical thing that takes place in the sales force,” said Jason Jordan, partner at Vantage Point Performance Inc., a sales training company based in Charlottesville, Va., at the recent Inbound conference in Boston4. “We have historical data, but we refuse to use it. Even if I closed 25% of my deals last year, I say the likelihood to close new deals is 75%.” Poor forecasting methods are also a factor. According to the Sales Management Association, 74% of sales leaders believe their company’s sales forecasts are either only somewhat accurate or, in worst-case scenarios, not accurate at all. There are best practices to avoid the vicious cycle of overpromising and under delivering. 2 alithya.com BEST PRACTICES FOR IMPROVING SALES FORECAST ACCURACY 1 Enable sales reps with technology. Use tools like CRM and others to accurately forecast. 2 Training. Only 28% of companies in a recent Sales Management Association survey said they train sales reps. “If we don’t take the time to define an opportunity and train them on how to use the technology, then, to an extent, we kind of get what we deserve.” 3 Hold Sales Force Accountable for Forecasting. Accountability increases sales forecast accuracy by 26%. Accuracy is sometimes considered part of some companies’ compensation plan for sales reps. Forecasting is an administrative burden, but holding people accountable can improve accuracy. 4 Pipeline Management. According to Sales Management Association data, only 44% said they manage a pipeline effectively, and 43% said they aren’t adept at managing the pipeline. As a result, sales managers don’t have confidence in the results they discuss with their reps. 5 Have a Well-defined Forecasting Method. Most companies lack clearly defined terms for forecasting. According to data, only 42% of companies have a defined forecasting methodology. Part of the challenge with sales management is that managers get so caught up in tracking and monitoring their sales reps that they tend to forget about the customer on the other end. If reps focus on enabling the buying process, they can achieve greater success. The key is to recognize that the sales process mirrors the customer’s buying process. 32 alithya.comalithya.com Conclusion Sales pipeline and forecast accuracy can be tricky for any company. At the end of the day, you need to deliver simple to understand, actionable insights that are in context of the customer relationship. Stay tuned for the third guide in this series where we address how to focus and act on the right priorities within pipeline and forecasting, and take action with confidence. You can derive meaningful intelligence from large amounts of complex data to engage your customers in more personalized, effective ways through customer intelligence. ABOUT ALITHYA IS AN AWARD-WINNING MICROSOFT DYNAMICS PARTNER, WITH OVER 10 GLOBAL AND NATIONAL MICROSOFT AWARDS. WE HELP PROFESSIONAL SERVICE ALITHYA FIRMS IMPROVE THEIR CUSTOMER EXPERIENCE BY USING TECHNOLOGY TO EMPOWER THEIR TEAMS ACROSS SALES, SERVICE AND MARKETING. WE ALSO HAVE UNIQUE ADOPTION AND TRAINING SERVICES TO ENSURE YOUR FIRM UNDERSTANDS AND EMBRACES THE LATEST TECHNOLOGIES, ULTIMATELY PROVIDING IMPROVED LEVELS OF SERVICE FOR YOUR CUSTOMERS. 1 http://www.businessobserverfl.com/print/pipeline-vs.-forecast-whats-the- difference/ 2 https://www.superoffice.com/blog/sales-pipeline-management-tips 3 http://searchcrm.techtarget.com/definition/sales-pipeline 4 http://searchcrm.techtarget.com/news/450403192/Five-tips-to-boost-sales-reps- sales-forecast-accuracy C ON T AC T U S ALITHYA GROUP INC. IS A LEADER IN STRATEGY AND DIGITAL TRANSFORMATION IN NORTH AMERICA. Founded in 1992, the Company counts on 2,000 professionals in Canada, the United States and Europe. Alithya's integrated offering is based on four pillars of expertise: strategy services, application services, enterprise solutions and data and analytics. Alithya’s Microsoft practice covers a wide array of capabilities, About Alithya including Dynamics, Azure, business and advanced analytics, digital solutions, application development and architecture. 4 www.alithya.com | [email protected] | 866 420-7624 alithya.com .