6 Common Mistakes with Sales Forecasting
What comes to mind with the word Forecasting?
Hopefully it’s not “Oh no, not again?” or “What a hassle!”.
We’ll assume that you all know what I’m talking about when it comes to forecasting in sales, but just in case, the quick breakdown is this: Sales forecasting is the process of estimating future sales. Accurate sales forecasts enable companies to make informed business decisions and predict short-term and long-term performance.
While sales forecasting may be a large time investment, it’s one of the single most important key indicators of how well your business is performing. Here’s a list of 6 common mistakes sales leaders face when tackling forecasting.
Mistake number 1: Taking your Forecast as absolute truth
Taking your forecasted projections as absolute truth is your first mistake. We can do everything in the books to try and hone in on the right metrics and prescriptions for how Q3 or Q4 will result, but in the end, real people are involved and forecasts are subject to change. If you rely to heavily as forecasts as a promises, you are setting your team and yourself up for failure. Be ready for anything. Train your team to think quick on their feet, so whenever they encounter a situation that might throw-off their projections, they’re ready to close the deal (maybe an even bigger deal than they thought!)
Mistake number 2: You trust your ‘gut’ as absolute truth
Just because you’re instincts tell you a “close” feels like it can happen in 3 weeks, doesn’t make deals closing a reality. Instincts do add value when forecasting—we are human and each member of the team does have value to add when it comes to really knowing their opportunities and future customers. This can get you into trouble, however, when you bank on your instincts providing you accurate forecasting information and not the data tracked and concrete metrics showing an contradicting forecast numbers. Data doesn’t lie. Use your instincts to complement the data, not dictate your direction.
Mistake Number 3: You’re ignoring your historical data
Past performance is often the best indicator predictor of the future. What better way to see how your sales cycle is progressing than to look at how it did just last quarter, or just last year. Ignoring these reports makes for “shot in the dark” guesswork and won’t bring you any closer to forecasting success. A few caveats to this mistake are when your company is brand new, or you’ve just gone through a product shift and historical data is no longer as relevant.
Mistake Number 4: You don’t make forecasting a part of your normal routine
Forecasting needs to be adjusted, always. Customer behavior can change daily and might require readjusting on the regular. This means you and your team need to spend time reviewing historical trends, adjusting expectations and adjusting tactics regularly.
Mistake Number 5: You assume discounts will speed up your sales cycle
We’ve seen future customers offered discounts very early in the sales cycle before they fully understand the value of your product. Once a rep gets further into the cycle and the potential customer is fully understanding the product, they can often request more discounts. It’s critical that you understand buyers pain points before going into any type of price adjustments. Don't’ rely on those pricing adjustments to sway a prospect when you’re not addressed the actual problems they’re facing first.
Mistake Number 6: You’re not using Mutual Close Plans
If you’ve not implemented a mutual close plan of attack with your team, you might be missing the boat! What is a mutual close plan you ask? It is simply a mutual agreed upon dated plan to get to the close between the prospected company and the sales rep. These projected timetables are essential when you forecast when a deal will close.
Next time you head to “your plugging-in place” i.e. your computer, the conference room, your home office at 10pm, we hope you’ll remember these 6 mistakes and avoid them in your sales forecasting adventures.
Looking to get a few helpful insights on what your sales forecasting numbers should be this next quarter? We can help. Set up a demo with our team today! We’re here to help you crush those quotas!