Here’s a crash course in improving the accuracy of your sales forecast. Unfortunately, these issues may have not been addressed in sales manager training courses you’ve attended.
But no matter what method you use for forecasting, what you’re about to read will help you forecast with a different view. It starts by candidly acknowledging these five underlying issues that get in the way of solid forecasts. Though generalized, these issues apply broadly and have been accepted for far too long.
Organizations that hope to improve the accuracy of sales forecasts should start here.
Sales Manager Training for Forecasts
1. Sales Managers must rely on others who never received training in forecasting.
Bad practices proliferate. Sloppy shortcuts abound. Guesswork is the norm. In most sales organizations, there are few (if any) strong and consistent forecasters. Who can pass along knowledge if no one has it? And, despite the abundance of CRM, pipeline, and automated forecasting tools, accuracy still depends on Sales Rep input. Who’s teaching them to accurately and candidly assess what’s in the pipeline? More often than not, random projections are made without the rigor required to produce the optimistic hopes behind reps’ projections.
2. Sales Managers look back instead of looking ahead.
Looking at last year’s numbers and tacking on a percentage increase is not sound forecasting (nor is it sound budgeting… but that’s a separate rant!). In one-on-one meetings with reps, Sales Managers frequently spend too much time talking about past performance and results that can’t be changed. Allocating more time to planning for future success and mapping out the steps to get there improves results, longer-term planning and the ability to accurately forecast. Looking ahead to understand client budgets and market conditions is also a wiser approach – potential, not history alone, should drive forecasts and sales activities.
3. Sales Managers shy away from math, tools or formulas that seem complex.
Sales Managers are usually former Sales Reps. Although there are exceptions, most Sales Reps haven’t made this career choice because they love calculations, data analysis or plotting sales cycles. On the contrary, these are activities that many sellers dodge. When they move into a Sales Manager role many are expected to tackle even more of these activities with more variables and for more people (their direct reports). Sans good training and systems, it’s an unrealistic expectation.
4. Sales Managers don’t understand the importance of an accurate forecast.
It’s alarming to note how many Sales Managers lack basic business acumen about their entire operation. Many don’t understand the cause-and-effect: If sales doesn’t hit revenue targets, expense cuts will be made to reach the budgeted profit margin. Inflated forecasts jeopardize jobs. Sandbagging on forecasts constrains resource allocation and forces too few people to do too much work processing more orders than were anticipated. Without a broad understanding of the impact, Sales Managers may not take sales forecasting seriously enough.
5. Sales Managers are consumed with too many extraneous tasks that don’t drive sales.
How much time should a Sales Manager spend on forecasting and the activities associated with generating an accurate forecast? Chances are that there isn’t enough time in a Sales Manager’s day to squeeze in the analysis and intelligence gathering this activity warrants. Instead, the typical Sales Manager is consumed with:
- Putting out fires
- Customer service
- Other work that interferes with driving sales
Forecasting, already an undervalued and uncomfortable task, gets put on the back burner and eventually is done haphazardly.
Get Ahead With Tools AND Training
To improve the accuracy of their sales forecasts, Sales Managers need support from others. They need training on how and why to generate accurate forecasts. Sales Reps do, too.
While some Sales Managers figure this out on their own, the strongest sales organizations equip their managers and reps with tools AND training.