Most Sales Leaders Agree: Current Sales Forecasting is Flawed
Why? Because this is what traditional stage forecasting, provided by the most widely used CRMs, currently looks like:
- For each stage of the pipeline, your organization assigns a probability of opportunities in that stage to close.
- That probability is multiplied by the dollar value of the opportunity in that stage and aggregated for a forecast.
- In many cases the sales rep has the ability to change that stage forecast to one that they subjectively feel is more accurate
Why is that inaccurate? Because it completely depends on the sales rep’s determination of what stage they put the prospect in. It does not in any way make use of key information that is gathered during calls and meetings. This is too primitive and creates huge inaccuracies.
When a sales rep determines the close probability it is based on the information that the they have gathered, and weighted in a fashion that the sales rep feels is right. The assignment of a 50% or 70% probability of close is done without any standardization of what the key inputs are to that decision, and how they are assessed. It’s a very subjective and inaccurate process.
Lets say your current forecast says that 10% of opportunities in discovery, 30% of those you met with will close, 60% of those in proposal will close, and 70% of those in negotiation will close. For each of the opportunities in those various categories, you multiply this close estimate times the opportunity value to generate your forecast.
That doesn’t take into effect any of the nuances or any of the information that was uncovered in discovery. You may be quoting someone, but they may have a very close relationship with another supplier and have never bought from anybody else. The current probability is 60% because of the opportunity stage. Realistically, you would give them a 20% chance of close, given the background that you have uncovered.. The current forecasting process does not take advantage of any of the insights that lead has provided to properly adjust that forecast.
On the other hand, another company that you may be quoting might be looking at you because they love your product, they believe your service is far superior to what they’re currently using, and they had a trial of it and really want to buy it--but they’re in the same stage at 60%. If you were to look at all of those insights, you would put them at 90%. So the shift from a standard stage forecast, to something that is based on The Insight Selling Process™, is a shift to something that’s much more accurate. This now lets you focus on the leads that are actually more probable to close.
The Shift to Accurate Forecasting
You know that if your sales rep has a better discovery with a prospect, they have a better probability of closing. When you implement a system of monitoring, measuring and optimizing that sales discovery, you have a way of increasing sales performance.