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Why Your Sales Pipeline is not Accurately Forecasted

Posted by Robert Beckerman
Robert Beckerman
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why-your-sales-pipeline-is-not-accurately-forecastedForecasting the sales pipeline is sometimes viewed as an art but like many other aspects of sales, sales pipeline forecasting has moved into the realm of business science. It is possible to accurately forecast sales pipeline activity when sales managers know what data to use and sales reps are in tune with expectations for sales pipeline management. If your sales pipeline is not accurately forecasted, you can use these tips to find out why and begin moving towards more accurate forecasting.

Early Stage Opportunities Aren't Being Forecasted Forward

Since it can be difficult to forecast the likelihood of success for opportunities that are at the earliest stages of the sales pipeline, sometimes these opportunities are given less focus for later stage forecasting. While this avoids the problem of placing forecasts too high, it can create another issue by influencing forecasts to be set too low. When this happens, you will see your sales reps consistently pushing past quota and over-earning through incentives. You can make your sales pipeline forecasting more accurate by looking at past snapshots of the sales pipeline to determine an average conversion rate for early stage opportunities and incorporating this into your projections.

Late Stage Opportunities Are Reaching the Late Stage – And Staying There

When sales reps have nurtured a major sales opportunity to the late stages of the sales pipeline and the prospect asks for more time to make a decision, there is a strong temptation to give that prospect the time he or she wants to avoid pushing away a huge sale. If this happens too frequently it can wreak havoc with your sales pipeline forecasting, since major deals will constantly be on the cusp of closing. Coach your sales reps on specific responses to prospect decision delays as well as on strategies to close the sale while providing an understanding of realistic timing and probability of close.

Forward Progress in the Sales Pipeline Is Not a Target Metric

You have likely set target metrics for your sales reps at all stages of the sales pipeline, expecting that a certain number of leads be followed up, a certain number of presentations be given, and of course a certain number of sales be achieved. These are effective methods of obtaining snapshots in time for your sales pipeline, but for forecasting a better approach is needed. Measuring the time cycles and the numbers between stages in the sales pipeline can lead to metrics that support forward forecasting while providing your sales reps with motivational numbers that engender a deeper understanding of the sales pipeline and the overall sales cycle. You can do this by:

  • Creating average timelines based on milestones within the sales pipeline so that sales reps can measure what tasks should be done by certain dates after a lead enters the pipeline.
  • Periodically checking the sales pipeline for deals that have hit a barrier and following up with sales reps to determine why a certain opportunity is not moving forward, and what the next steps should be.
  • Considering temporary incentives based on sales reps' ability to continually move deals through the sales pipeline based on traditional and forward forecasting metrics to get sales reps in the right mindset for sales pipeline management.

Sales Reps Are Using Subjective, Rather Than Objective, Data

The accuracy of your sales pipeline forecasting is dependent on the accuracy of the inputs – that is, the data that your sales reps are using to update your customer relationship management system. If sales reps are being too subjective, which usually results in overly optimistic about opportunities, your forecasting is likely to fall wide of the mark. Train your sales reps to be objective with the data that they share and realistic in their expectations to ensure that your sales pipeline forecasting is accurate. You might consider creating an insight panel that outlines key feedback to be used in scoring opportunities and that can be used to automate accurate forecasts.

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Topics: Sales Effectiveness, Pipeline Management, Sales Process & Performance