Is your company one of the 70% doing it wrong? Let’s find out.
Knowing how to forecast sales in today’s technology fueled world is key to ensuring long term business growth for your enterprise company.
But what if your process is off, or fast becoming irrelevant?
Your sales are what make your company successful. If your sales forecast formula is incomplete or broken then you are definitely not getting the most out of your forecast and it might even be hurting you by affecting your business decisions.
Before you read another word, let’s agree on some things:
- Sales forecasting is no longer a guessing game. Anyone who is living in the dark ages needs to hit the books, and reexamine what they know about today’s technology.
- A sales prediction that is informed by the right technology, and data, is so much more than a guideline. Forecasting is data science and it’s a huge competitive advantage.
- New technologies like AI and machine learning are insanely relevant to sales forecasting. While they seem complicated, with the right tools and expertise they can actually simplify the process and improve the results. Remember Excel seemed complicated 30 years ago.
Okay, now that we agree on these facts, I’m going to tell you how to do a sales forecast from the top-level that incorporates all relevant modern technologies.
Step 1: Understand Your Current State of Sales Forecasting Maturity
How is your enterprise-level company forecasting sales? Determine your level of maturity based on the elements that you use to calculate your sales projections.
- Infancy: A lot of manual data input and spreadsheets
- Adolescence: Manual input, spreadsheets, CRM
- Adulthood: Spreadsheets, CRM, automation
- Maturity: Spreadsheets, CRM, automation, AI
Check out our post on forecasting maturity here.
Step 2: Understand Your Current Sales Forecast Formula
The next step to knowing how to forecast sales is examining your forecast formula.
In an article by DataHug they talk about the 5 main methodologies and argue that weekly sales rep forecasts are the most accurate. But we would argue that is is flawed as most would agree that reps are about as good a flipping a coin at forecasting sales.
A multi-variable forecasting method that uses many different methods and lots of different data streams is the most accurate. At a basic level, combine your historical data to determine core forecast components and apply that to the opportunity stage model to get the if the deals are going to close. The use the sales reps close dates while comparing to the average sales cycle for the when deals are going to close. Very basic but you have to dial in your forecast formula for your business before you can move forward.
When you get to a certain company, you’ll need advanced analytics and sophisticated technology infrastructures that incorporate artificial intelligence and machine learning into your CRM systems to get this right. Or else you run the risk of hurting your business more then helping.
Step 3: Add to Your Forecast Process for Improved Accuracy
If you find that your maturity level doesn’t match your forecasting methods or tools – then you need to upgrade. Remember – accuracy is the name of the game now. 2-20% increase in accuracy can be the difference between profitable and not or life and death of your business.
Its 2019, and if you are an enterprise company then you should be seriously considering adopting AI into your sales process. Don’t know where to start? Machines are good at pattern recognition, automation, speech and text recognition.
If you still need a Sales AI, you can get ours here. Once you start using it, it’s as easy as inputting your sales goals, getting AI forecasts, taking action and reviewing simple reports.
Step 4: Improve on Your Goals Incrementally and in Real Time Using AI
Now that your infrastructure is aligned, your methods will rapidly improve. Evidence-based forecasting leads to better decision-making for your company.
This is how to estimate sales that will align with what is achievable for your sales teams.
Set your goals, and track your data over the next 12 months. Your AI will give you unique insight into when to change and how to optimize results in real time.
In 2019, understanding how to forecast sales means understanding what is and isn’t possible with the technology available to you.
Update your methods and add AI to your systems to guarantee forecasting accuracy and consistent growth moving into 2020.
10 years of corporate finance and forecasting experience at different technology startups across the US.
[…] Check out our post on forecasting maturity here. […]