Sales ForecastingMany Sales Ops leaders I’ve spoken with are proud of a +/- 10% forecast accuracy.


Let’s say the 2013 sales revenue target was set at an even $500 million.  Your Q1 forecast calls for $120 million and you come in at $108 million.


The company is already behind the 8-Ball and your credibility just took gut shot.  Forecasts are tricky.  Here’s a way to make your CRM-based forecasts better and build your credibility.


Two steps to fix your CRM-based sales forecasting


First, stop using your reps estimates of what will close when.  Sales guys tend to be too optimistic.  That’s one of the reasons many of them are in sales.  Optimism is a valued trait in sales that can push them past adversity.


I can hear the negative backlash because I’ve said to stop listening to your sales force.  I’m really referring to your use of their estimated success probabilities for their opportunities.


The sales rep glass isn’t just ½ full – it’s brimming to the top.  Meanwhile your CFO sees it as ½ empty.  But where is the truth and how do you find it?


Second listen to your customers.  You know what they do by observation.  Of all the opportunities put in your pipeline during 2012, how many actually closed?  How many got to proposal?  What are the average days opportunities spend in each stage?


What’s that you say?  You know all of that information and much more.  But your forecasts are still too far off for comfort and you need a more reliable approach.  Here it is:


Persona-Based CRM Forecasting


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Download Your Persona Based Forecasting Tool Here


At SBI, we’ve been working with more and more of our clients to build Buyer Personas. Personas are research-based representations of the buyers, and influencers and evaluators of your products or services. Personas map out:


  • Your ideal customer’s job titles
  • The industries they work in
  • Their buying preferences
  • Their objectives, obstacles and fears when buying and how you can help


I’ve said this in past few posts but want to emphasize: If your company hasn’t done true buyer research, it’s past time to do so.  You can’t forecast future sales if you don’t know who buys, how they prefer to buy and why.


Here are the recommended steps you should take to improve your CRM forecast accuracy:


  • Using all of your 2012 CRM data, segment by Buyer Personas.  For example, say your company sells to IT professionals – look at your CRM data broken down by CIO, IT VP, IT Director, etc.
  • Analyze that data for all the key metrics from your pipeline.  But do this at the Persona level. How do your different Personas move through the pipeline?  How many leads came into the pipeline by Persona?  What are their conversion rates through each stage?  What are their average deal sizes?  You get the idea.
  • Find the significant differences between your Personas – which Buyers have the highest and lowest closing rates?  Who moves fastest through the pipeline?


It may seem like this is a lot of work but it’s really not.  It’s doing what you do now broken down by your Buyer Personas.  Talk to your best reps and they’ll tell you this simple fact: Some of their targets are more likely to buy and take less time to buy than the average.  Is your forecasting taking this fact into account?


Of course, there are other considerations that good forecasts relies on.  Factors like order backlog.  Economic indicators like the Producer Price Index.  Competitive moves like new product releases or price discounting. 


But unless you start looking at forecasting through the eyes of the buyer, it’s still tossing darts. 


The tool I’ve included in this post should get you to start thinking differently about your forecasting.  You’ll need to tailor it to your company.  The key metrics you track from your sales automations system.  But until you recognize that different Buyer Personas buy differently, how can you predict what they will do? 


Common sense tells you that selling higher up an organization moves you through the pipeline quicker.  They have more authority to pull the trigger on a purchase.  They can mobilize stakeholders to gain agreement.


Ask one of your best sales reps – would they rather have one hour in front of a CEO to pitch or a supervisor with little budget and authority?  This difference needs to be reflected in your forecasting process.


Download your Persona-Based Forecasting Tool Here.