3 Strategies to Improve Sales Forecast Accuracy

 The single most important issue in any sales organization is managing the funnel to achieve an accurate sales forecast. Let's look at two ways this core issue is typically handled.

Company A's funnel process uses one of the most common approaches to forecasting, orienting its sales funnel to the steps of its sales process: qualifying, opportunity identified, quotation provided, demonstration delivered, and negotiation/close. You know the drill.

Company B uses a funnel based on the customer's buying process. Each stage of the funnel identifies specific actions that customers take when they are moving forward in their buying process: agree to a meeting, acknowledge their pain points, meet with 2nd decision-maker, define buying criteria, request a proposal, and so on.

Can you guess which sales funnel design leads to better forecasting accuracy? Right. Company B. By a big margin. If your company has a sales funnel more similar to Company A than B, here are three tips to get you started down a more accurate forecasting path.

1. Define the steps in your sales funnel and CRM based on customer actions.

In Company A's funnel structure, sales opportunities are tracked based on sales tasks performed by the salesperson. In a selling-focused sales funnel, it's easy to be deceived: a rep is confident that an opportunity will close successfully because they've done everything they're supposed to do. But tracking sales rep actions doesn't help you predict what a customer is going to do.

In contrast, Company B has specific criteria in its sales funnel that indicate whether a customer has completed one step of buying and is moving on to the next. The better a sales rep becomes at having customers complete next-step actions, the more consistent and more predictable the sales funnel becomes.

With a buying-focused sales funnel like Company B has, if and when a buyer chooses not to move forward, alarm bells go off. Sales managers are alerted to the problem right away, and can intervene while there is still a chance to fix the problem and get the opportunity back on track.

2. Transform Your Reps' Perception of CRM from a Pain to a Gain

The work of defining a customer-focused funnel has a second benefit: Any rep who thinks negatively about the extra time and effort needed to input information into CRM will quickly see personal benefits from a Company B-type approach.

Look at it this way: Company A's sales funnel generates sales process statistics that are lagging indicators (data collected after a process is complete) - such as how many calls, appointments, demos, and quotes have been made (or not made). By the time these data reveal a problem with a rep, it's way too late for a sales manager to get involved in a specific opportunity and put in a fix. All managers can do is exhort the rep to, once again, "try harder."

Company B originally had a CRM system like Company A, but realized that its use by the sales force was poor. Punishing people for not using the system didn't work, and the lagging indicators weren't helping anyone improve. They discovered that having a more customer-focused sales funnel was just the ticket for turning its CRM into something that both reps and managers would want to use. Salespeople can now be more precise in describing which opportunities are or are not moving forward, and they know where the trouble spots are. Also, sales managers have better visibility on customer actions in the earlier stages of the sales cycle, and can provide more timely advice to sales reps.

3. Re-focus your sales managers on coaching opportunities from beginning to end.

In Company A, forecasting is the process of tracking opportunities that are closest to closing. That means sales managers typically get involved when opportunities are at or near the Negotiate/Close step, often riding in to save the day if there is a sign of trouble.

Company B's system places much greater emphasis on having sales managers coach reps through each customer milestone from initial contact to after-sale follow-up. Managers more quickly recognize the importance of coaching early-sales-cycle selling skills - so their salespeople are better at getting more and bigger opportunities into the funnel in the first place.

Proactively Managing Sales Funnels and Forecasts

As you may have picked up, the real difference between Company A and Company B is that the former does sales forecasting reactively-near the end of sales opportunities. Company B, however, is proactive. They view their funnel as a way to help them become truly customer focused: during each step in the buy-sell process, its reps are thinking about what the customer needs to do to move forward in buying.

5 Sales Coaching Questions to Better Qualify Forecasted Deals

 There's no more frequent conversation between a sales manager and a sales rep than one that starts, "What are you going to sell this month?" And all too often, the rep's projections come up frustratingly short of forecast. Here are five questions you can ask your salespeople to help you evaluate how much trust you should place in the accuracy of their forecasts. These questions will also help your reps focus on actions they can take to improve the odds of closing their deals.

1. What actions has the customer taken thus far in their buying process?

Most sales managers ask salespeople something like, "Where are we at with the XYZ sales opportunity?" But that question is focused on where the salesperson is at in their sales process, not what actions the customer has taken.

So don't ask about the rep's sales process. Instead, ask questions focused on where the customer is in their buying process and what buying behavior is occurring. For example, "Has the customer shared inside information?... Arranged a meeting with a 2nd decision-maker?... Called your references?"

There are two reasons to ask these questions: First, the actions a customer has taken are a much better indicator of if and when a deal will close. Second, you will be a more effective sales coach when your questions force salespeople to think about the customer's point of view. Your reps will become much more focused on what actions they can take and what information they can provide to help a prospect move forward in their buying process.

2. What problems does this customer have that we can solve?

Note the plural "problems" in that question. If a salesperson has identified only one customer problem that your solution can address, the sale is more likely to fall apart.

Think of this way: Salespeople get an appointment because a new prospect is experiencing some type of dissatisfaction. But the mistake many salespeople make is not continuing to probe for a 2nd need that the customer may have. Often times, it's the ability of a salesperson to identify a 2nd or 3rd customer need that distinguishes him or her as a true consultant in the customer's eyes. The more plentiful and urgent the customer's needs, the faster the buying decision typically occurs.

3. What are the customer's top 5 buying criteria?

Many salespeople make the mistake of moving directly from identifying needs to presenting their solution. They forget to ask the customer, "What factors will be most important to you in your buying decision?"

The purpose of this sales coaching question is to make sure that your reps have thought about what solution requirements the customer will use to evaluate alternative offerings, and which of those requirements will be most important in the final purchase decision. Salespeople who understand a prospect's specific requirements and how they rank in priority can deliver a much more persuasive presentation & proposal.

4. Who else are they talking to?

A salesperson who does not know which competitor(s) they are up against will be unable to communicate your company's value proposition in a compelling way. From the customer's perspective, comparing one solution to another ensures a better buying decision.

If a salesperson is unable to tell you who else is competing for this account then either that person forgot to ask the customer, or they don't have a sponsor in the account-meaning there is no customer contact who is a strong supporter for your company. Asking this sales coaching question can help prevent your reps from being blindsided by a competitor that has snuck in the back door, causing your "sure thing" sale to tank (and ruin your forecasts).

5. What changes will you need to make in the future to make the most out of this coaching discussion?

In this question, you get sales reps to shift their focus towards the future. By this part of the coaching conversation you know what areas of weakness exist in the salesperson's sales approach. But what matters most is does your salesperson know? To help ensure you don't have to repeat the same points in the next sales coaching discussion with this rep, you want to help them think about how they can apply the broader lessons you're trying to convey.

Becoming a better sales coach

There are two key purposes for this coaching conversation. One, obviously, is to better qualify forecasted deals and help the salesperson strategize on getting an opportunity back on track. The 2nd purpose is to develop your rep to do a better job of selling the next time.