How to Forecast Sales

Compliments of our partner from HubSpot

 Guided by my sales forecasting best practices, I use the following steps when creating forecasts to ensure an accurate sales forecast.

1.      Document your sales process.

The first thing you need to do is document your sales process. Think about it. If your team doesn’t use the same stages, steps, and definitions, how will you be able to predict the likelihood of an opportunity closing and repeat the success? I set out guidelines for my team for how to determine what step of the sales funnel leads are in, including when they enter and exit the funnel.  Create a documented sales process.

2.      Set goals and quotas.

Next, you’ll need to set goals and quotas for individual sales reps and the team as a whole. This will give your team a definition of success and a baseline to make your forecasts. You can use data from your CRM to set your quotas. Be sure to gather data on how your team performed weekly, monthly, quarterly, and annually to discover trends.

3.      Invest in a customer relationship management (CRM) tool.

Investing in a CRM can go a long way in helping you predict future revenue growth accurately. That’s because it gives you complete visibility into your pipeline. As Snyder says, “Momentum during a sales cycle is built by the buyers’ actions, not the sellers’ actions. Therefore, sales stages and forecasting milestones must be based on buyer actions. “A CRM system also allows sales managers to assess the performance of individual reps.  I recommend using one even if your business is new. There are many CRMs in the market, but HubSpot CRM is my favorite. It allows sales managers to track sales activity in real time. And the best part? It’s 100% free.

4.      Choose the right sales forecasting method.

There are many sales forecasting methods available, and it’s essential to choose one that aligns well with your business model. You’ll need to consider things like the age of your business, your budget, size of your sales team, and the amount of available data before proceeding with a forecasting method. Learn about the six most popular sales forecasting methods to help you choose the best one for your business.

5.      Include data from other departments.

While understanding past sales data is critical for creating a viable sales forecast, I’ve found that other departments can also provide data you can incorporate into your sales forecasts. Working with other departments also promotes a collaborative work environment. Collaborative work promotes buy-in, making reps more motivated to meet sales goals. Goodman elaborates on cross-functional collaboration: “You can often get granular insight into your business's future performance by partnering with a team such as Revenue Ops.”

6.      Review previous sales forecasts.

Now, you can finally dig into previous sales forecasts and current data and compare to find discrepancies. Ask yourself:

• ·         How did my team perform this year?

• ·         Did I factor in major events and seasonality?

• ·         Were the goals set the prior year unrealistic?

7.      Keep your sales team informed and accountable.

Regardless of your chosen sales forecasting method, keep your sales reps informed and communicate often. This is another good reason to invest in a CRM — it keeps your reps updated about every interaction with leads and with each other. After all, they are the closest to and most familiar with your prospects and overall sales performance as a company. Gather regular feedback from your team about what‘s working and what’s not. Hold your reps accountable for their performance against your sales quotas and sales forecasts.

Dr. Millicent Brooks and the Elite Shedload Collective believe that it is through increasing profits – NOT REVENUE – is the single biggest factor in crushing the competition. 

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