Sales Forecast Templates – The Complete Guide

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With economic conditions, marketing spending, customer satisfaction, and competition affecting sales, accurate forecasting seems like a far-fetched possibility for many businesses. Still, even a 10% forecasting accuracy can help you streamline your sales process, efficiently allocate resources, estimate costs and revenue, and so much more. We delve deep into sales forecasting beyond following a simple cookie-cutter template to ensure you enjoy all the benefits sales forecasts have to offer.

Why Sales Forecasting Is So Important

Few business owners would argue against the benefits of planning. Sales forecasting helps to paint a clear picture of the future. With this forward-looking perspective, it is easier to make accurate business decisions regarding inventory, budgeting, planning, and risk management.

On the surface, exceeding your sales forecasts may sound like a good thing. However, there might be missed opportunities for hiring, investing, or other growth strategies. Rather than rely on sporadic surges in revenue, accurate forecasting enables you to create a sound sales strategy to increase revenue consistently over the long-term.

Additionally, accurate sales forecasts make it more likely that your sales teams will meet their targets. Too-easy targets may cause you to overpay for results, while too ambitious targets might frustrate your sales team. Sales forecasting helps you hit the sweet spot between defining achievable goals for your sales team and motivating sales reps to work at their best.

Accurate sales forecasting also allows you to recognize potential obstacles and problems early on. By keeping an eye on your sales pipeline, it is easier to notice unusual trends such as a dramatic dip in sales during specific periods of the month or year.

From here, you can investigate and remedy the problem before the end of the quarter, buying you precious time to compensate for lost revenue in other areas. 

Lastly, consistent sales forecasting helps to identify ways to improve your sales process. For example, forecasting may help you detect areas with low conversion rates or sales processes that take too long. These problems would otherwise have gone unnoticed without consistent forecasting.

Quick Tips to Improve Your Sales Forecasting Today

The easiest path to improving your sales forecasting today is to take advantage of customer relationship management (CRM) software.

Sales Cloud from Salesforce gives you a complete view of your entire pipeline through closed sales, allowing you to take necessary action steps to streamline your sales cycle. The CRM forecasts amounts for opportunities in four primary categories: Pipeline, Best Case, Commit, and Close.

You can configure the software to use specific forecasting data types, including standard opportunity fields, overlay splits, opportunity splits, territories, product families, or create your custom opportunity fields.

Additionally, the software lets you track top performers, allowing you to follow individual sales reps on an easy real-time leaderboard.  You can also track sales overlays to monitor and reward their contribution to the sales team.

Sales Cloud is an excellent option for small businesses and startups but is also scalable enough (with the Professional plan) to handle complex sales structures. The software also comes with a host of critical sales features, including:

  • Opportunity management
  • Contact management
  • Lead management
  • Salesforce quote-to-cash
  • Sales collaboration
  • Sales data and intelligence
  • Reports and dashboards
  • And more

There are a few more ideas that you can implement immediately to get the ball rolling on accurate sales forecasts.

Leverage CRM Software

We have touched on Sales Cloud from SalesForce, but it is impossible to overstate the importance of implementing a CRM to your workflow. According to a study by Capterra, a popular technology marketplace vendor, 65% of companies reported implementing a CRM system within the first five years of business.

It is easy to see why this software has such a high implementation rate in startups and established businesses. CRM software tracks everything entering and leaving each stage of your sales pipeline, allowing you to calculate the probability of closing a sale accurately.

Sales forecasting is just one small part of what CRM can do for your business. These tools also let you manage all customer touchpoints, centralize sales operations, identify bottlenecks in your sales process, improve customer data accuracy, and much more.

While Sales Cloud by Salesforce is a notable option for its ease of use, you may be in the market for something different. We have a full buying guide reviewing the top seven best CRM software in the market.

Be sure to read that guide for the big picture about what CRM software can do for you and how to choose the best one for your specific business needs.

Pick A Suitable Forecasting Technique

Sales forecasting is far from being a one-size-fits-all affair. You need a forecasting technique that speaks to your unique business scenario. It may be necessary to try out a few different methods before you find one that sticks. In any case, you need to justify your preferred approach. Some sales forecasting methods include:

Lead-driven forecasting – This method involves assigning a value to each lead in the pipeline. You assign the value based on the performance of similar leads in the past. This method is advantageous because it lets you predict the probability of converting each lead to revenue.

Lead revenue forecasting can be very accurate but is highly susceptible to variance. You may need to track average sales price by source, lead-to-customer conversion rate by source, and historical leads per month data for this method.

Opportunity stage forecasting – This method calculates the chances of a deal closing based on where the prospect is in the pipeline. By tracking and assessing past performance, you can estimate success rates for each stage of the pipeline.

This forecasting method is simple to implement and is highly objective. However, it doesn’t consider specifics such as the deal’s size and age, which can lead to inaccurate forecasts.

Regression analysis – If you rely heavily on data to make decisions, regression analysis is a useful quantitative forecasting method. This technique involves calculating how variables impact your sales.

Regression analysis offers in-depth insights into your sales process and can help you identify specific variables that affect your sales. However, this approach is highly advanced, requiring specialized knowledge of mathematics and statistics.

Forecast stages – Startups without access to historical data and other metrics may find forecasting stages methodology is an excellent alternative to the techniques mentioned above. Forecasting stages is a qualitative technique, relying on sales reps’ intuition rather than data.

Here, sales reps make personal predictions on the outcome of sales opportunities. This option allows for early forecasting since you don’t have to wait for opportunities to progress through the pipeline. On the flip side, this method is highly subjective and prone to error, especially with overly-optimistic or inexperienced sales reps.

Consult an Expert

Consulting with an expert in your specific industry is always a smart move. This tip goes doubly if you do not have historical data to work with. The same goes for when you are launching a new product or service.

An industry expert has intimate knowledge of the market, knows your competitors, and has vast experience in your industry. It’s also hard to replicate the power of first-hand experience and knowledge that an expert brings to the table.

You may not even have to bring in an external expert. Look to your sales team, preferably the most experienced and high-performing team members. They will likely have all the information and insights you need to plan for sales forecasting.

Long-Term Strategies for Sales Forecasting Accuracy

Sales forecasting is a long-term approach to business planning, and some strategies take a long time to implement. Here are some of the activities you can perform in the long term to boost your sales forecasting accuracy:

Tie KPIs to Forecasting Accuracy

Even after discussing the importance of forecasting with your team, some people may view this critical function as just another item on a checklist. Although unpopular, organizations that link KPIs and even sales compensation to forecasting accuracy see a marked increase in forecasting accuracy and sales performance.

Making sales reps accountable for the forecasting process will have a positive net impact. Be sure to support your reps with the right tools and training to improve their forecasting accuracy.

You can also involve your sales reps in the decision-making process. Representatives are more likely to mess around with the data if they do not feel that it accurately represents what they know about your sales process.

Remember that your sales team is in constant contact with prospects and clients, so they have valuable insight to offer about your forecasting process.

Sales reps who feel that their voice is heard are also more likely to trust and use the forecast’s numbers. Even so, take this point with a grain of salt. Forecasting is a means to an end rather than an end in itself. It’s not so much about how accurate your forecast is (although accurate predictions are always a good thing) but what you do with the estimates.

Update Your Sales Forecasting Reporting

The whole idea behind sales forecasting is to make accurate business decisions, both short-term and long-term. This can only happen if the forecasting data gets to the right people and on time.

It is worth updating your forecast reporting to match your organization’s maturity and workflow.

Spreadsheets are outdated, prone to inaccuracies, and limit the data fields and metrics you can use to predict sales. Additionally, spreadsheets are not scalable, making it even harder to conduct accurate forecasts as your business grows.

Update your reporting technique to match where you are in your organization. CRM software makes your database accessible to the entire sales team and different departments.

Some sophisticated CRMs use AI capabilities to automate reporting, saving reps time to focus on their core sales activities.

Use Diverse Metrics  

It’s easy to get stuck on forecasting in relation to setting and meeting sales targets. However, forecasting supports every aspect of your business beyond just hitting sales targets. For example, operations may need numbers that let them know what to produce and when, while product management is more interested in forecasting specific products.

Track as many metrics as it takes to paint the whole picture. Some of the metrics you may consider using include:

Sales rep metrics – Including historical win rate and historical forecast accuracy.

Sales cycle – Tracks how much time it takes to move prospects through the sales funnel from awareness to closing the deal. This metric can help decide which sales shouldn’t be included in your forecasting, such as too young or too old opportunities.

Activity data – Tracks the sales activities geared towards closing prospects, including phone calls, ads, emails, and ebook downloads. Tracking these activities helps to improve the sales process by assessing what works and opportunities for improvement.

Variance – Tracks the difference between actual sales and predicted sales. Tracking variance helps to gauge overall sales performance, understanding market conditions, and analyzing business results.

Accuracy – Lets you know how accurate the forecast is by assessing the projected forecast and actual numbers variance.

Pipeline coverage – Calculates your sales quota versus the total amount of sales opportunities in your pipeline. For example, a $1 million sales goal with $1 million of pipeline gives you a 1X pipeline coverage. Following the same model, $4 million in your pipeline gives you 4X pipeline coverage.

Linearity – Shows the number of deals closed within a specific timeframe. This number can fluctuate, especially towards the end of the quarter when sales reps attempt to meet their targets. Linearity can help identify areas where the organization may need to invest more resources.

Most sales CRM lets you define the forecasting settings, including the measurements that guide your forecasts.

Change Your Forecasting Methods Accordingly

The business environment is dynamic, and a lot can change in a year. Additionally, your sales process may change or evolve over time. Your sales forecasting is intrinsically tied to your sales process, so be sure to update your forecast data and metrics accordingly.

Other organizational changes such as a shift in the company’s objectives and key results (OKR), new marketing strategy, and reprioritized milestones can have an equally significant effect on your sales process.

Be conscious of these changes over time and update your forecasts accordingly. An updated sales forecast is more accurate and helps you stay on track with your sales process.

Involve Other Departments in Forecasting

More businesses are discovering that sales and marketing are not standalone departments. Keeping all your client data and interactions in a single location will improve your forecast’s accuracy.

Another reason why using CRM for forecasting is these systems compile data from relevant departments aside from sales.

By getting your marketing, customer service, finance, and product departments on a single CRM, it is much easier to aggregate cross-departmental data in your forecasting. Most CRM comes with integrations and collaboration features to help you achieve this synergy.

Review Your Forecasts Often

Set a specific date and time to review the forecast, preferably every month. How often you conduct the review depends on your particular circumstances.

During this review, bring in managers or key decision-makers to assess the results of the forecast. These meetings can help you make necessary changes early on and identify potential pitfalls before they happen.

Focus on Demand Rather than Supply

Accurate forecasting is indispensable in inventory management. Your forecast will let you know what the demand will be like next month or the next quota so that you can plan accordingly.

Rather than focusing on supply, use the demand data to account for supply.

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