Why is it so Difficult to Create an Accurate Sales Forecast?


Posted By Lewis Miller | Oct 15, 2012


Welcome to Qvidian’s new Sales iQ blog!

This blog will be a great reflection of what The Q team—sales effectiveness gurus who have been working with sales teams for nearly two decades—have to say about successful selling and what’s happening in the rapidly changing sales industry. We'd also like to tap into what other B2B sales and marketing practitioners are saying about what’s working and what’s not.

I am fortunate enough to work with and know many of those individuals – team members here at Qvidian, as well as respected friends and colleagues in the business that have helped shape what an effective sales organization is today. This blog will tap into that expertise to foster conversations, maybe even stir some controversy, but ultimately share ideas and experiences so we can better the business of selling!

Why is it so Difficult to Create an Accurate Sales Forecast?

As we start the fourth quarter, it seems timely to look at an issue impacting every sales leader across every industry—forecasting. Or, as I like to call it, the propagation of a lie. (I warned you I might stir up some controversy!)

I found the statement from DestinationCRM on sales forecasting particularly on-target:

“Sales forecasting can be a painful, expensive, time-consuming process that fails to produce accurate results. Many organizations lack a forecasting solution; others use ad hoc, best-guess practices that don't help close sales opportunities or lead to reliable company performance. Forecasting processes are often stove piped within the sales organization, lack analytics, and fail to integrate input from other business functions like marketing, finance, and operations.”*

Of course there are many reasons why sales forecasts are so woefully off the mark most of the time. However I have found the most important reason (although possibly the least obvious) is the fact they are not grounded in sales rep activity and behavior.

Instead, they are based off of subjective opinions of sales reps which are then propagated up the food chain to senior leaders in sales who compile quarterly and annual figures also based upon their own subjective guesses as to what deals will actually close. Those figures are then used in budget, resource, and strategic planning by senior leaders who are all basing their plans off these figures that are mostly conjecture. The propagation of a lie begins!

I remember my own indoctrination into the propagation of a lie like it was yesterday. In 1976, I was a new salesman with IBM and was attending my first monthly forecast rollup meeting with my manager and the entire sales staff. I couldn’t wait to share the results of my first month of activity. When it was my turn, I proudly stood up and gave a full report of all of the opportunities that I had uncovered during the period.

After the meeting, a 25-year veteran put his arm around me and said, “Son, never tell them all of what you think you will close because they will expect it. Always put yourself in a position to under commit and over deliver, then you’ll be a hero.”

Fast forward to today as we look for ways to help us move from conjecture to educated guessing – and the most popular is by leveraging CRM systems such as salesforce.com. While the CRM does improve sales effectiveness by collecting data, it does not solve the forecasting problem.

In fact, the data collected within a CRM system is typically an outdated collection of opinions and hunches. It may look like data with probability estimates and dollars signs but it is not based upon data that captures and measures what your sales reps are actually doing during the entire sales process.

However, we think this situation is about to change in a major, game-changing way.

The Q team has been working diligently this past year and we recently announced a major new release of our dynamic Sales Playbooks & Analytics application that we think will change the way you (reps and leaders) approach forecasting.

You’re probably familiar with Sales Playbooks in the old, static context. You may have created one for your sales team a few years back and you may or may not use it in sales training and on-boarding; but for the most part, it sits on a desk or is stuck in a PDF file that your team rarely references. Well, that’s all about to change. The new Sales Playbooks app provides sales people with all the content, tools, and expertise you’ve compiled for them to help advance deals forward, but through an interface that is integrated with salesforce.com, as well as dynamic to the rep’s specific selling situation. But what’s better, is behind the scenes it tracks and analyzes sales rep activity while they work their deals.

The activity data is then correlated with your data in salesforce.com to obtain some pretty compelling insights about the actual status of your sales pipelines. The result: Forecast accuracy increases because the data is grounded in the actual activity completed during the sales cycle versus subjective rep opinion.

This is what’s been missing from sales forecasting!

I will be sharing more about these issues in the coming weeks/months and look forward to hearing from you about your experiences in creating sales forecasts.

In the meantime, happy selling and winning.

Lewie Miller


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