Even when applying the best sales forecasting methods in attempting to generate accurate, predictable revenue, Sales VPs must be wary of red herrings, false alarms and misleading data. These sales forecast killers can sabotage the accuracy of your data-driven sales forecasting methods if not properly accounted for.
Fortunately, when spotted early enough in the process, these sales forecast killers can be easily sidestepped. Manage these 10 sales forecast killers and flag the associated opportunities as “at risk” if they are drastically different than your normal profile in the following categories:
Average Deal Size ($)
Opportunities that are three times greater than your average should be flagged and treated differently. Reps should allay their optimism – after all, larger deals have lower close rates and longer sales cycles and thus, should generally be treated as “at risk.”
Contacts that don’t want to say no but aren’t that interested in buying either will attempt to stall you or push the close date bag as far and as often as possible. If a deal’s close rate has slipped three times or more, it might be time to move on.
As an opportunity approaches the latter stages of the buying process, it is imperative that your reps are talking to a contact that has buyer’s authority, and the right title. For instance, a Sales Manager would have much more influence than a sales admin when pitching a product.
It’s too good to be true if your customers have not shopped around to compare products and prices before settling upon yours as the best fit for them. If your sales rep is not aware of which competitors the contact has looked at, it might suggest that the contact is not particularly interested in buying after all.
Time kills all deals, and languishing in early stages longer than your typical historical won cycles for those stages are “stuck opportunities” that are risky. Compare your opportunity age to your average sales cycle to be attuned to the right timing for each opportunity.
If an opportunity that is forecasted to be closing soon hasn’t been engaged with in some time, then it is not likely to close. Sales reps should increase their activity on fast-closing opportunities to help push them over the finish line.
Opportunities in the first or earliest stage have no business being considered in your sales forecast. These opportunities are a long way from becoming a closed-won deal, and relying on them is a foolishly optimistic outlook.
Some of your lead sources are simply better than the others. Look at your historical win rates for each lead source. Opportunities that arise from inherently low-probability lead sources should be flagged as risky and appropriately considered in the sales forecast.
When negative velocity (whereby a deal is stalling or moving backwards through the sales funnel stages) occurs, the opportunity should be sounding alarms. These risky deals are in danger of losing momentum and slipping beyond your chance of closing.
Late Random Additions
The best opportunities are slowly nurtured on their way toward closing. That’s why late random additions – especially ones larger than your average deal size – into your sales pipeline are suspicious. These should be flagged as at risk and slowly nurtured before being considered a prime opportunity.