By using accurate, data-driven sales forecasting methods – instead of inaccurate, intuition-based techniques – sales managers can gain better visibility into their projected sales. A company can’t generate predictable revenue when they consistently strike out on their sales forecasting and when most of their reps fall short of reaching quota. Here are some essential metrics for data-driven sales forecasting.

  • Conversion ratios at each stage
    Knowing your historical conversion rates for Closed-Won opportunities at each stage of your sales funnel will give you a clear idea of what the probability of converting the opportunity to a closed deal is at each particular stage. For instance, if your historical Closed-Won conversion rate for opportunities in the trial stage is 82%, you can ascribe that ratio to your current pipeline opportunity to produce more accurate sales forecasting for next month or next quarter. Sales Forecasts - Sales Cycle
  • Age of opportunities in sales pipeline 
    There are probably a number of sale opportunities clogging up your pipeline and leading to inaccuracies in your sales forecasting. During sales forecasting and pipeline review meetings, it is important to objectively point out stalled opportunities to your sales reps. Opportunities that have been in the pipeline for 3x or more longer than your typical average sales cycle are likely to be stale and should be purged altogether. Sales Forecasts - Sales Pipeline
  • Opportunity pipeline engagement
    If an opportunity is forecast to close this month or within a quickly-approaching timeline, yet there are no activities associated with that opportunity over the past two weeks, this is an indicator that the opportunity is at risk. Pinpointing opportunities that have stalled in engagement allows managers to properly prioritize the efforts of their sales reps, while continuing to purge stalled opportunities that have become stale, leading to more accurate sales forecasting. If you have a traditionally longer sales cycle, adjust this threshold based on your historical data and continue to monitor the pipeline for drops in engagement.

InsightSquared provides the sales analytics, reporting and sales pipeline review tools necessary for more accurate sales forecasting. Producing inaccurate sales forecasts can lead to management errors and inefficient business decisions, sinking the growth trajectory of a company.

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