It can be challenging for sales managers to produce accurate sales forecasts, especially if they’re not relying on data-driven sales analytics to support their sales forecasts. Using inaccurate, intuition-based forecasting methods will give sales managers poor visibility into their projected sales, which can lead to underperforming sales reps who struggle to reach lofty goals and fall short of attaining sales quota. Without accurate, data-driven and -supported sales forecasts, a company won’t be able to generate predictable revenue. Here are some essential metrics to use in producing accurate sales forecasts.
- Conversion ratios at each stage
Sales managers need to know their historical conversion ratios for Closed-Won opportunities at each stage of the sales funnel in order to get an idea or probability of how likely an opportunity in a specific sales funnel stage is to convert. With their historical conversion ratios for Closed-Won opportunities at every stage, sales managers can use that information to forecast for the next month or quarter, given the number and value of opportunities currently in the pipeline.
- Age of opportunities in sales pipeline
The longer opportunities remain in the pipeline, the less likely they are to close. These stale opportunities are clogging up your sales pipeline, leading to inaccuracies in your sales forecasts. Use a report on the ages of opportunities in your sales pipeline to point out these stalled opportunities to your sales reps. Your team should be either actively working on these stalled opportunities to reverse their negative velocity or purging them from the pipeline altogether.
- Opportunity pipeline engagement
Opportunities that are forecasted to close should be actively worked on by reps. Therefore, if a number of opportunities are seeing limited or no engagement at all, they are at risk of stalling or descending into negative velocity, turning from a ripe opportunity to a lost one. Pinpointing the engagement of all opportunities allows sales managers to help their reps prioritize their efforts on the right opportunities, while continuing to get rid of stalled opportunities. This will lead to more accurate sales forecasts.
InsightSquared provides the sales analytics, reporting and sales pipeline review tools necessary to produce more accurate sales forecasts. Producing inaccurate sales forecasts can lead to management errors and inefficient business decisions, sinking the growth trajectory of a company.
InsightSquared is the irreplaceable complement to Salesforce.
- David Fishman, VP Marketing, Marantis