Forecasting is key to your pipeline | Clarasys

As a consultant, it perhaps stands to reason that I’m rather keen on planning. Plans enable us to measure our performance and react quickly if we’re going off-track. And for me, the best way to ratify the team’s commitment to delivering the plan is by having the full team participate in creating it.

In the field of project delivery, it doesn’t matter how much effort the team puts in if it’s in the wrong direction, or if the rest of the company simply isn’t ready for the change.

And the planning principle applies to most areas of business. If I don’t have a plan of when, what and to whom I’m going to sell, then I shouldn’t be surprised when I don’t manage to hit my targets. So I’m always surprised when I’m working with clients whose view of sales targets and the sales pipeline extends only as far as their top-down annual forecasts and reports.

I think most of us share the objective of selling the right thing to the right client at the right time. But to do that, we need to answer a few questions associated with our annual goals:

• What is our overall revenue target? Is it to grow our existing client revenue, or is it to capture new clients?
• If we wish to capture new clients, is there a particular segment we wish to target?
• Is there a particular product we want to push, or one we want to sunset?
• Should we be using the same strategy in each of our regions?

Only once these questions have been answered, and you’ve provided a high-level quarterly target to the sales teams, are you in a position to ask the teams to provide a bottom-up forecast of where they’ll generate that revenue. For our bigger accounts, we would expect that this forecast would be backed up by an account-level plan. For smaller ones, we would require an indication of when the revenue will close and therefore what activity needs to happen in advance.

The forecast should be your best estimate of how much revenue you can generate in any one period. It may display both your commit amount – that is, the amount you can confidently close – and the best case amount: the total amount of revenue you could possibly generate. The manager’s forecast should draw together the amount of revenue the whole team can generate together.

In order to deliver against your forecast, you need to effectively manage your leads and open opportunities, which is why the sales pipeline is so critical to sales success and to meeting your sales goals.

The sales pipeline is all about the top of the funnel. While the bottom may be filled with the more exciting, soon-to-close opportunities, the top is actually much more important in terms of the overall health of your pipeline. And so it follows that your pipeline meetings must be kept separate from your forecast meetings, which focus more upon the opportunities at the bottom of the funnel.

Maintaining regular pipeline review meetings will make sure you make provision for coaching, helping sales reps understand the best way to progress opportunities through the sales funnel, which, in turn, can feed into more accurate forecasting.

Developing account plans and forecasts at the micro level means you can ensure that your efforts will be directed at the right customers, and allows you to use your pipeline analytics to see how you’re doing – so you can respond promptly and effectively if you find that you’re behind schedule.