6 Common Sales Forecasting Mistakes That Must Be Avoided
Work smarter, not harder. This adage is at the heart of sales forecasting. Unfortunately, however, mistakes are sometimes made while creating a sales forecast that can make it inaccurate and counterintuitive. Let’s take a look at some of the common mistakes that are made when crafting a sales forecast.
Relying Solely on Instincts
There’s a time and a place to rely on instincts and gut feelings – sales forecasting is not necessarily one of them. If your forecasting is relying on intuition rather than factual information, historical data, and prospect behaviors, you’re setting your sales team up for failure. Forecasts should always rely on actual data first, with very slight consideration for gut instincts.
Forecasts that rely solely on instincts are often indicative of an ineffective data tracking system.
Not Refining Forecasts
The marketplace is always changing. Customer behavior is always changing. Technology and sales/marketing trends are always changing. One of the biggest mistakes you can make in sales forecasting is refusing to make adjustments and refinements on a regular basis. Regardless of what industry you’re in and what industries you serve, there will always be fluctuations that need to be accounted for.
Ignoring Sales Patterns
This probably isn’t your first sale/sales forecast. Focus in on key sales patterns or routines that you’ve begun to recognize during sales. Do you find that prospects respond well to a particular marketing tactic? Is there a stage in the sales cycle that has some underlying issues? These are questions that you’ll need to ask in order to better understand any sales patterns for forecasting. Remember, it’s not about your patterns – it’s about the patterns of prospects, and how those can be interpreted when forecasting.
Treating a Forecast Like a Promise
Simply put, a forecast isn’t the same thing as a promise. If you’re approaching sales forecasting in this manner, you’re setting yourself and your sales team up for failure. Forecasts should be considered as more of a guideline to follow, something that can be referenced. When treating a forecast like a promise, salespeople tend to feel overwhelmed and constantly trying to stay within the confines of the forecast, leading to an unhealthy work environment.
Forecasts aren’t perfect. You’re never going to know exactly what’s going to happen down the road.
Missing Real-Time Information
If you’re planning on creating an accurate, effective sales forecast, you’ll need to be able to rely on real-time information through a customer relationship management (CRM) software tool. Manually inputting information into Excel doesn’t give you any real-time data that can make the difference between an accurate sales forecast and an outdated one.
Looking Past Sales History
Reflecting on the past is usually a good predictor of what will happen in the future – this is especially true with sales. If you’re utilizing a CRM, you likely already have all of the data from previous years and previous sales, it’s just a matter of finding it and interpreting it for forecasting.
The only scenario in which looking at past sales wouldn’t be beneficial would be if your business went through drastic changes, such as a change in products/services, change in industries served, or the business is relatively new without a lot of data to look back on. For all other scenarios, looking at the past is always a safe bet.