Get Started with Forecasting
Learning Objectives
After completing this unit, you’ll be able to:
- Explain what forecasting is and how it differs from pipeline.
- Name the key forecast stakeholders and identify process best practices.
What Is Forecasting?
If you’re in the business of running a business, you likely have an idea about how much money is coming in the door. Maybe you’re tracking numbers in a spreadsheet, or multiple spreadsheets. But forecasting is a process, and it’s so much more than what a static spreadsheet can tell you. Tracking the sales landscape is the window into your business and involves analyzing opportunities, measuring sales against quotas, making adjustments as opportunities move through the sales cycle, coaching your sales reps, and more.
Before we get too far along in making that window into your business clearer, let’s clarify how forecasts are different from the overall pipeline.
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Pipeline is all the open opportunities your sales team is pursuing, no matter where they are in the sales cycle. Generating opportunities to sell your products and services keeps your business going beyond today.
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Forecasts are a subset of the opportunities in the pipeline. A forecast focuses on opportunities closing in a certain period, which can be a month, quarter, year, or a custom period.
Without a full pipeline, there’s no one to sell to, and nothing to forecast. Your sales forecast is the key to decision making because it focuses on how much revenue is actually coming in. Having a forecast that you feel confident in influences decisions around hiring and budgets, just to name a few.
And you guessed it, we’re here to help! Customers who use Salesforce for forecasting have seen a 28% increase in forecast accuracy, and their sales deals close faster. Using the forecasting features available in Sales Cloud provides the tools you need, and works with your real-time data. With the flexibility and power of Salesforce, you can customize forecasts for your business, analyze win rates, identify challenges, and see trends across your sales team. And with the power of AI, you gain even more insight into the future.
Generating forecasts isn’t just about having the correct tools in place. It’s also about the people and the process needed to ensure success. Let’s look at those pieces of the forecasting puzzle.
People and Roles Involved in Forecasting
Each business has its own sales owners, and it can vary by company size, structure, and industry. These roles are examples of people typically involved in the forecasting process for a sales team.
Role |
Description |
Key Measures |
|---|---|---|
Sales Reps |
The individual contributors who are often the opportunity owners. Sales reps are communicating to their managers what they feel an opportunity will bring in during the forecast period. In some cases, sales reps also define their own commit numbers. |
Personal commitment and rollups |
Sales Managers / Forecast Managers |
Managers who own the forecast for a group of sales reps. They gather information from reps about opportunities, and adjust forecast predictions to report the most accurate forecast numbers to sales leadership. |
|
Sales Executives |
The leaders that manage groups of sales managers and are typically organized around a product, service, or territory. These roles can include higher-level VP of sales roles and finance, and consider wide sets of numbers to analyze forecasts at a higher level for the business. |
Forecast revenue or forecast quantities across the business |
Other groups and supporting roles also rely on the forecast from a sales team. Product development and marketing staff rely on past, current, and future forecast numbers to determine product viability, and to drive interest in your company’s solutions. Even human resources use forecasts to plan recruitment efforts. Having an accurate sales forecast is a key indicator for your entire business.
Forecasting Process Best Practices
Now you know about the people who are involved in and need accurate forecasts. But what about the process? Keeping data up to date, reviewing at regular intervals, and analyzing performance are all parts of a successful forecast process.
Build the Foundation
As you start to plan your forecasting strategy, look at how your company is organized around the market that you serve and what each group wants to know.
- Evaluate how your sales team is organized. Is it by region, product, different industries, or something else? Knowing how your company is organized helps to ensure that the people in each of those areas have what they need to forecast.
- Know what you want to learn. Define the business objectives, and the metrics you want to gather as you predict sales. For example, do you want to predict revenue, profit margin, units sold, a combination, or something unique to your business? Ensure that you have the data in Salesforce to capture what you need.
- Keep data up to date. A forecast is only as good as the data that feeds into it. Establish guidelines and rigor around keeping data in Salesforce up to date. And ensure that everyone across your sales team knows what’s required to move an opportunity to the next stage in the sales cycle. For example, set criteria such as internal approvals and having pricing agreements in place for a deal to be considered as committed and likely to close. One sales rep’s confidence about a deal could be different from another rep’s confidence level. Although your intuition is likely right, don’t let it be your only guide and skew your forecast.
Define a Review Cadence
Each week, sales managers at all levels review, analyze, and adjust forecasts based on their knowledge of their team and the current sales landscape. If you use Salesforce for forecasting, you know that everyone is using the same set of data to make decisions, because all your data is in one place. Part of the review process at each level involves adjusting forecast values based on what the manager knows about past performance and current sales factors. Adjustments help to clarify the path to filling a team’s commitment, but an adjustment doesn’t change the opportunity amount. You can change the specific opportunities, if needed.
Measure and Analyze Often
Bad sales forecasts, just like bad weather forecasts, can really put a damper on your plans! So it’s important to analyze your forecast for accuracy and trends over time.
Accuracy in your sales predictions provides valuable insights about where coaching is necessary or a change in strategy is required. You could also find that you’re facing unpredictable conditions in product demand, which could require a change over the short or long term. Or even better, maybe sales exceeded your forecast and that demand is up! Either way, forecasting provides a head start on predicting what’s to come.
Next up, let’s look at configuring Salesforce for your business process, and getting your sales team set up to forecast.
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