What do we need to do to make sales forecasting more accurate? This is one of the most common and urgent questions asked by senior sales leaders. In theory, the answer is rather simple. But in practice, getting better forecasts has proven extremely challenging. 

Aligning the processes 

So, what’s the underlying problem? The dots aren’t connected. The most common reason sales managers can’t get sales reps to forecast more accurately is because the company sales process isn’t represented in the pipeline stages. 

Too often companies implement a sales pipeline process into their organization to match their shiny new customer relationship management systems, without any regard to the core strategic sales activities that sales reps should be completing throughout the process. 

Most pipeline or funnel management systems use such terms as Stage 1, Stage 2, and so on. The problems arise from the murkiness around each stage’s definition. A process with boundaries and stage definitions that can shift from constituency to constituency, or case by case, is a process that does not work. But when a clearly defined pipeline process aligns perfectly with sales activities, the results can be stunning. 

Case in point 

While working with a global commercial bank solution provider, the North American VP of sales was striving valiantly to improve her team’s forecasting. The sales team consisted of nearly 250 sales reps and their 30 sales managers. Like many organizations, sales reps didn’t have an effective or consistent way to predict when their opportunities would close. Each region had its own way of doing things. 

We interviewed the top-performing sales directors, regional managers, and sales reps across the sales organization to learn three things:

1. How they were communicating with each other about where the customer was in their decision process.

2. How they defined the stages or steps in the process.

3. What managers were doing to be a value-adding resource throughout the process. 

   Working in collaboration with a cross-functional team, we designed and implemented a rigorous, workable five-stage sales pipeline:

• Stage 1: Opportunity Qualification

• Stage 2: Needs Development

• Stage 3: Solution Identification

• Stage 4: Implementation Resolution

• Stage 5: Contract Confirmation 

  The five stages had the advantage of being so simple that anyone can understand and use them. Another advantage of the model was clarifying boundaries between the stages themselves. What made this approach different from some of the company’s previous approaches was the clear and unambiguous way in which the five stages were delineated, and that the key milestones and metrics built into each stage. Connecting the dots for this company gave them a process that was workable for the entire sales team, leading to positive changes in forecasting accuracy. 

  When the pipeline hums

  Managing the sales pipeline effectively requires sales managers to know how to challenge their reps. To merely ask them if they completed all of the milestones in a previous stage is actually insulting.

  The job of the manager is to help the sales rep identify why that milestone is important and how to leverage that information to secure the opportunity. A few strategic coaching questions to challenge the sales about concerns, assumptions and strategies will get sales reps to think about the opportunity in a different and deeper way.

  The pipeline model we designed quickly improved the company’s forecasting accuracy, to say nothing of the sales team’s increased interest in using the process. The sales managers became more aware of the warning signs of an opportunity stalling or slowing. Conversely, they were able to respond more efficaciously when an opportunity’s forward momentum increased because they saw it coming. Over time, the management team established reliable metrics which gave them insight into their business.

  For instance, they learned that opportunities that entered Stage 3 had a 78 percent chance of closing. When the opportunity moved into Stage 4, the percentage jumped to 86 percent.

  Recognize the facts

  To begin making your pipeline hum, recognize that sales forecasting is inevitably problematic. Some salespeople are too optimistic. Some are too pessimistic. And beyond optimism and pessimism is plain, old forecasting ineptitude. The end result is inaccurate forecasts.

  Improving your pipeline management process continues by connecting the dots representing the sales process in the pipeline stages and building critical milestones into each stage. These milestones help create a common understanding of the pipeline process and begin to pave the way to a consistent pipeline process and an accurate sales forecast.

  Become involved and invested in the new process. Develop some insightful and impactful coaching questions to improve the dialog with sales reps and move opportunities along the pipeline. When the process has been in place, review the performance and ask for feedback. 

  Forecasting and pipeline management is never easy and often requires some tweaks along the way, but when you get it, the sound is beautiful.