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Why You Can’t Accurately Forecast Sales

why you can't accurately forecast sales

why you can't accurately forecast salesMost companies I see and work with in the IT staffing industry struggle to forecast sales revenues.  In fact, many don’t even make an attempt at forecasting sales revenue.  Customers tell me they would love to be able to forecast their sales but they just don’t know how to do it.  In fact, many of the companies who try to forecast sales often refer to their sales forecast as “the crystal ball” or a “hope and prayer” indicating that they have no idea what deals are going to close and which are not. 

Unfortunately, this problem has become an epidemic.  But if you can’t figure out how to solve this problem, achieving scalable, sustainable growth becomes increasingly difficult. 

In this blog post I'm going to share why you can't accurately forecast sales. I'm also going to share with you tips and best practices for how to improve your sales revenue forecast.

Why You Can't Accurately Forecast Sales Revenue

I’ve found that the root cause issue for why staffing companies can't produce an accurate sales revenue forecast is due to a lack of a sales process. Most staffing firms don’t have a sales process.  Even for those who do have a sales process, chances are they've failed to align their sales process with how their buyer's buy. 

Without a buyer aligned sales process salespeople and sales managers are forced to rely on making decisions off of gut feel and instinct. This is NOT how to forecast sales revenues.  

Most staffing firms use an old and outdated sales process methodology that only accounts for the activities that the salesperson or recruiter has completed. Their view of the sales process is limited to only looking at where the seller and/or recruiter and their candidate is at in the recruitment and interview process.  Their sales process fails to account for where the buyer is in their buying process.  Instead, their CRM or ATS tells them the following:

Candidates submitted. Check
Candidates interviewed. Check
Candidates reference checks completed. Check
Candidate pre-closed. Check
Candidate background screen completed. Check.

Typically when a candidate has gotten this far in the interview process sales managers and salespeople tend to think the deal is 80% or 90% closed.  Confidence is real high which is why it’s at this point in the sales cycle where salespeople including sales and recruiting managers set themselves up to be disappointed. How? 

Salespeople and recruiters make the following assumptions:

  • They assume they know who interviewed the candidate
  • They assume they understand the role that each interviewer plays in the decision making process
  • They make assumptions about the client's decision making criteria
  • They assume they understand how the client will reach a decision among the group
  • They assume the budget is approved
  • They assume funding is available
  • They make other assumptions as well but you get the point
Without a buyer aligned sales process salespeople make all kinds of assumptions about their customers including how they buy, why they buy and the timeline in which they will making the buying decision.  Making assumptions is what creates the poor, inaccurate sales revenue forecast.
Tips for Avoiding Inaccurate Sales Revenue Forecastsales forecast
  1. Base your sales revenue forecast off the steps that your buyer must complete before they can buy from you and or hire your consultant. This will dramatically improve your sales forecasting accuracy.
  2. Incorporate customer driven verifiable outcomes as your exit criteria for each stage of your sales process
  3. Managers should focus the majority of their opportunity specific coaching on early stage deals, not late stage or "closes to the money" deals.  You have a greater likelihood of influencing the outcome of early stage deals than you do late stage deals.

How do you prepare your sales forecast?  What do you find most challenging when assessing your sales pipeline and putting your sales forecast together?  Please share your thoughts and experiences below and we can share our ideas and best practices with you.

If you want to improve sales performance, download the free eBook titled "The Definitive Guide to Building a Buyer Aligned Sales Process."

create a buyer aligned sales process

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