What is sales forecasting?

Sales forecasting is a prediction of the weekly, monthly, and annual revenue. The predictions are based on:

  • Historical sales data
  • Your salespersons’ deal estimates
  • Market trends
  • Research on target market and competition

So why is sales forecasting important?

 

Aaron Ross, Co-CEO of Predictable Revenue, said, 

“Of course, you want more revenue, but what good is it if it isn’t predictable?”

This is more than just a witty remark, for it underscores the importance of predictability in business. And when it comes to sales forecasting, the more accurately a company is able to do it, the better its chances of success.

 

So, why do successful sales leaders work toward attaining better forecasting day in and day out? The reasons are unmistakable: forecasting helps businesses in optimizing and tracking sales performance, aligning incentives, increasing revenue, and making informed decisions. Investing in proper forecasting significantly improves the productivity of their teams.

If you are a sales leader, accurate forecasting ensures that your sales team is motivated since their targets are now set right. Moreover, it creates a sense of accountability within the team.

In a recent Aberdeen study, top leaders who deploy data-driven forecasting see:  

  • 23% improvement in revenue throughout all the months in a year  

  • 8.3% improvement in sales cycle  

  • Nearly 10% increase in the number of sales reps making their quota

The benefits to the organization and team aside, sales forecasting has been proven to enhance the effectiveness of a business leader significantly. As a leader, when the forecasts are inaccurate, you head into board meetings with a coin flip’s chance of hitting the number.

High performing sales leaders know that primitive tools like spreadsheets are not cut out for sophisticated forecasting. Do you know that using spreadsheets for forecasting puts you in the category of companies that close only 46% of their forecasted deals?

So what happens if a sales leader doesn’t have a proper sales forecast?

So if you are using spreadsheets to forecast, you end up guesstimating. Those guesstimates are primarily based on intuition and the pipeline data of sales reps’ opportunities. Most often, these numbers are under/overestimated. 

Here's what happens when:

Forecasts are underestimated Forecasts are overestimated
  • Your sales reps lose out on the potential to close more deals
  • Your sales reps get frustrated as the targets are not achievable
  • Your competition with accurate forecasting models end up hunting deals your (inaccurate) forecast neglected
  • Your top-performing sales reps move on to organizations  that do accurate forecasts, with realistic targets
  • Affects sales reps’ commission as the business is not ready to meet the demand
  • You invest in unnecessary resources such as hiring new members to scale up and meet the demand (as calculated by the inaccurate forecast)

 

And over time, the business will incur a loss!

A sales leader can avoid this situation by moving out of spreadsheets.

But this is easier said than done and there are some existing challenges to be overcome. In most cases, the sales team has to constantly juggle between the phone, Excel sheets to manage contacts; email marketing software; notes taken during conversations and calls; sales reports; and a lot more.

As such, it is not enough to use a forecasting software that performs ‘only forecasting’ — which makes the already hectic routine of the sales team even more tiresome.

What most fast-growing businesses do is use an all-in-one tool that forecasts sales, keeps track of sales reps’ performance, generates reports, sets reminders, manages emails, makes calls, takes notes, and a lot more...

Enter Freshsales CRM

What makes Freshsales CRM the best sales forecasting software

Forecast and track your goals

Freshsales CRM analyzes the sales cycle of all your deals. It allows you to set the win/loss probability for every stage of your deals in the pipeline, based on your sales data and process. Once you feed the system with enough data, it starts estimating the possible close date automatically. Based on this, a forecast summary is created. 

With these accurate forecasts, you can assign individual or team goals. You can set goals based on territories and different products.

Freshsales CRM lets you set goals for:

  • Forecasts based on revenue 
  • Forecasts based on won deals

Revenue goals give you inputs on the actual sales numbers and how likely is your team to achieve them. On the other hand, won deals give you a clear picture of the number of deals closed by a team or individual during a particular period. It will provide you with an idea of the number of deals won and determines the average deal win rates.

Chase the RIGHT deals

Freshsales CRM logs all the interactions you have with leads—emails, and calls—apart from tracking the goals. Also, any activity your leads perform on the web is tracked. 

One of the key advantages of using a cutting-edge tool such as Freshsales CRM is that it uses AI to track your lead’s activities and scores them for you. 

Remember, not every lead is a RIGHT lead. If you chase a lot of leads that are not all that interested in your product or service, you can end up wasting a significant amount of time in pursuing them.

This where our ‘lead scoring’ feature comes in handy. Freshsales CRM scores lead based on parameters such as the lead’s interaction with your reps, engagement through website visits, and lots more. A high score signifies that the lead is potentially interested and a low one, obviously, that it may not be worth your while.

 

 

Thus, lead scores help your sales reps to close more deals effectively by:

Chasing the RIGHT deals makes the pipeline of your reps more accurate. And coupling it with expected close dates, based on past data, makes closing the deals much easier for reps than before.

Identify your top performers

Your sales reps deserve appreciation for the hard work they put in every day. Make sure to acknowledge their efforts, since this makes them go that extra mile.

Freshsales CRM helps you identify your top performers at a quick glance; you can incentivize them by setting new benchmarks and through reward programs to nudge them to achieve more. 

You can also get insights from top performers on the selling process to help the reps who are struggling to achieve their quotas. You can identify top performers in Freshsales CRM based on Regions, Teams, or Products.

Reports and Analytics

Reports act as quick reality checks to track your current progress against the targets you set for yourself. Freshsales CRM helps you generate visual sales reports in a single click. Also, you can easily customize the reports dashboard to meet your specific needs.   

These reports help sales leaders to track performance and come up with strategies to achieve the numbers. They also help the business leaders to stay informed on the team’s performance. 

Additionally, reports in Freshsales CRM provide you insights into:

  • Forecasts vs. Achieved goals

  • New Business vs. Renewals 

  • Sales Trends 

  • Sales Cycle and Velocity

sales forecasting software