How to Forecast Sales: 4 Tips to Keep Your Sales Team on Track

How to forecast sales is one of the top concerns I hear from our clients.

Busy sales managers want to help their salespeople stay on track, and rightfully so. There’s a lot more involved in the selling process than just selling!

So, check these four tips to put you on the right path when it comes to how to forecast sales in the most accurate way.

How to Forecast Sales: 4 Tips to Keep Your Sales Team on Track

1.  Develop a leading indicator

Phone calls won’t do it:

Most sales leaders track the number of phone calls sales people make.

Have you ever noticed that one salesperson can make 100 calls and make zero appointments, while another can make three calls and get three appointments?

The number of calls doesn’t accurately equate to the number of appointments.

Does calling a prospective client to wish them a happy birthday count as a phone call?

Appointments won’t do it either:

When determining how to forecast sales, what you’re really looking for is how to get more insight into potential for closing new deals.

However, it's difficult to be accurate about what constitutes as a quality appointment that will lead to future business.

If I bump into someone on the street, was that an appointment?

Tracking the number of meeting follow up emails is the best answer to how to forecast sales:

We recommend that you send an email after a first-call with a buyer in the following format. We call it the DEAL email.

a) Requirements – Outlining the needs for you to satisfy

b) Requests – Actions you want your buyer to take

c) Responsibilities – An overview of your solution

d) Outcomes – Criteria that determines a fit for your buyer

Measuring how many of these emails are sent and who responds to them on a timely basis is the best leading indicator for how to forecast sales for new business.

For example: if a salesperson sent 15 of these email in September and then 20 in October, this indicates that the number of opportunities is likely to increase.

Tracking this over time gives you good insights into where new business is coming from.

2.  Keep good records

If your sales team keeps good records in your CRM system (ex. Salesforce.com), you will be able to forecast more accurately.

Track leads as well as activity to quickly convert them to opportunities. Make sure each opportunity has a next step identified so it stays in motion, hopefully to a close/win.

3.  Run a smooth pipeline

Have your salespeople focus on the opportunities in their pipeline that are more likely to close than those that will languish. Continue to scrutinize the likelihood of each opportunity to close on a timely basis.

I like to use a “disqualification” approach. This means that I look for all the “gotchas” that might prevent us from moving forward to a close/win. This might include price, size (company is too small or too big), chemistry, etc. Using this approach allows salespeople to stay focused on the deals they have a better chance of closing.

4.  Keep a binary hot-sheet

As a sales manager, I kept a spreadsheet of the top 20% of deals in the pipeline.

Size of deal, estimated close date, and strategic value are examples of what puts a deal on this list.

I used to put these into an MS Excel spreadsheet. Next to each deal I would enter a “0” or “1” in the first column. Multiplying numbers for a deal by this number, I would get either “0” or the original value. The sum of all the deal numbers would vary based on the binary column. I made the decision to enter 0 or 1 based on the feedback I got from the salesperson responsible for each deal at any point.

I hope this gives you some insight for how to forecast sales more accurately.  Please write back with your feedback, especially if you implemented these suggestions.