Sales Forecasting With Excel? There is a better way!

According to CSO Insights, 48.6% of companies need to improve sales forecasting and companies that use spreadsheets to forecast only close 46% of their forecasted deals – causing many a CEO and CFO significant frustration. For those CEOs who are in that 46%, they head into board meetings with a coin flip’s chance of hitting the number.

 When forecasts are regularly missed, employees lose confidence, people lose their jobs, investors lose their money, and - ultimately - companies can and do fail. What happens when forecasting is accurate? In a recent Aberdeen study, top-leaders who deploy-insight driven forecasting with a strong process rigor see:

                    · A 12 month improvement in organic revenue by 23%

· Improvement of the sales cycle by 8.3%

· 9.3% increase in number of sales reps making quota

The Excel rollup.

How forecasting is done by most companies, ubiquitous across industries, is that sales reps and managers export pipeline data (dates and dollars) out of their CRM system and create manual Excel spreadsheets. The rest of the process (monthly, quarterly, etc.) happens outside of Salesforce and there is not historical audit trail of the information.  The managers then apply their experience and manipulate the data based on their gut feel or guess at what the numbers are going to be. Even if they hit their forecast, many of the deals that were forecasted may not the deals that were closed.  Most of the time they lose track of the pushes as they move into the next reporting period.  Interesting situation to say the least.

So why are so many organizations’ sales forecasts still so abysmally bad? Technology, process and people.

 The fact is that Salesforce.com (SFDC) was never designed to be a forecasting application. It lacks the fundamentals to drive accurate forecasting. Forecasting is a manual process that is far from error-free. It’s nearly impossible to improve forecasting without analysis and insight into sales behaviors and critical deal management data – something that Salesforce.com was not designed to do.  Sales reps spend twice the amount of time on forecasting than they should. They extract data from SFDC into a spreadsheet. They then modify the spreadsheet and send to their manager. Their manager than modifies that data and combines it into the team data and then submits it to management. Management then changes the data. Sales reps are then expected to manually go back into SFDC and update the information - forcing them to do the work twice. All along the way, human errors are made that corrupt the forecast and make it nearly impossible to explain what and where they went wrong.  Sound Familiar?

There is a better way.

Accurate forecasting is a marathon and not a race.  It’s not something that is achieved by simply plugging in a great software application and then hoping that people use it.  Great forecasting requires rigor – strong process, accountability, coaching and measurement.

So how do you get rigor?  Follow these steps.

Step 1. Install or build a simple forecasting process into your CRM system.  This is not  reporting.  Reporting does not solve forecasting rigor.  This is an actual worksheet where sales reps can add opportunities to a forecast and commit opportunities to specific scenarios.   This is a real-time forecasting platform that automatically rolls up to the most senior level of sales.  The average time it should take a sales rep to develop or update a forecast should be less than 15 minutes.

Step 2.  Train sales people to use the worksheet.  This should literally take 10 minutes.  Part of this training should include accountability.  All forecasting and all reviews are now to happen in the worksheet – right inside of your CRM  system.  There is no excuse for not having an updated forecast.

Step 3.  Train managers on how to use the worksheet for forecast reviews.  A great forecast worksheet should lend itself to “one-click” access to each sales rep’s forecast.  Saving managers countless hours a week begging reps for forecasts and compiling spreadsheets.

Step 4.  Measure everything.  Trending and monitoring forecast accuracy is key to improving performance. Knowing the volume, velocity, win rates, loss rates, opportunity data accuracy (close dates, value, activity, stage) and use this information to trend out into the future is what you need to predict future performance.   

Step 5.  Continually tweak the system using your key performance indicators.  Ensuring that opportunities are in the right stages, with the right close dates, with the right values and the right data that tells you the opportunity risk is what you need to drove accurate forecasts.  To do this, you will have to consistently monitor and coach your reps.  Why?  Because sales rep behaviors change all the time.

Savvy sales executives know that near the end of every sales period, a frenzy of “almost” deals will be advertised as closeable with extra discounting or executive participation. Which opportunities are worth the time? How do you know when to discontinue them or engage them more deeply. The faster managers know which deals to support, the better the chance those deals will get signed. Picture a world where you know you have the right opportunities in the right stages, with the right close dates and the right values. When managers get all of those “rights” right, decisions have already been made. They already know who to engage and who not to. Issue solved. That’s the future of forecasting.