This article was originally published on the Salesforce blog.
Data is everywhere nowadays, and thanks to the combination of cloud computing, data science and enterprising companies, data analysis drives an increasing part of our lives. Yet human judgment continues to dominate B2B sales forecasting.
For example, the two most common forecasting methods (the weighted pipeline and “forecast categories”) are 100% judgmental. And most sales managers and sales operations managers would argue that forecasting is “more art than science.”
It is true that, unlike marketing, sales doesn’t naturally generate the thousands of data points required by statistical forecasting methods, for most SMEs at least. Does that imply that sales reps and managers are condemned to guesswork when discussing potential revenue? (more…)
Last year here at SalesClic, we conducted a big research project, testing various B2B sales forecasting methods on a large sample of pipeline data from SalesClic for Salesforce clients. Our most striking discovery was that a slightly enhanced runrate calculation (our “daily closing rate forecast”) outperformed most forecasting techniques.
This year, the goal of our summer research project was to explore if our previous results varied based on the horizon chosen for the forecast. We are still refining our findings, but can already share our top three insights.
1. Whatever the forecasting horizon, the weighted pipeline is the worst performing forecasting method. No surprise here…
2. Our daily closing rate forecast behaves well regardless of the forecasting horizon.
3. “Unborn opportunities” account for a major part of forecasting mistakes. (These are the opportunities that are not in the pipeline at the time the forecast is made, but will appear in the pipeline and close before the forecasting horizon is reached.) This holds not only for long-term forecasts, but also for short-term ones (less than a quarter).
This last finding is significant and exciting for many reasons: (more…)
The next SalesClic upgrade (on Wednesday, Sept. 18th at 16:30 GMT) includes a significant change to how the application handles “pipeline dynamics” (the key stats that define your sales process) in Salesforce. SalesClic for Salesforce users will now have a choice between:
- Letting SalesClic leverage their historical data. The historical stats, the red dots, the ideal pipeline and our 2 data-based forecasting methods will then leverage the last 3 rolling years of data in the Salesforce database.
- Defining “starting values” for their pipeline dynamics. SalesClic will use these starting values, potentially refining them over time (with machine learning) based on the reality of your business.
2 approaches for starting values
There are 2 ways to approach user-defined starting values.
- As a better reflection of your past performance than low-quality historical data. That approach will be particularly relevant to sales teams that haven’t used Salesforce consistently and wish to make a fresh start with their CRM software.
- As legitimate targets for your sales team. Here SalesClic will help you track progress against these goals in real time, and will clarify what they imply in terms of sales forecasts.
The original version of this article was published on the Salesforce blog.
B2B sales forecasting is tricky because most B2B companies lack the large sales volumes required by statistical forecasting techniques.
As a consequence, B2B companies that care about their forecasts usually choose one of two methods with notable drawbacks.
How can you mitigate the drawbacks of these forecasting techniques?
1. A documented sales process
Both methods require that your opportunities be in the “right” pipeline stage, i.e. the stage that accurately reflects how advanced they are in your sales process. (more…)
On 25 September at 18:00 GMT (13:00 EST), we will be hosting, together with our Salesforce consulting partner GTR, a webinar on sales pipeline risk.
Most sales people focus on finding deals and closing them as quickly as possible. Unfortunately, many miss their sales quota due to hidden sales pipeline risk, such as inadequate sales process, incorrect opportunity amounts or unrealistic opportunity closing dates.
So how can you identify and reduce the risk in your sales pipeline?
We will address that question during the webinar, and provide actionable risk management strategies for Sales Cloud users, including:
- How to improve “economic” pipeline data quality
- How to identify at-risk opportunities
- How to increase sales forecast accuracy
You can register for the webinar on this page. We look forward to seeing you there and don’t hesitate to reach out with any questions.
How much can you trust your sales forecast? SalesClic gives you a data-based answer to this traditional sales management question, pipeline by pipeline.
Based on your historical data, our new “trust factors” rank the reliability of your forecasts on a scale of 1 to 4 stars. Just click the small arrows right next to the forecast you are interested in to display the corresponding trust factor:
Two notable elements about these trust factors:
- They are based on the calculation of the average forecasting error over the last 4 periods.
- They take into account the point you are at in the current period. This is important, since being 75% accurate 60 days vs. 5 days before the end of the quarter (for example) obviously makes a difference.
- Marc Benioff
What is CRM software? It is a relational database organized around 4 objects.
- Contacts: the people you are dealing with.
- Accounts: the companies they work for.
- Tasks: the reminders of what you need to do.
- Opportunities: the deals you are working on.
And while enterprise-class CRMs provide much more, most small-business CRMs just put a user-friendly interface on this basic architecture.
Which is why I am amazed that Google hasn’t devoured their market yet. After all, Google Apps is the leading collaborative suite for SMEs – millions of companies already manage their contacts, accounts and tasks with Google Apps. Google Apps is only lacking 2 features to become a small business CRM: (more…)