Sales Forecasting: Analytics to the Rescue

Enterprise sales organizations are under increasing pressure, often both from internal and external stakeholders, to provide more accurate sales forecasts of top-line revenue in order to better predict, and improve, the long-term health of their company.

The upcoming Aberdeen benchmark report, scheduled for publication in June 2010, will explore how companies are turning to sales analytics solutions that provide an enterprise-wide data flow into the forecasting process to improve their snapshot of future revenue and empower more efficient, margin-driven sales activities as well as more pure selling time by the sales teams themselves. You can participate in this research by taking a 15-minute survey here.

Topical Background

Sales teams have long deployed CRM and SFA (sales force automation) solutions to support a variety of chronologically ordered questions within the organization: the past (what did the customer purchase?), present (what is in our pipeline?) and future (when is the deal likely to close, for how many dollars, and at what probability to “seal the deal?”). While an increase in sales volume can impact the future in terms of top-line performance, how can the forecast itself be utilized to drive better profit margins?

According to July 2008 Aberdeen research, “Sales Analytics: Hitting the Forecast Bulls-Eye,” 87 percent of Best-in-Class companies held regular sales forecast reviews for sales reps and managers, and 81 percent of them created the opportunity for cross-functional views of the forecast within their enterprise. Laggards deployed only 68 percent and 64 percent of these capabilities, respectively, and furthermore were 49 percent less likely to include formal definitions of progressive sales stages, used to weight their forecasts. More recent research for “Inside Sales Enablement: ‘Let Them Drink Coffee!’ (December 2009) shows that use of commercial sales analytics solutions remains dramatically different between the Best-in-Class, at 76 percent, and Laggards, 40 percent of whom include the technology in their sales support efforts.

Limitations on internal visibility into predictive business results are compounded by the changing dynamics of many business environments, and thus affect both forecasting accuracy and, ultimately, an organization’s actual revenue flow. As a result, flawed source data affects decisions on how sales execution will occur and then, in turn, the level and type of resources that will be applied to sales situations based on past successes / failures, sales cycle timeframes, and close ratios.

Key Benefits

Sales forecasting inaccuracies are not limited to over-eager deal-closing expectations at mid-quarter; publicly held firms are taken to task for missing their number on the plus side of estimates, as well. Hence, predictability and holistically sound forecasts remain an important goal, in all cases when an organization’s ability to leverage opportunities that might be missed when over- or under-performance trends are not visible to senior management, or detected in enough time to respond.

From the end user’s perspective, the key benefits of leveraging sales analytics solutions include the opportunity to increase company value and share of market, resulting in:

  • Improved accuracy in sales forecasting
  • Decreased time spent creating and manipulating sales forecasts
  • Increased profit margin
  • Better alignment of sales management best practices with corporate goals
  • Creating a singular view of under- and high-performing sales reps, channels and regions

Ultimately, the promise of contemporary sales analytics solutions depends on an enterprise’s ability to accurately anticipate their overall business health by corroborating two-dimensional CRM data with intelligence stored elsewhere within the organization, such as in finance, supply chain, customer service and marketing, and to focus sales efforts on the newly identified, most profitable opportunities in the pipeline.

To participate in this research and receive a free complimentary copy of the resulting report upon publishing, take the 15-minute survey by clicking here.

Peter Ostrow is research director of sales effectiveness at the Aberdeen Group.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

Related Stories

CRM Buyer Channels