In 2016, a leading technology company’s stock was down over 54% with over $2B in market cap erosion over two trading sessions following the announcement. The same year, another tech company suffered a similar loss with over $10B erosion in market cap erosion a day after announcing their falling stock value.
What causes these precipitous drops? Basic market forces? The burst of a technology bubble? Actually, the declines can be mainly attributed to earnings, which fell short due to misguided Sales forecasting.
If a company has built a robust, long-term forecasting system, they should be able to see early signs of weakness in Sales and put strategies in place to increase revenues or reduce costs. Without such a system, companies are being driven by misleading forces, wasting valuable time, energy and resources.
Why do companies get this wrong?
One reason that companies fail when it comes to Sales forecasting is because of unreliable projections. For a typical quarterly Sales forecast, a 90-day cycle, the accuracy of the average outlook is only 55%. For a best-in-class Sales forecast, the accuracy is 66%.
Most projections are unreliable because most are not driven by real-time data. When companies operate without reliable, real-time information their forecasts are useless at best, dangerous at worst.
But working in real-time isn’t enough. It’s just a start. Based on our research, the future of Sales forecasting needs to address:
- Customer Relationship Management (CRM) systems not fully leveraged for forecasting
- Lack of transparency and accountability for individual users and Sales teams
- Lack of automation in Excel-driven Forecasting
- Roll-ups are not timely, too late to make up for lost sales
- Understanding the quality of bookings
- Lack of early detection and warning system
So we set out to develop a tool that answers these common problems.
Leverage CRM for Forecasting
Is your forecasting completely separate from your CRM? If so, you’re likely working with inconsistent data and definitely working with outdated systems. Leveraging CRM for forecasting is efficient for your entire Sales team and your bottom line.
ForecastEra harnesses the information of a basic CRM and integrates it with a powerful opportunity funnel to ensure Sales Reps keep the tool updated and enable Sales Ops to run analytics on win ratios, commit changes, and forecast trends. It also helps the team accurately manage the bottom-up forecast.
Empowering Sales Ops to drive transparency and accountability
Most Sales forecasting systems lack clearly defined timelines and visibility, making it difficult to establish and maintain accountability for users. ForecastEra empowers Sales Reps to set and meet their commitments and execute deals with total transparency. Similarly, such data-driven forecasts allow Sales Leaders to support Sales Ops in their day to day and quarterly goals.
If your organization has multiple layers of Sales hierarchy, it is important to track management judgments at every level. At the end of each period, ForecastEra generates Forecast Accuracy reports to demystify the Forecasting rhythm of your company.
Automate Forecasts for accuracy and efficiency
Companies often compile forecasts in Excel sheets out of habit and convenience. But doing so can lead to major losses in productivity because Excel generally lacks the power to automate projections, especially accurately. Forecasting in Excel can lead to problems with data integrity as Sales Reps can dispute entries. If you’ve ever tried to reconcile Excel entries with CRM data, you know how painful this can be. ForecastEra Navigator relieves this pain point by automating forecasts and allowing for accurate data capture to free up Sales bandwidth.
Timely Roll Ups – Focus on Gap
A typical quarter is a mere 14 weeks. Time is precious and it’s important to have timely roll ups of the Sales forecast, ideally on a biweekly basis. This can be a heavy lift for any organization, and too often Sales Teams don’t take this opportunity to pinpoint the sources of gaps and create clear gap mitigation plans. ForecastEra’s powerful and robust reporting capability empowers Sales Teams to efficiently summarize forecasts and build out various scenarios for their CEO or CFO.
Quality of Bookings Matter
It goes without saying how important it is to measure and correlate the quantity of bookings with revenue growth. But not all bookings are equal. Since many bookings do not lead to revenue growth it is critical to understand the quality of bookings between New Business, Renewals and Recompetes. Renewals do not add net new revenue to the company. If renewals are done at lower than current rates, this may lead to decline in revenues inspite of a high booking. ForecastEra allows you to categorize bookings, evaluate their revenue potential and inform Sales strategy.
Early Warning System
Are you able to accurately detect early warnings and avoid loss of revenue before it happens? With ForecastEra, you can monitor key indicators like change in customer satisfaction rates, change in win rates, cancellation of orders by key client, and bookings forecast based on your progress throughout the quarter. Our powerful tool gives you unprecedented visibility and control to oversee and protect the health of your business before a loss occurs.
At ForecastEra, we believe in putting Sales in the driver’s seat. We believe that forecasting can be done with efficiency, transparency and accuracy. Let us help you implement a better way to drive sales. Get in touch with us today.