I’ve been in software sales for over 11 years and I pride myself on being able to accurately forecast my deals. When my leadership sees a deal in the pipeline with my name on it, they can be confident that it’s coming in.
Don’t get me wrong, it hasn’t always been this way. It has taken me years and much experience to get to this level of accuracy and sometimes I miss something and get it wrong. After all, sales is all about relationships and people – and people can be tricky! I have found it comes down to: how strong are your relationships, and have you asked the right questions.
The biggest mistake I see with forecasting is when sales reps forecast a deal based on when they need it. Meaning, they have a quota, and they only have so many deals, so they need to “call” a deal in a certain quarter to meet that quota. This is backwards – instead, you want to determine the most likely close date, based on when the client needs it. Your sales will drive your quota, your quota does not drive sales.
Every deal is different, but here is your general guide to ensuring the most accurate forecasting:
Client Discovery
Forecasting starts at the very beginning of your sales cycle, with your discovery call(s). Discovery is so important in determining whether your product is a good fit for your client, but it’s also key in uncovering what their timing looks like. Their actual timing, not the timing you want from them. Sure, later in the sales cycle you may uncover reasons that their project could be pulled forward, but at the discovery stage and for initial forecasting you want to know when they feel they will be ready (based on budget, resourcing, project approvals etc).
There are good and bad discovery calls. Bad discovery calls sound like you are reading off a script and most often are not effective in getting many details from the client. They may tell you they are “just looking” when in fact they have a fully approved project and are already demoing with other vendors. Or the opposite.
That’s where the importance of building relationships comes in…
Building/Strengthening Relationships
I am all about relationships in sales. I love people, and I love helping people – so it’s a good fit. My intentions are authentic and I truly want to serve my customers, and this comes across in all of my behaviours and interactions with the customers (and my discovery call questions!) This creates a sense of trust, and positive relationships with my clients.
I also invest a lot of time with clients that I already have (rather than prospecting, for example). I make sure to make time for in-person meetings with them frequently, often just for an informal coffee or a chat – not even to discuss a current sales cycle. This not only strengthens our relationship but also makes my job so much more enjoyable. Sales is less stressful when you’re not constantly chasing deals or focusing on what’s next in the pipeline.
The benefits of a strong relationship for forecasting, however, is that the client is more willing to be truthful with you. Both at the beginning of the sales cycle, but also as things change (as they always do).
Client Discovery Again!
Client discovery should take place throughout the sales cycle, because things often change and some sales cycles are very long. Also, it’s likely that over the sales cycle your relationship with the client has strengthened and they may be more open to sharing things with you that they weren’t before. For example, a client is usually not very keen on sharing their budget with you on a first sales call, even if they know it – but later in the sales cycle once you’ve gotten to know them perhaps they will be more open to providing at least ballpark numbers (or whether they have budget at all).
It’s so important for accurate forecasting to not rely on old information. Other projects come up all the time within an organization, and it’s possible for yours to get pushed out. It’s possible for budgets to not get approved. You want to find these things out as early as possible, so that it’s not 1 week before your close date and you’re realizing the deal now needs to push.
Play Devil’s Advocate
This post is not about “how to win deals when you want them” (perhaps another time), but “how to forecast accurately”. Forecasting goes wrong when sales reps are too optimistic, and ignore glaring signs from the customer. So my best guidance is to always try and prove yourself wrong. If you’re forecasting for this quarter, write down all the reasons that you are wrong. All the things that might go wrong, or haven’t been completed yet. Argue against yourself.
The opposite is also true – you don’t want to be “sandbagging” your deals, putting them all in a future quarter or next year when all the signs point to an imminent deal. I’m sure your company would prefer that a $300k deal just shows up this quarter and closes rather than losing the same value in the quarter – but neither are helpful for company financial planning and that’s really the purpose of accurate forecasting.
Each organization will be a bit different in how they want you to forecast your deals. Different stages, etc. and often they’ll even have checklists or questions you need to ask. For general questions that you need to know, though, to accurately forecast your deals – check out my blog “Questions to Ask for Accurate Sales Forecasting.”
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