5 Things Most Likely to Derail Your Sales Forecast

Blog
Sep 30, 2021
4 min read
Even good forecasts can go haywire when unexpected events happen. Here are the five most frequent factors that can negatively impact your forecast and what you can do to navigate them.

 Sales forecasting is notoriously inaccurate. According to Miller Heiman Group, more than half of the deals that sales organizations forecast to win don’t close.1 Those are the same odds as flipping a coin.  

If you’re going to stop guessing and start forecasting accurately, a strategic overhaul is needed. You need to know the right business problems to address and how to overcome them. Below are five of the most common factors that throw off your sales forecast, and what you can do to avoid them.

1. Relying on Inaccurate, Stagnant Data

The secret ingredient to sales forecasting is data. You need to be able to look at past performance, compare it to current trends, and combine it with third-party insights. If the data in your system is bad, your accuracy will be, too. 

According to Forrester, one in three growth leaders (34 percent) ignore data-driven insights altogether.2 Instead, they ground their decisions based on gut feelings, experience, or opinion. Despite advancements in automation and heightened pressure to succeed, companies still struggle to understand their data and deliver on revenue targets. Too many organizations fall short of forecasts and revenue targets because they’re missing a key component: the ability to capture data.

Solution: Locating and unifying data across the entire organization. 

This leads to more accurate planning processes by laying a solid foundation for sustainable growth. Companies must choose solutions that allow access to real-time sales insights. This gives you the ability to evaluate, optimize, and execute plan changes based on trusted recommendations. 

2. Operating in Siloed Departments 

Disconnection is one of the biggest issues a company might face, and they might not even know it. This siloed mentality affects business efficiency and even damages departmental relationships. 

Traditional business plans are researched and created by an isolated team within an organization. Often, this plan is shelved as it cannot adapt or react quickly enough to changes in a volatile market. Course-correcting and pivoting based on market conditions cannot be achieved through spreadsheets or stagnant documents.

Solution: Create internal alignment by centralizing data.

To create internal alignment, you need a single place for all of your data to live. You also need  the right combination of tactics, technology, and people in the sales planning process

By leveraging the combined power of intelligent sales forecasting software and employee alignment, you are able to link operational plans across all departments and processes. This ensures that businesses become dynamic, collaborative, and intelligent at all levels.

3. Banking on Wishful Thinking Versus Realistic Numbers  

“This is our sales goal and it’s set in stone. The sales team will just need to make it happen.” - Famous last words of a revenue leader. 

Thinking along these lines typically results in large gaps between your plan and actual performance. When you start making decisions according to what you think your sales team could handle, or based on numbers you want to see instead of basing your quota on objectivity and rationality or with facts and evidence, things start to fall apart sooner rather than later.

Solution: Forecasting solutions that use artificial intelligence. 

Strategic growth can help your business become more productive and successful over time, even during periods of slow revenue intake. According to SiriusDecisions, quota accuracy leads to higher sales, better returns on salesforce investments, improved market penetration, and better alignment with the business planning process.3 This helps you target long-term revenue over getting revenue at all costs. 

4. Assuming Your Year Will be “Business as Usual”

This was a hard lesson businesses had to learn in 2020 and one many are still learning in 2021.  Today’s companies need an understanding of their sales organizations to know where their numbers are, where they need to be, and what decisions or changes they should make in their sales plans in order to keep them in the green at all times. 

Solution: Plan for disruption. 

To navigate murky waters, organizations must make near-real-time course corrections based on current and trusted data. With today’s dynamic markets and increased competition, you must monitor your sales plans and evolving market conditions to respond swiftly to them. This allows you to make changes to stay on track to hit your goals.

Xactly research uncovered that 75 percent of respondents changed revenue goals in the wake of the pandemic.4 But not all companies struggled to make changes that drove consistent growth and profitability. Those using intelligent forecasting solutions were able to navigate the changes much more easily.

Since adopting Xactly’s forecasting capabilities, customer Balto Software has:

  • 100 percent increase in total contract value
  • 13 percent increase in wins quarter over quarter
  • Sales pipeline accuracy improved by 87 percent, giving them the ability to target better
  • Shortened its sales cycle to under two months

The adoption of intelligent software allows organizations to rely on healthy forecasts because it protects them from adverse competitive and market conditions and positions them to adapt, plan, and thrive in the present and future.

​​​​​​​5. Misplanning Sales Resources

Organizations should ensure that their teams have the right processes, information, and technology required to work effectively. Without them, companies do not have visibility into which resources were impactful or unnecessary.

For example, under-worked teams can become frustrated due to minimal work and low levels of productivity. On the other hand, overworked teams can fall victim to being spread too thin, which can lead to suboptimal levels of activity. This leaves otherwise valuable resources overlooked. 

Solution: Use data insights to use resources more effectively.

Including resource allocation in your sales forecast helps leadership identify the resources their company will need in the future in order to sell efficiently. These predictions typically use historical and current project data to anticipate how many people they should hire, retain, or let go and what skill sets are needed to serve clients and their evolving needs. By analyzing sales activities, intelligent forecasting solutions allow companies to understand when and where to introduce additional resources. 

Maximizing Your Forecasting Accuracy 

An accurate sales forecast helps organizations make better business decisions. It assists in overall business planning, budgeting, and pipeline management in order to predict short-term and long-term performance.

Discover how you can plan for unexpected disruptions and stay on track towards revenue targets with automated, intelligent forecasting technology in the guide, The 10 Data Sources Every Accurate Sales Forecast Needs.”
 

Sources:

  1. Miller Heiman Group
  2. Forrester
  3. SiriusDecisions
  4. Xactly Corporation   
  • Forecasting
Author
Emily-Jahn
Emily Jahn
,
Content Marketing Manager

Emily Jahn is a Content Marketing Manager at Xactly. She earned a degree in advertising from The University of Colorado - Boulder and has experience in copywriting, social media, and digital marketing.