Very few businesses were prepared for the disruption the last two years brought.
As we attempt to find a safe and sustainable altitude amid the turbulence caused by the economic downturn and reeling effects of the pandemic, companies have acknowledged that their old ways of planning are outdated.
Manual or legacy systems lack the speed and agility to anticipate and respond to the oscillations in sales and demand. The answer lies in a refreshed approach to end of the year sales forecasting.
Fewer functions have been as heavily impacted by market fluctuations as sales. Sales and revenue leaders now require more frequent sales forecasting, budget assessments, and faster course corrections, amplifying the need for access to real-time data.
While traditionally, sales has been a kind of black box that falls shy of seeing the big picture, the question is: is it possible to make end of the year sales forecasting more accurate in 2023?
Yes, but only with the right sales forecasting technology in place. But first, let’s deep dive into sales forecasting challenges to understand the depth of the issue we’re trying to solve:
The year-end scenario sales leaders face with sales forecasting
This classic challenge stems from the fact that forecast accuracy has always been an area of great vulnerability for sales organizations. Even fast-scaling and more established companies struggle to attain acceptable levels of accuracy.
In addition to this, Human Resources, Finance, RevOps, and other departments are already embracing deeper data insights to finetune their processes. Leadership now expects the same level of precision from sales as their peers in other departments. There is an increased pressure to accurately predict future revenue.
Pro tip #1: Read our guide to Revenue forecasting best practices for 2023.
Rushing to meet revenue targets by end of the year
Let's start with one of the most frequently asked questions: What does the bird's eye view of your end of the year forecast look like? Do you have a consistent stream of deals coming predictably over the four quarters? Or does every quarter start with a logjam of opportunities that often stall until it’s dangerously close to the end and when the sales team rushes across the finish line to meet the revenue targets?
If it’s the latter, it is a key indication that your team is struggling to build an accurate sales forecasting process.
Pro tip #2: Read our guide to the Evolution of sales planning and why your business must ace it.
Developing next year’s forecasts and targets with confidence
Most sales leaders fail to make an accurate projection of how much revenue their team is going to bring in for the quarter since the forecast happens closer to the New Year’s resolution.
Understandably, most sales leaders' forecasts don’t get within 10% of accuracy until week 10 or 11 of the quarter.
But in these uncertain times of looming recession, the ability to predict revenue outcomes is instrumental in achieving revenue confidence. Accurate sales forecasts set the pulse for the entire organization, its operating plan, and the way it invests in growth or cuts down cuts spending in a timeline manner. Inaccurate forecasts lead to dire consequences due to missed quarters, unknown close dates, and unpredictable growth.
Pro tip #3: Read our beginner’s guide to sales and revenue planning for 2023.
The current economic volatility makes end of the year sales forecasts 10X harder
By now, it is clear that the 2023 economy is going to be a bigger challenge than previous years. In this tough macroeconomic environment, with teams throughout the organization working in silos and having varied goals, EOY sales forecasts are harder than ever. Leadership can focus on growth strategies only when the best and worst-case scenario planning is possible.
However, sales teams are under constant pressure to meet their revenue targets and build accurate forecasts and having reliable data plays a huge role in this. Studies show that 80% of sales teams have more than 10% of their committed deals slip out every quarter. Outdated data, inefficient processes, decisions made in vacuum, and lack of alignment between the sales and finance teams are some of the reasons for inefficient or inaccurate forecasts.
Pro tip #4: Discover 7 Ways to maximize revenue with sales capacity planning.
That’s where the modern-day sales leaders need a sales forecasting platform to keep things up-to-date, accurate, and automated.
The role of a sales forecasting platform in creating accurate end of year sales forecasts
Pigment for sales teams centralizes your forecasting resources and reporting so that you can create a confident, consistent, and more informed strategy, by streamlining moving parts related to sales and revenue forecasting. Here’s how.
Consolidate data in one place
Pigment’s native data collectors allow for integrations with CRM, ERP and accounting systems, data lakes, BI solutions, and more. You can consolidate your data, import historical data, and model sales forecasts over the centralized platform. This shared data source makes it easier for the sales teams to make decisions.
Model sales forecasts flexibly
Using Pigment’s multidimensional platform to plan and predict, sales leaders can model faster using 20X fewer formulas compared to spreadsheets. You can build, maintain, and change your models for sales forecasts, sales capacity planning, and beyond with a few clicks.
Align the organization around shared goals
The collaborative features of Pigment allow for cross-functional alignment. Using Pigment you can tag colleagues, comment on the forecasts, and overwrite quota assumptions.
Run comprehensive what-if scenarios
Scenario planning is a must-have for companies, even more so during the volatile economy, to minimize the need for reforecasts. Comprehensive what-if scenarios by Pigment give you visibility based on the values you enter, and help the sales teams prepare for all eventualities without any costly surprises.
Present findings in the form of impactful charts
When it comes to delivering key insights in an effective way, Pigment plays an instrumental role. Sales leaders can build accurate reports and convert them into slides with the latest data, to empower better decision-making.
Sales forecasts are used as a base by the entire sales teams, to break down the goals into smaller achievable milestones. Pigment provides fine-grained security features including access rights, audit trail, and data encryption so that your critical sales forecast data is secure.
We hope that after reading this article, you have the power to improve the accuracy of your sales forecasts for 2023.
Whether you are in the advanced stages of EOY forecasting, or on a path to accelerated growth and looking for ways to implement predictive end of the year sales forecasting, get in touch with Pigment today.