4 Bad Rep Behaviors That Lead to Inaccurate Sales Forecasting – Info Sales
The sales forecasting process is riddled with errors in most organizations, wether they are human errors or lack of predictability in the marketplace. Around 79% of sales organizations miss their forecasting mark by 10 percent or more, according to SiriusDecisions data. What we like to call human ‘errors’ are often just poor habits of sales reps. And some of them are repeated throughout the sales cycle.
One habit in particular is the end-of-the-month rush in sales, which is costing companies millions. It’s so widespread, that many customers now wait until the end of the month to buy a product. They know they have a chance that they will get a discount from a sales rep desperate to close a deal.
Data shows that stakeholders are increasingly looking to invest in companies that are good at producing predictable and sustainable growth.
For this reason– and others, sales leaders need to get used to handing over more accurate revenue projections.
The Four Bad Behaviors That Mess Up Sales Forecasting
Naturally, there will be factors that influence your revenue projections outside of your control: how the economy is growing, how your industry is doing, or even production costs rising or dropping on your products.
However, some sales rep behaviors also play a part of inaccurate revenue forecasts.
Here’s just a few of the bad sales rep behavior that you need to cull to make forecasting more predictable and increase revenue:
Sales reps stuff the pipeline with opportunities at the end of the month, to make sure they are seen as high performers. Studies show on the last day of the month, sales reps triple the number of opportunities they have in the pipeline, and they also make many more calls. It’s basically just a form of procrastinating and then panicking before your deadline.
Other sales reps might keep good opportunities from moving into the next stage in the pipeline in the current quarter. They will eventually move them into the next quarter, to make sure they make quota. This might help them in the short term, but long-term it paints a distorted picture of how the company is actually is doing, which can have repercussions on how it can obtain financing, or how it hands out compensation.
Overestimating Deal Size
Sales reps are notoriously optimistic — hey, you have to be, to work in this profession. Most of the time, they will over-estimate how good sales opportunities really are. This leads them to input inaccurate numbers on the deals they have, and they end up being disappointed at the end of the quarter due to not reaching targets.
Underestimating Sales Opportunities
Other times, they might simply pass up good opportunities because they follow their gut and intuition, rather than predictive scores. This often happens because they don’t have all of the information about factors that influence their deals.
Predictive sales tools that tap into crowdsourced data can change this, by analyzing billions of data points instantly. They can send reps alerts in real time on internal factors that influence their deals: past transactions and their outcomes, or changes in account information. They can also add info on external factors: weather, traffic, stock information, company acquisitions and mergers.
Inaccurate Sales Forecasting Costs Companies Millions
Out of all these pitfalls of forecasting, opportunity stuffing at the end of the month is usually the most common. It is also the most toxic for accurate sales forecasting. This is because sales reps are under the pressure of performance review calls, and this means they will either:
- Scramble to work harder than they did the whole month (and as a result, their closed won rates fall by nearly half)
- Try to push any deal over the finish line at all costs to increase their numbers, giving away discounts in the process (this leads to a median drop in deal size of 34.50%)
The result is inflated pipelines and inaccurate forecasts. Overall, this lowers the confidence in the team’s ability to produce reliable financial projections.
How Artificial Intelligence Can Help With Pipeline Management & Forecasting
New predictive sales tools powered by artificial intelligence (AI) is just one of the technology sales managers can use to cull bad sales rep behaviors. AI can dramatically enhance human judgement when it comes to pipeline management and forecasting.
AI sales systems can analyze data from company’s CRM, as well as external data and crowdsourced information to reach more accurate conclusions about:
- What has changed in the pipeline, and how this can impact deals
- Which deals will close and which are at risk — and how to focus only on what matters
- Who are the sales top performers — and how you can coach others to success
To learn more about how top sales organizations use artificial intelligence for pipeline management and improved sales forecasting, join the InsideSales.com webinar “Running the Perfect Pipeline Review Call.”
Article Prepared by Ollala Corp