What is CRM sales forecasting?When it comes to CRM sales forecasting the rule of thumb is this – the more accurate the information you have, the more you can prepare and plan for the future. However, understanding the past to predict the future is an inexact science. Having access to the correct data is one thing, applying the right methods to extract the correct conclusions is another matter. Using a modern and effective CRM, like Teamgate, can assist in providing you with an accurate, and well-engineered sales forecast. This, in turn, can help you avoid major, and costly mistakes when it comes to planning marketing campaigns, lead gathering strategies, stock control, hiring practices, and the overall management of the entire sales process, and it gives you the ability to correct off-course sales directions faster than your competitors.
Why you need a sales crystal ballWhat happens when you don’t have the ability to forecast for future sales? The answer is simple – bad things happen! Without the in-depth insights which come with CRM sales forecasting your business is wide open to all kinds of catastrophic scenarios. Managing the money – Being able to forecast future sales helps you manage for the future. Will you be in a position to invest further in your business, or is the time coming to tighten the purse-strings. It will also help you to understand better your cash flow situation, and to plan for any future financial shortcomings. Purchase power – Managing stock levels can greatly depend on your ability to create accurate sales forecasts. Creating a CRM forecast will offer you a better insight regarding strategic investment, additional stock purchasing, or increased marketing spend. Plus, CRM sales forecasting can help you picture future economic trends and plan in accordance.
Sales forecasting and forward budgeting go hand in hand.Future thinking – Uncertainty in the future restricts your ability to take advantage of changing situations and act faster than your competitors. It can also rob you of the opportunity to expand at just the right time – an opportunity that doesn’t come around too often.
The sales forecasting process using a CRMWe’ve already said it, and we’ll say it again, sales forecasting is not easy. In order to predict trends accurately CRM sales forecasting tools should be part of your business armoury. But, in order to engage in accurate sales forecasting, your sales leads needs to be scored using a common ‘criteria’. These scores can then be used to evaluate the likelihood that a lead or a deal will close within the desired time-frame.
There are several main methods of sales forecasting using your sales CRM
Forecasting by Sales FunnelIn order to use your sales funnel as an accurate means of sales forecasting, it’s imperative to have a clearly defined sales process, with clearly defined stages. If you don’t have that clearly defined process in place, using your sales CRM for accurate forecasting is almost impossible. Without a set sales process in place, you lose the opportunity to create a scoring system which can forecast sales accurately. The main idea behind sales funnel forecasting is allocating a percentage to each stage of the sales pipeline. This percentage will represent how likely it is for a deal to convert to a sale at each stage of the pipeline. Obviously, the percentage will increase the further the deal journeys through the sales pipeline. For example, pipeline stages could be ranked in the following manner:
- New leads – 10% potential win rate
- Qualified leads – 25% potential win rate
- Proposal – 50% potential win rate
- Negotiation/Bargaining – 75% potential win rate
- Deal Closing – 90% potential win rate
Forecasting by ScoreIn order to understand the likelihood of a deal closing, you need to have a reliable scoring system in place. One of the best methods of sales forecasting is by allocating scores to the source of your leads. The lead score will reflect past sales performance when compared to similarly sourced leads. Past results will offer insights into how much time a lead took to convert to a deal, plus, how long the deal took to close. For example, deals which came from the following sources may be scored in the following manner:
- Referral – 8.1
- Email campaign – 7.2
- Landing pages – 6.5
- Social media – 5.4
- Cold calling – 3.6