One of the most difficult tasks that a sales manager is faced with, is whenever asked by the top management to provide sales forecasts.  But why forecasting sales data should be such a problem?  After all, the performance of sales teams is probably the most measurable in an organisation and even daily, the result of the activities of the salespeople is there for all to see.       

There are several reasons that forecasting is such a challenge for sales managers.  Primarily, it has to do with how close someone is in the first line, as the higher we are in a sales organisation, the further we are apart from the deals happening beneath us.  In addition to that, CRM (Customer Relationship Management) systems that are mainly used to gather data about sales opportunities, are mostly filled with salespeople’s opinions rather than facts and with “suspects” rather than prospects.  Therefore, quite often, whatever data is recorded in those systems, it does not match with reality.

So, how can we make sales forecasting a task that will be easier to perform and more accurate as output?  The answer is that we need to manage better the sales pipeline.  According to Gartner: “The sales pipeline is a tool for converting leads into sales.  It provides sales leaders with a visual representation of the sales process, such as when a prospect becomes a qualified lead or when salespeople should follow-up with a lead”.  Most of the times, pipelines are visualised as funnels or horizontal bars that are divided into different stages, in which leads are moved through the sales process.  

Research conducted from the Sales Management Association and Vantage Point Performance, in the US, showed that 44% of executives believe that their organisation is ineffective at managing their pipeline.  For all of us involved in sales, these are highly alarming news, because there is a direct correlation between revenue growth and effective pipeline management, therefore it seems that a lot work it must be done.

According to the same research, there are best practices in managing a sales pipeline, which if mastered will lead our organisation not only in revenue growth, but also in more accurate sales forecasting.  First, everyone in our salesforce has to be on the same page and speak the same language, so we must clearly define the sales process, with stages - milestones that all salespeople understand and that are also aligned with the way that our customers buy.

Moreover, quality time must be spent between sales managers and salespeople, when reviewing their pipeline.  The main focus of these meetings should be to coach sales reps to develop ways to move deals forward, rather than just doing an inspection.  For this reason, sales managers must receive training on pipeline management other than logging in the CRM system and generate reports.  Finally, we need to start caring more about the sales activities (follow-ups, meetings, phone calls, e-mails etc.) that our salespeople do to close more business and we need to monitor how many of these activities are required to win the order.

I firmly believe that better pipeline management can not only make a significant difference in sales results and performance, but can also make easier and far more accurate the task of sales forecasting.  So, I invite all sales leaders to get rid of our crystal balls and start investing our time on how we will manage in a superior way the sales pipeline.