Main Questions that an Accurate Sales Forecast Answers
Do we follow the market trends?
For quality estimation, considering industry trends and the economic course are as important as using historical business data. Market research can tell you how the preferences of your target audience change and how seasonality impacts the demand for your product. Relevant data collection will let you know when similar offers enter the market and change your sales behavior accordingly.
For example, the number of customers of a B2B lead generation company grows. It should be the signal to increase its current sales prices and, probably, hire sales personnel. Or, if monthly sales of your SaaS service are the same, there's no point in hiring more customer success reps. So, top-notch sales forecasting software helps you follow the market tendencies.
Is our sales team on the way to sales targets?
Your company can set sales targets every year, quarter, or month. But these numbers always differ from the expected sales stated in revenue forecasts. That's because the target is what you want to achieve, while the forecast is a realistic assessment of your present pipeline performance. So, often accurate sales forecasts aren't as optimistic as target numbers.
In other words, sales forecasts account for chances of closing current sales opportunities based on the sales data about each prospect. Sales reps input the deal amount, the date of the first communication with the lead, and the current status. If you set up the average sales cycle length, your sales forecasting software will estimate the outcome of each deal. So, you could track if it's in line with your targets and analyze the reasons for deviations.
Which sales reps are generating revenue?
Actual sales reports show how much revenue each seller brought to a company. And these are historical sales that you can't influence. Sales forecasts, in contrast, estimate the sales performance of each seller against sales pipeline targets and help sales leaders stay proactive almost in real-time. With projected revenue reports, they can control the contribution of sales reps, assess how healthy the situation is, and be ready to change it.
Sales managers can see how much money this product or rep brings in or how much revenue a particular territory generates. With sales forecasting software, monitoring top performers and complex teams, as well as tracking if they hit their target, is simple.
Is our pipeline management effective?
Are deal opportunities in your organization spread evenly through the pipeline? A sales forecasting tool can say. When you have identified stages of each opportunity across the sales cycle and tied possibilities of having the deal closed, you know if the sales funnel is balanced. And if it requires further monitoring and management.
Does your sales team have enough deals at the incoming stage, how many of them are qualified, which prospects already saw the demo, got proposals, and are in the process of negotiation? Are there enough won opportunities, and does your post-purchase customer support service keep clients happy?
Do our sales forecasting software models reflect the actual sales?
A forecasting model is a set of principles that help process historical business data and get accurate forecasts. So, the more structured, consistent, and complete historical data on sales, attracted leads, lost customers, etc., you feed to the model, the better predictions you'll get. Usually, targets for a sales team are set based on historical sales. (So, annual or quarter goals aren't just optimistic intuitive assumptions of sales teams).
However, the main challenge for any historical sales forecasting software model is how well it represents the achieved sales. For example, sales lead companies can use a model based on sales cycle length for more accurate estimations, while a time series approach will work for a tourist agency. So, choosing the suitable sales forecasting software model should be part of your forecasting strategy.
Core Models Used by Sales Forecasting Instruments
The sales forecasting technology behind the popular sales forecasting software is usually based on two sales planning models. The first accounts for historical sales, and the other considers open deals in a sales pipeline.
Sales Forecasting Software Using Time Series Model
This approach to revenue forecasting takes into account past results and extrapolates them to future sales performance. It uses historical trends and seasonal demand fluctuations for your product or service. That's why this method is suitable for companies that have worked for several years.
Moreover, the sales data for the past periods should be accurately stored, and the trends need to be stable and transparent. So, the time-series approach considers historical data, demand, and seasonality, excluding other relative factors. It can also be accurate when predicting sales data for comparable periods.
This means you shouldn't use last September's sales to learn the expected revenue for this April. So, if your company is new and its sales are relatively stable for similar periods of a year, then the historical data forecasting approach is for you.
Deal Stages Method Used by Sales Forecasting Software
This model uses knowledge about all the stages of your sales pipeline and the average sales cycle in your company. So, using this approach, your forecasting tool will estimate the potential revenue based on the probabilities of closing each deal in your sales funnel. But to get accurate forecasts, you'll need to set up at least three reliable input parameters.
- Value, stage, and age of an opportunity
The first and, probably, most straightforward component is the value of an opportunity. However, some changes may happen. For example, there's a chance that a potential customer of a B2B lead generation company will prefer another subscription plan. Still, your sales team member will usually know about the prospect's intention.
The second parameter is the average time a lead needs to finally buy from you. That's the basis of the model, so to deliver even one accurate forecast, your sales forecasting software needs to analyze hundreds of closed deals.
The stage of an opportunity, or its age, is the third factor in predicting expected sales. How long has the prospect been within your sales pipeline, and when can this potential client convert into a buyer? The model can simulate sales behavior of each customer and estimate the probability of winning the deal.
- Sales rep's experience and risky deals
The fourth element of this sales forecast equation is a seller's experience. How many achieved sales does this rep boast, and what is the percentage of the won deals? It's also vital to ensure that the average customer journey of this seller's leads fits the company's sales cycle. For, if it differs, you need to adjust this parameter accordingly. And, consequently, for proper sales planning, you'll need to check the performance of all members of sales teams.
The next challenge of the method is to estimate the probability of a successful outcome for the uncertain or risky prospect. Such deals can stay inside your sales funnel longer than usual for various reasons. For example, when a prospect expects that the startup will develop particular features for one B2B lead individually. Or if a prospect continuously postpones appointments or demos.
So, if your sales teams generate a different number of opportunities each month, but their buying cycle is similar, choose the sales forecasting software based on deal stages. And remember that, for this method, you need to set the sales forecast period properly.
Other Models that Help Create Sales Forecasts
There are other tactics that sales forecasting tools can use. And if the previous two models exclude many factors from their analysis, the following two models also consider controllable (internal) or uncontrollable (external) factors.
Sales Forecasting Software Using Demand Forecasts
You'll find two demand-based sales forecasts that differ from the type of factors they account for. This way, passive demand forecasts use past sales data to estimate future sales, considering seasonality and internal parameters. And active demand-based sales estimation additionally considers non-controllable external factors.
More about internal and external factors
Now let's look at other criteria that can impact your forecast accuracy. Controllable, or internal, factors represent the changes in your:
- Services or products. Adding some significant features to your product or equipping your service with critical functions influences many sales-related parameters. Among them, for instance, are prices, product bundles, the average time of closing a deal, and, consequently, revenue sources. Once you implement such changes, your final forecast reports should reflect them.
- Sales teams. Growing the number of your salespeople generally results in a sales increase. However, this is true provided that each new seller passed through the training and onboarding procedures. And, vice versa, when a sales rep quits, sales typically drop, unless this happens during some particular period like a high season in the tourist business. So, you won't notice the sales decrease until this season ends.
- Sales locations. When managers decide to move to new markets, expand sales territories, or grow the geography of the target audience, this results in sales decrease. However, this impact should soon disappear and even alter for more intensive growth. That's because of the new markets and optimized selling efforts.
- Compensations to salespeople. Changes in commission payment criteria can change the structure of sales and revenues. For example, if you pay for each closed deal, salespeople will focus on growing the number of customers. But, if you change the focus to attracting revenue, the number of clients can decrease. However, they will buy more.
The Functionality of Sales Forecasting Instruments
Sales forecasting software aims to grow the accuracy of projected sales and add value to managers and decision-makers. Moreover, advanced tools speed up the process of report generation and save your salespeople's time. The following section will describe some special functions that top tools for sales forecasts possess. And below, you'll see the key features of such instruments.
1) Access to Sales Information
Importing gigabytes of past-period data in various formats is critical. So make sure your sales forecasting software will be compatible with your RevOps (Revenue Operations Platform), ERP, CRM, accounting software, and even revenue reports in Excel files.
Once you integrate the new tool with all sales tracking solutions you use, it'll bring value. Otherwise, this instrument will require additional time and effort from your team. And you'll have to pay too high a price for the far-reaching insights.
2) Visualization of the Sales Funnel
It is invaluable to view how many leads are in your pipeline and their real-time progress through the stages. It helps track and timely address bottlenecks of your sales funnel, proportionally filling it with leads. So, an understandable and clear dashboard with critical parameters is a must-have for proper sales forecasting tools.
3) Monitoring of Sales Goals Achievement
Once you set target sales and revenue numbers for the next year, it would be helpful to know if your company is on track to meet them. Continuous comparison of targets and forecasts allows managers to watch the current situation with sales. The value of such monitoring is that it gives a possibility to identify problems, find their reasons, and take quick action.
4) Delivering Forecast Accuracy Reports
The sales forecasting software should show how your actual sales compare to estimated numbers. Knowing the deviations will help you analyze its causes, make corrections, and leverage the most accurate forecast of your sales and revenues. And, the closer your revenue projections are to reality, the more stable and predictable your business becomes.
Best Sales Forecasting Software: 8 Top Tools to Try in 2022
Belkins, one of the top-rated sales lead companies, is ready to share the best tools that forecast sales. We considered several criteria while choosing the platforms, so each instrument below can: (top performers 2021 according to Capterra)
- Visualize the pipeline
- Generate various reports
- Upload data from other sources
- Monitor reaching the targets.
Now onto picking up a proven sales forecasting solution!
Pipedrive is a CRM platform specifically designed for salespeople. It allows you to import all opportunities from your pipeline or add the stages using the template. Then all team members who have access to deals can set alerts and monitor their progress. The AI-driven tool allows to take admin tasks and routine work from salespeople and help them notice details that could lead to more won deals.
With this sales forecasting software, managers can accurately predict sales volume and estimate future revenues using the data from the sales funnel. And, if a deal closes when you open the report next time, the system automatically updates numbers. Pipedrive offers detailed reporting on current sales and features a user-friendly dashboard to track progress.
Pricing: the Essential plan starts at €12.50/user/mo. The Advanced subscription costs €24.90/user/mo. The Professional fee equals €49.90/user/mo, and the Enterprise pack is as high as €99.00/user/mo. All payments are billed annually, and a free 14-day trial version is accessible.
Capsule is a CRM system, so its features aren't limited to sales and revenue planning options. The system gives you a complete view of the pipeline, showing essential details of each customer. A comprehensive dashboard visualizes all sales opportunities, while customized reports help users gain valuable insights.
Capsule works for businesses of any size and fits companies from multiple industries: IT, real estate, construction, accounting, hospitality, travel agencies, and many more. Since this tool offers setting tasks in calendars and craft emails, it boasts integration with plenty of relevant tools. Some of them are MailChimp, Zapier, QuickBooks, Outlook, Gmail, Xero.
Pricing: there's a free version for two users that can process 250 contacts. The payable version starts at £12/user/mo for the Professional plan. The Teams option for £24/user/mo will fit growing companies, offering 100,000 contacts and 20GB of space. And for £36/user/mo, you get the Enterprise solution with 40GB and 200,000 contacts. A free 30-day trial for each plan is available.
Prophix promises a fair representation of your forecasts generated by its AI-powered algorithms. This tool helps you choose the approach to sales planning that fits your business, whether the bottom-up or top-down pattern. Prophix estimates future sales across product lines, drivers, and territories with the accuracy of critical numbers. You can monitor your sales staff performance in real-time, identify bottom lines, and timely take practical actions.
Prophix allows changing input parameters to check alternative what-if scenarios with advanced sales and revenue planning features. This tactic helps identify the most appropriate direction for your company, whether you consider altering the micro or macro-environment. Above that, Prophix offers solutions for budgeting, cash flow, personnel, capital expense, project, scenario, and other types of planning across multiple industries.
Pricing: it's possible to get a price only through the contact form on the Prophix website. However, you can check some of its features through the demo.
Workday regularly updates its information and is always available for what-if forecasting and assessing various scenarios. This platform offers collaborative planning for sales, financial, and HR teams. Workday keeps the data about each rep's compensation and related costs so that managers can plan future sales expenses.
It also reveals territory scoring and improves its management so that executives can optimize the allocation of their sales resources. This tool boasts an intuitive and customizable dashboard that shows sales quotas distributed among your staff. The system analyzes this target coverage and offers its optimization. This way, you'll balance the risk of demotivating reps and holding back the sales growth.
Pricing: You'll need to contact Workday to get an individual quote for your company's needs. However, a demo and a free trial are available.
InsightSquared offers AI-driven forecasting software that crafts your plans considering the line of the business, region, and products. So, its reports help identify and properly approach the gaps between the target and estimated revenues. Sales reps and managers can track the deal's progress with its visualization feature. And InsightSquared's AI will then project bookings using weighted pipeline, historical data, and human estimates.
The access to full information related to each deal won't leave any chance to guess possible reasons for a lost deal. Instead, team leads will be able to see their reps' weaknesses well in advance to change the situation. When salespeople need training or coaching to move deals through the sales funnel more effectively, you'll know it from looking at InsightSquared's dashboard.
Pricing: you'll need to complete a contact form on InsightSquared's website to get a quote. However, there's a demo available.
This is an omnichannel instrument for sales engagement. It offers automated lead routing, ensuring that your prospects follow the shortest path to a closed deal. Salespeople can track every potential buyer with a lead management tool and get a complete view of the pipeline. With VanillaSoft, sales teams can organize their workflow and deliver forecasts relying on actual data.
This platform offers exceptional sales activity control, summarizing the performance of the whole team and each sales rep individually. Quickly crafted, such reports will help you ensure proper supervision. So, once required, team leads can include more training or coaching into a seller's daily schedule.
Pricing: starts at $80/user/mo, but you need to contact the managers to request a quote for your company. You can also book a demo.
This tool enhances corporate planning and analysis, becoming their only data source. With IBM Planning Analytics, sales ops managers and analysts can create accurate forecasts and help executives make decisions quicker. Viewing critical metrics and general trends provides organizations with the required report accuracy and agility. So, consistent and real-time monitoring of relevant KPIs becomes possible.
Though IBM's sales forecasting solution offers exceptional visibility and advanced analytics, this platform has a lot to offer to other teams within a company too. It has marketing, procurement, and finance teams solutions so that managers can see their collaborative input into growing sales. In addition, this platform is a great instrument to optimize your teams' structures.
Pricing: "On Demand" plan starts at $45/mo, and a free 30-day trial version and interactive demo are available. This package fits individuals and small teams. For Enterprise offer, you'll need to contact IBM.
This platform lets users deeply explore various sales parameters. Its real-time visual analytics gives actionable insights into current sales approaches, highlights new opportunities, and summarizes essential statistics. This sales forecasting instrument integrates with spreadsheets, SQL databases, Salesforce, and multiple cloud apps. Such embedding allows users to combine and process data from various sources.
Tableau also boasts many modules that serve various purposes in a company. For instance, its Data Management solution helps prepare and structure information. This way, company leaders can generate reports from reliable and updated numbers. Such self-service will help executives make data-driven decisions.
Pricing: the Viewer plan starts at $15/user/mo, the Explorer option costs $42/user/mo, and for the Creator plan, you'll pay $70/user/mo. All subscription fees are billed annually. You can discuss plans for groups and embedded options with Tableau sales managers. A free trial is available.