During periods of unpredictability, companies seeking to maintain and accelerate growth will adopt a focused approach to predict future sales growth over the coming months. However, with markets changing, now is not the time to be overly optimistic; clarity is required amid the chaos.
Companies need to monitor external factors and be mindful of changes, which can make sales forecasting onerous. Therefore, establishing a solid factual foundation is essential for making your growth forecasts.
We have put this guide together to assist you identify key factors of where you stand today and how you can achieve future sales growth. A robust forecasting model can support creating a reliable sales forecast.
A forecast that looks beyond just products and services or historical forecasting practices. A sales forecasting method that considers the sales rep’s contribution to sales and marketing’s contribution.
Let’s look at the steps you can take.
Before beginning the planning process, sales operations must spearhead data collection to establish a single fact baseline upon which the entire team can agree. Historical sales data can contribute to working out your baseline. Your team will need to comprehend how far along your company is on the growth curve to make appropriate decisions toward future sales growth.
Recommendations for building your factual foundation.
- Evaluate your company’s performance to comprehend how you are executing against KPIs.
- Utilise leading and lagging indicators to determine which metrics are crucial to your organisation’s objectives.
- Utilise identified metrics to determine which initiatives will assist you in reaching your goal.
- Sales & Marketing Productivity – Sales representative productivity is measured by new business bookings/revenue, the number of new deals, and existing bookings/revenue. Take into account the sales cycle and current sales growth rate. When looking at opportunity stage forecasting, when will the orders be finalised?
- Sales & Marketing Plan – Look at the organisational structure, quotas, compensation, and talent. To achieve this objective, you will also need to consider the revenue plan, which should include renewals, upsell, cross-sell, attrition, potential, and lead generation.
- Market Positioning – Market growth rate and sector economic outlook. Customer size, deal size, deal profile, single product deals, and multi-product penetration compared to the competition.
- Revenue Goals – Revenue goals by product line and geography.
- Customers & Prospects – Market Potential. New markets for entrance and viable sales forecast.
These five critical areas will demonstrate trends and voids where potential opportunities exist.
You can further establish a factual foundation and identify potential revenue opportunities using leading and lagging indicators.
With leading indicator KPIs, comparative benchmarks will determine possible reasons these KPIs are surpassing or not meeting those benchmarks and discover areas to pull back or invest. Consider sales and marketing expenditures, pipeline coverage ratios, sales representative turnover, and selling time as a percentage. These KPIs will provide insight into efficiency, performance conditions, pipeline quality, demand generation, and talent requirements.
Give the same evaluation and consideration for lagging indicators, including marketing attribution, annual bookings, retention rates, renewals, expansion, new logos, rep quotas, and win rates. These key performance indicators will illuminate customer success, performance conditions, prospecting, headcount, and sales processes.
Benchmarks will vary by industry, customer lifecycle, and other factors, but general guidelines will assist teams in determining where they may be exceeding or falling short of expectations.
When you have a firm foundation of key data points and a clear picture of the current state, identifying potential growth levers and placing strategic moves seems less daunting.
Sales Focus Advisory can guide you through this growth forecasting process and ensure your business is focused on the key drivers of growth.
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