3 Strategic Steps to Improve Your Revenue Forecasting

improve your revenue forecasting

Improving your sales team and the tools they use is crucial to business, and you likely spend much of your time doing just that. Not only are they the front line of marketing and customer interaction. They are also where sales forecasting data is most accessible, and where forecasting and strategy implementation is carried out. If you're looking to improve revenue forecasting, the following three sales force-oriented tips can help you get there. 

Step #1: Know Your Target Customer

Knowing your target audience as a generalization is no longer enough. You have to be fully aware of the buyer persona or personas you are targeting in order to accurately and effectively market and make conversions. Knowing the specifics of the person that buys from you is crucial. But make sure your sales team is aware of this buyer persona, as well. How can they effectively carry out marketing and sales techniques if they have no idea who they're selling to? When completing a buyer persona, consider the following. 

  • Demographics (age, location, financial situation, etc.)
  • Where they shop
  • What's important to them (values)
  • Their self-image
  • Perceived barriers (about your product/service)
  • What impacts them/ how they make decisions
  • What products and services they use now that serve as competition to your marketing efforts

Step #2: Focus on Prospect Behavior

When revenue forecasting, it is crucial to focus on prospect behavior. It is very common for managers to have key metrics for their sales team and steps of the sales process that are considered ideal. However, if you send your sales team through a series of steps without understanding the prospect's reaction to those steps, you could wind up with data that gives you an inflated sales forecast. It is very possible to have a prospect who says they'll take more information, agrees to a quote, maybe even attends a sales meeting, but if they aren't actively engaged in the process and they haven't given certain types of feedback, the sales process may not be as advanced as you think it is. In addition to having sales criteria, make sure your sales team has response criteria, as well, as this will help ensure more accurate revenue forecasting. Your sales team (and you) should be aware of things such as: 

  • If your sales representative sends out information, does the prospect simply take it, or does he or she set up a meeting?
  • If your representative identifies a prospect need, does the prospect actually verify that need?
  • Does the prospect indicate when they will make a decision? 
  • Does the prospect agree to further meetings? 

Step #3 Be Aware of Key Data Points (and Let Your Sales Team Know)

Many times sales managers come up with data points they find most important (opportunities in the right stages, history of deals/commitments, accurate deal values and close dates, etc.) but never let their sales team know what they are. Over time you'll be able to gauge the data points that most accurately dictate in which direction your sales are heading. Be sure you communicate these to your team, as it will help them:

  • Know where they stand in the sales process
  • Be able to provide accurate feedback to management
  • Be on the same page as you and everyone else, so everyone works towards the same goals
  • Be better prepared to gauge their own success

These three tips are by no means inclusive of everything you should do to ensure a better sales forecast. However, by understanding these three metrics and communicating them to your sales team you can ensure more accurate revenue forecasting, improve quote accuracy, reduce proposal time, and more.

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Tags: Revenue Forecasting

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