Forecasting sales results shares a trait with most other types of prognosticating: The risk of error is significant. There may be more solid, data-informed analysis behind sales forecasts than, say, predicting who’s going to win the Super Bowl next year, but it’s hardly an exact science.
In a new survey of 405 finance, sales and revenue operations professionals, an overwhelming majority (81%) of the finance and sales leaders said their forecasts are typically at least 5% off the mark. Almost half (43%) said forecasts usually are at least 10% off.
However, despite such frank assessments, 95% of finance and revenue operations teams expressed confidence in their ability to plan using existing forecasts.
Software provider Xactly, which conducted the survey, was skeptical of that sentiment. It “suggests a disconnect between perceived competence and actual proficiency,” the company wrote in its survey report. And it “underscores the need to bridge the gap by further developing the skills required to effectively navigate and interpret forecasting data.”
According to Xactly, which sells software for sales performance management and sales compensation, there are four main reasons for missed sales forecasts:
- Technology failure: an inability to integrate with critical systems when incorporating sales data
- Leaders’ poor preparation for forecast calls
- Individual sales reps not being enabled on which deals to include
- Poor customer-relationship management or pipeline data hygiene
More than nine in 10 of the surveyed sales leaders said more frequent pipeline data could yield more accurate forecasts.
Indeed, all of these problems could be addressed in various ways. However, the issues tend to be less problematic when there’s a strong collaboration between sales and finance professionals, Xactly suggested.
“Sales and finance leaders actually think very similarly when it comes to sales forecasting,” the survey report said. “Although popular belief might be that these functions are often at odds, our findings indicate that when [they] unite, the business thrives.”
Unfortunately, even where such harmony exists, it appears to rarely achieve optimal results. Virtually all (97%) of the survey participants said sales and finance teams need to get better at working together.
Asked about barriers to collaboration, about a third (35%) of the survey-takers said processes take too long and are not collaborative, 30% cited struggles with internal roadblocks, and 24% said everything is too siloed.
Xactly offered some cross-collaboration tips:
- Promote cohesion: Clearly define roles hold cross-functional team members accountable, pull from varied experiences across the business, foster stronger understanding and collaboration in projects.
- Provide individual and team coaching: Cover all bases by allocating adequate time for broader team training and individual sessions.
- Prioritize career development: A major way to keep a team happy and maximize sales performance is to emphasize team members’ career growth year-over-year.
