In an enterprise environment, sales forecasting can be a challenge. Because the sales cycles are longer, predicting future sales with any degree of accuracy is difficult. This is particularly true for startups who are still refining their sales process.
But there are a few proven steps that sales managers can take to deal with the uncertainty of sales forecasting in a volatile environment. Three NYC enterprise sales leaders weigh in on their best practices and tips:
1. Talk to every single stakeholder to better understand their buying process.
David Greenberger of Building the Sales Machine explains that every company has a different buying process, so you need to coach your reps to invest time to understand that process for every prospect. You need to figure out who the economic buyer is, and their decision process. Ask each stakeholder questions like what their budget is competing with, what challenges they might have, any next steps, etc.
Then after a while, your team will have data to help show the probability of a deal closing after a certain amount of steps. For example, you could learn that you typically need to have about 5 meetings with 3 different people in order for a deal to go through. Start tracking this info from the beginning and update as you learn more.
2. Create urgency in deals.
Jeremy Seltzer, VP of Worldwide Sales at Movable Ink, recommends shortening the sales cycle by creating greater urgency in deals. You can do this by offering a discount or providing additional value in the deal. But Seltzer prefers this method: “my favorite way to create urgency is to tie our product to a specific project that does have a budget.”
During the discovery process, the sales team should identify what projects the prospective client is currently working on. Learn everything you can about the project’s aims, budget, and timeline. Then, show the prospect how your product can help them to complete that project. Seltzer recommends this method for startups selling revolutionary products. Although prospects may not have a budget for your product category, if you can tie your offerings to an existing project you increase your chances of success.
3. Devise a rating system that utilizes probabilities of deals going through.
Most sales organizations classify deals according to different stages in the sales cycle. In addition to that, Seltzer suggests using a weighted probability system for sales forecasting purposes, which he refers to as the ABC system. Sales representatives will rate their deals an A, B, or C. Each letter refers to the likelihood of a deal coming through within the quarter. An A deal has a 95% chance of coming through. A B deal has at least a 30% chance of happening, while a C deal has less than a 10% chance. By the middle of the quarter, Seltzer asks representatives not to have any C deals in the pipeline.
By automating this rating system in Salesforce, deal probabilities will impact and reshape forecasts.
4. Utilize automated forecasts.
Adam Landsman, Head of Sales at Transfix, also harnesses Salesforce features for sales forecasting. Landsman uses the newer version of Salesforce, which allows for greater automation.
Managers can configure Salesforce to ask between five and ten key questions about a deal. Based on sales representatives’ answers to those questions, Salesforce assigns a probability of the deal closing. Landsman explains that this method allows sales representatives to provide input in forecasting, which is important because they have the most intimate knowledge of deals and the sales cycle.
At the same time, automation removes much of the subjectivity from the sales forecasting process. According to Landsman, “the biggest problem with forecasting in general is that so many forecasts are subjective. They rely on way too many opinions and there is nothing worse than not only missing your forecast but also being completely unable to predict it.”
5. Think smart about sales representatives’ quotas.
Landsman also said that sales representatives’ quotas can be used to forecast—to an extent. While 60% of sales representatives fail to meet quota, Landsman believes that half of that can be attributed to unattainable goals. He recommends taking a data-driven approach to assigning quotas. More realistic quotas that are in line with reliable sales forecasting data will be better for both managers and reps.
To learn more about what sales experts recommend for startups in enterprise sales, watch the full presentation here: “Building an Enterprise Sales Team.”