Sales forecasting is an important cornerstone of revenue operations—and your company’s future. Now, let’s understand the seven key benefits of building a top-notch sales forecasting practice.
1. Aids target attainment.
Here’s a staggering statistic: According to The Aberdeen Group, 97 percent of companies with industry-leading forecasting processes reach sales quota. In contrast, only 55% of organizations met their targets, that didn’t implement best-in-class approaches.
2. Propels growth.
Forecasts help revenue teams achieve their goals by identifying early warning signals in their pipeline and course-correcting before it’s too late. Teams that master sales forecasting’s science are 10% more likely to grow annual revenue, and are twice as likely to outcompete their industry peers.
Companies with error-free forecasts are 10% more likely to grow revenue year-over-year and twice as likely to lead their field.
3. Improves how well you understand customers.
Business consultancy Bain estimates that effective cross-sell and upsell is five to 25 times more cost effective than acquiring new customers. Sales forecasting helps you attain this revenue efficiency by offering insight into the likely behavior of your most valuable customers. You can predict future sales, as well as improve pricing, advertising, and product development.
4. Quantifies your organization’s health.
Your forecast is much more than a sales number, just like revenue operations includes marketing and customer success in addition to sales. “The forecasting process represents the entire operating rhythm of the whole company,” says Kevin Knieriem, Chief Revenue Officer at Clari.
5. Bolsters sales analysis.
How much do your products and services contribute to your bottom line? How long does it take sales reps to ramp up in new roles? How many new heads does your sales team need this year? Correct forecasts assist sales leadership in answering each of these questions and more.
6. Enables continuous strategic planning.
According to recent Forrester research, annual or even quarterly planning is a thing of the past. Continuous forecasting enables organizations to respond with exponentially less failure to today’s pace of the market. With it, they understand sales rep ramp, justify hiring decisions, allocate resources, and effectively manage risk.
7. Streamlines cash flow, credit, and financing.
By helping your business estimate revenue based on predicted short- and long-term performance, effective sales forecasts position your company to accurately deliver and predict payments, as well as earn better terms when seeking credit and corporate financing.
It goes without saying that these benefits make a solid business case for sales forecasting, provided you avoid common barriers to accuracy. Contact us if you are interested to learn more on how we can help you kickstart your revenue operations process, schedule a meeting here.