Exact timing for the country to re-open remains in limbo, but there's no question COVID is having a profound impact on every aspect of our personal and professional lives, including the ability to generate and convert pipeline, forecast sales accurately, and drive predictable revenue.
The resulting unemployment and economic uncertainty thrust the country into tumultuous market conditions. But what did that mean for businesses and their ability to forecast revenue with confidence?
Since we process and analyze a lot of revenue data, over $600 billion worth of pipeline data, including 185 billion sales and marketing data points, over 1.24 billion emails, and some 145 million meetings, we decided to look into the numbers to see what the real impact of COVID on deals was, and the way organizations were forecasting revenue.
Sales pipelines are dynamically shifting
As every company across the world faced uncertainty from COVID, and budget freezes began, it was no surprise the data showed late stage deals in Q1 were heavily impacted.
- On average, organizations slipped 8% more late stage pipeline deals (stage 2 and above) compared to the same quarter last year. Early stage pipeline was not impacted as much with slip rates remaining more or less the same as last quarter, indicating that early stage cycles were still in play.
- As current quarter deals slipped, revenue teams pulled in 82% more business by accelerating deals expected to close in future quarters to compensate for others that got pushed out. On average, teams created 25% more new business in quarter between March 1 and April 30 compared to last year, a clear indicator that successful revenue teams were able to identify and pursue new prospects with a more optimistic financial outlook (we call them tailwind accounts).
Sales forecasts shrank and were a lot less accurate
As a recession started taking shape, revenue teams became far less confident in their ability to deliver on the original revenue goals set before COVID hit. Many have gone through the process of adjusting their operating plan to be in-line with the new realities of their business.
Total forecasted revenue declined by 9% in Q1 compared to Q4. Even after lowering their total projections, on average, teams were not accurate, landing 24% below their March 1 sales forecast. The story here is the effects of COVID are completely unprecedented and a black swan event that no one could have predicted.
However, Clari’s AI forecast projection, which is based on a historical analysis of previous deal behaviors and current deal activity, noticed something was off from the start, as it lowered projections by about 12% on average from March 1 to April 30.
Teams ramped up activity in their deals
Even with the transition to an all-virtual selling mode and the unknowns that brought with it, revenue teams were hard at work engaging with prospects and customers.
We’ve noticed an overall increase in meetings and emails sent and received. The number of prospect meetings increased by 14% in Q1 compared to last quarter and the number of emails increased by 16%. However, the overall ratio between sent emails and responses received decreased by 8% compared to the previous quarter, which means it’s even more critical to make sure you’re providing value in every correspondence to break through the noise.
Navigating an uncertain B2B market
Over the past few months, we’ve spent time with CEOs, CROs, and board members of both publicly-traded and privately-held companies, sharing our best practices for navigating this uncertain world.
Almost everyone is looking for answers to the same question: How can they get more confidence in their sales forecast?
While every conversation differs, the conclusions we reached are remarkably similar. Clari CEO Andy Byrne recorded a series of short videos you can share with your teams to ensure you have the right instrumentation and rigor across your end-to-end revenue process. See all 13 videos from our Confidence Checkpoint series here.