Nailing Your Number: What It Takes to Forecast Accurately

Throughout the years, I’ve spent time at big companies (11 years at SAP) and fast growing businesses like DataScience.com (acquired by Oracle). I’ve also served at every level of the sales organization, from sales rep to various levels of management and now as CRO here at Clari.

While every role and company is a little different, one thing has remained consistent at every stop: Forecasting is one of the most important business processes to running the business. It determines how the company invests and grows and can have a massive impact on company valuation.

When you’re in the trenches, like most reps and managers, it’s not always easy to see this bigger picture. Luckily, we’re passionate about forecasting, so we love to share our point of view on why forecasting matters.

Feel free to share with your team too.

Masters of Revenue

Why Sales Forecasting Matters

The forecasting process is so much more than just calling a number. It represents the entire operating rhythm of the whole company.

When the team is hitting their number quarter after quarter, the company can invest and grow with confidence. That means more marketing campaigns, increased headcount, and new technology to not only sustain, but also boost that growth trajectory.

If you’re a public company, calling a number to the street drives shareholder value. If you’re private, forecasting sales — and the ability to do it accurately and predictably — reflects the health of the business to the board of directors.

Done right, sales teams perform at their best, and everyone wins. Done wrong, there's finger-pointing & distrust, and everyone loses. Sales is a team sport, and a great forecasting process can vault team performance to new heights.

It’s about getting the team to run the right end-to-end process and cadence so the company can realize its fullest revenue potential.

The Role of Reps and Managers in the Sales Forecast

Hitting your number at the end of the quarter doesn’t just happen. It requires careful inspection and execution throughout the quarter. It’s so much more than just calling a number. It involves:

Whether you’re a rep, manager, regional director, or geo lead, executing a proper inspection and forecasting cadence significantly increases your earning potential. Do it right (e.g. following points A-F above), you will maximize your earning potential. Do it wrong (e.g. perceive this as a process only for management), you will dramatically reduce your probability for big earnings.

This is what Clari was designed to do: Help the company (& you) realize your fullest potential. If you follow our process in Clari, you’ll be more efficient, productive and strategic. And you’ll be doing your best work, achieving your highest potential, meeting your commitment to the business and growing your career.

How Sales Forecasting Affects the Company

Blowing away your number can be just as detrimental as ending the quarter below your number. It may seem counterintuitive, but take these two scenarios:

  1. Weak pipeline/missed forecast. When a team underperforms on their forecast, the company sees less revenue, which impacts stockholders, the valuation, and can lead to layoffs or downsizing. That’s an obvious (and terrible) result of a missed forecast.
  2. Strong pipeline/exceed forecast. Exceeding the number is almost equally bad for business. Why? Not knowing how much revenue you’re generating means the company can’t plan, hire or invest properly. This leads to hasty, inefficient and wasteful business decisions.

In both scenarios, had the team 'seen' (i.e. forecasted) where they would land early in the quarter (e.g. week 4, not week 11), plans could have been made to avoid those less than ideal scenarios, impacting the entire operating rhythm of the whole company.

  • The underperforming team could have decreased spending to balance out the forecasted missed revenue. With better visibility, the team may have spotted risk earlier and throughout the quarter, taking action to course correct and avoid a miss.
  • The outperforming team could have proactively developed a more strategic plan for spending the future windfall they were forecasting.
Masters of Revenue

Final Thoughts on the Importance of Accurate Forecasting

Follow the process and you’ll call the right number, win big for the company and do your best work. Don’t follow the process and you risk calling the wrong number, along with myriad consequences. Clari is here to help you do the former with flying colors by:

  • Automatically capturing sales activity and customer engagement data (emails, meetings, attachments sent, etc…) and associating them with the relevant opportunity, saving reps time from manual data entry and giving the entire revenue operations team visibility into the health of a deal
  • Using machine learning and AI to analyze that deal data to provide you with meaningful and actionable insights for better forecast accuracy and efficiency
  • Real-time forecasting that gives you better accuracy with up-to-the minute opportunity data and saves you time by avoiding telephone tag
  • Visibility into out-quarter pipeline allowing you to set your team up for future success

If you’re already a Clari customer, we hope you find this helpful. If you’re not, schedule a demo to see how Clari can improve your forecast accuracy.

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