INTRODUCTION

There are dozens of products on the market that use algorithms and machine learning to predict sales forecasts. So why isn’t one dominant? Why isn’t there one solution so trustworthy that sales leaders from any business can just plug in their pipeline and win rates, and get a perfectly accurate forecast every time? Many reasons. Maybe your data set is too small. Or perhaps seasonality plays a role. Maybe win rates vary greatly by product line, geography, or vertical. But usually, the problem is us – humans. It doesn’t matter how sophisticated your predictive algorithm is if it’s being fed faulty or biased data. Are sales forecasts forever doomed to be constructions of back-of-the-napkin math and best guesses? Of course not. But managing the human element of sales forecasting is crucial – you need to get it right before adding technology to the mix. The number you get from your sales reps is one valuable data point, and the number your forecasting software spits out is another. Neither is perfect, so it’s important to consider both. This guide walks you through a blended approach to forecasting, helping you develop a process that instills trust in both the human and the machine prediction, so you can use both to make a more reliable estimate.

PRIORITY 1: HARNESS THE HUMAN ELEMENT THE CHALLENGES

People are notoriously susceptible to biases. If you’ve ever observed a flipped coin land on heads several times consecutively, and felt tails has to land next, then you know we aren’t a particularly rational species. And our biases tend to show up when we’re making sales forecasts. As a result, some of the most common forecasting problems are:

• Some reps purposefully “sandbag” or forecast low to save deals for the future
• Other reps forecast too high because they are reluctant to admit they don’t have enough pipeline, or they are afraid to call out a low number in front of their peers
• The team as a whole doesn’t understand why forecasting is important, so your reps don’t invest time to make their forecasts accurate
• Reps’ goals are on sales quota, not forecast accuracy, so they aren’t incentivized to focus on predictability

THE SOLUTION

Educate your sales reps, create a culture of accountability, and develop a transparent forecasting process. Follow these steps to get everyone on the same page:

• Educate your team
• Develop a culture of accountability
• Get visibility into your forecasting process