How can we increase the accuracy of sales forecasting?
The assumption that the further a lead or opportunity moves along the sales process, the higher the chance of closing the deal is problematic. This prevailing forecasting logic is correlated with the fact that prerequisite sales stages of a linear sales process. Before you close a deal, you should give a proposal. To give a proposal, you should have done your needs analysis, etc. This thinking alone does not give us an accurate projection of future sales success but only shows us how far our sales team manages to move our prospects to the possible finish line.
An opportunity can be easily moved to a proposal stage without concrete reasoning of the high probability of closing. When things go smoothly through the sales process, salespeople tend to see the positive things even if they do not exist or overlook the potential red flags, signalling serious obstacles before closing the deal. On the other hand, if they struggle, push hard or struggle, they are inclined to perceive the negatives more than the positives.
Sales forecasting accuracy can be increased when the sales process progress information is coupled with a deal qualification assessment scoring algorithm directly linked to sales stages. This stage-based assessment brings more scrutiny without creating extra hassle for salespeople.
For example, opportunity A is at the negotiation stage after the proposal with a 30% assessment score. Opportunity B is at the needs analysis stage with a high score of 90%. Which opportunity has a higher chance of closing?
To sum up, sales forecasting will be more accurate when you combine the level of sales process progress with an appropriate qualification assessment.