Accurate forecasting is a core skill every technology company requires to make informed business decisions.
Inaccurate and unreliable forecasting results in businesses owners not having visibility and foresight of what revenue is due to come in and in what month and may result in poor, uninformed business decisions being made.
In order to build a strong, reliable forecasting process you need to consider the following 5 points:
1. Qualification
You need to build a framework which filters the suspects from the prospects and opportunities.
The qualification of opportunities should not be subjective and follow a stringent string of key qualifying points.
Qualification points should cover such items as Budget, Competition, Key Influences and Decision Makers, Personal and Business Drivers and Agreed next actions.
2. Measurable
Once the qualification points have been identified and agreed, a pre-defined scoring system should be established that is acknowledged and accepted by all key stakeholders within your business.
This will enable forecasting to be consistent from salesperson to salesperson and management to gain an accurate overview at a glance with no further clarification needed.
3. Regular Reviews
How regular are you going to review your companies’ pipeline and who is going to be involved in the process?
This time should be pre-defined so all employees know they have an obligation to make sure their pipeline is up to date.
4. Simplicity
A forecast doesn’t have to be complicated; it just needs to be accurate.
The granular detail is what feeds the forecast and should be available for validation but shouldn’t form part of the management summary.
You should have the confidence that a deal forecasted to close this month has gone through the qualification process.
5. Accountability
Each opportunity within your forecast has to have an acting ‘Account Manager’ who has taken full ownership of ensuring it is managed correctly.
If your managing a team they have to be prepared to be questioned on their pipeline and the qualification, validation should take place sporadically.