Sales leaders and sellers must have confidence in their organization’s forecasting to make commercial decisions, but a recent survey by Gartner, Inc. shows most leaders lack confidence in the process and output. Gartner’s State of Sales Operations Survey reveals that only 45% of sales leaders and sellers have high confidence in their organization’s forecasting accuracy. This level of skepticism can result in actions that are based on intuition instead of evidence, which often results in reduced commercial outcomes.
“Heads of sales operations are under constant pressure to produce accurate forecasts to help shape decision making,” said Craig Riley, senior principle analyst in Gartner’s Sales Practice. “Unfortunately, sales forecasting isn’t getting easier — as expanding product portfolios and shifting market conditions exacerbate the issue.”
“While a wealth of sales data and new analytics solutions promise to help, finding the signal in all the noise is often difficult and time-consuming. Combine this with the fact that customers simply don’t follow a linear progression of steps to arrive at a buying decision. Sales Ops leaders are looking for new ways to manage their pipelines more effectively.”
Inaccuracies in sales forecasts can have far-reaching effects and multiple unintended consequences, including:
- Impact on short-term spending decisions. Sales leaders may implement unnecessary incentives or incorrectly ramp enablement programs up or down based on perceived needs.
- Impact on decisions regarding key deals. Leaders may be more willing to approve a discount they would normally reject if they believe they need that revenue to reach their targets for the quarter.
- Impact on the external guidance provided by investor relations. For public companies, an inaccurate forecast may lead to a correction in a company’s guidance to investors, which will likely affect stock price and analyst confidence.
One of the main contributors of inaccurate forecasts is poor data quality. In fact, only 47% of respondents believe their organizations had high-quality data. Meanwhile, 13% report their organizations’ overall data quality is, in fact, poor.
Three common factors resulting in low data quality include:
- CRM adoption and discipline: The organizations that succeed in identifying high-quality data are those that create a culture of process compliance and demonstrate to sellers how CRM data helps them succeed.
- Data governance: Many organizations don’t have a definition of data quality standards that derive from their CRM vision. Sales leaders should ask questions such as, “Why do we have a CRM system?” and “What standards must users follow to attain those goals?”
- Data quality inspection: Many organizations are not measuring data quality and are not building that data into their recurring conversations between managers and sellers.
Gartner for Sales Leaders clients can learn more about the impact of forecasting accuracy in the report “The State of Sales Operations.”
About the Gartner CSO & Sales Leaders Conference
Sales leaders face unprecedented changes in customer expectations, technology and the talent needed to drive results. At the Gartner CSO & Sales Leaders Conference, taking place October 6-8, 2020 in Las Vegas, sales leaders will learn from the latest research and Gartner experts covering sales talent, customer buying behavior, sales enablement and sales operations. Follow news and updates from the event on Twitter at #GartnerSales.
About Gartner for Sales Leaders
Gartner for Sales Leaders provides heads of sales and their teams with the insights, advice and tools they need to address mission-critical priorities amid mounting pressures to drive growth through new and existing customers. With extensive qualitative and quantitative research, Gartner for Sales Leaders helps sales teams combat commoditization and price-based purchasing, develop critical manager and seller skills, elevate the value of sales interactions, unlock existing growth potential, and optimize sales force enablement. Follow news and updates from the Gartner Sales Practice on Twitter and LinkedIn using #GartnerSales.