How can pipeline and forecast management work together to yield more accurate results?

Did you know that forecasts provided by your sales managers and leaders are no more accurate than just flipping a coin? According to CSO Insights, less than 50% of sales people who participated in the study reported that they were accurate only half the time when forecasting opportunity amounts and due date for closing. For today’s post, I want to discuss why pipeline management (also referred to as pipeline review) works hand in hand with your forecast approach, and how it can benefit your sales organization. I will also share tips to help you successfully incorporate it within your own company.

You may have already established a rigorously inspected top-down effort to collect the forecasts from every region and sales team, but they are ultimately inaccurate and you are left wondering: Why am I spending so much time explaining how the closed quarter differed from the forecast I shared with my CFO and CEO a week before closing? The answer:

A pipeline management effort implemented and overseen with the same rigor and executive endorsement as forecast management will help your sales managers achieve greater accuracy.

Since you are already responsible for shaping the sales managers’ forecast approach, you can also initiate a pipeline management process in tandem. Your sales managers are already investing many hours with sales reps in 1:1s, but this time is well-spent if they have an effective pipeline discussion.

Your forecast management process depends on your managers’ ability (perhaps with an AI tool) to make the right judgment for every opportunity projected to be closed in the current quarter. But what about the next quarter? How can you anticipate if you have enough pipeline to reach your sales goals in future fiscal quarters? In general, you don’t have the time nor the energy to determine that because you spend most of your time reviewing on the top deals for the current quarter. Pipeline management will help you move from a reactive forecast to a proactive forecast. It creates a base for your well-orchestrated forecasting effort and you might not be fully involved. While it deviates from your day-to-day execution, you can make this happen and enable your sales managers to strengthen the forecast process.

To make the right judgment, you should have a strong awareness of all the possible gaps in your managers’ pipeline, which includes:

  • Trusting your sales managers to inspect and evaluate every opportunity in their current sales stage against the customer buying process.
  • Assessing a lack of opportunities ahead of time to launch marketing campaigns that can help generate more qualified leads.
  • Diagnosing why and how discounts are being offered, and how to rely on them less with a strong empowerment model at every level of the organization.
  • Providing your sales reps guidance on how to increase the average deal size with more units and selling premium versions of your product without overselling to your customer needs.
  • Evaluating how quickly opportunities can move forward through the sales stages and helping your team reduce time in every customer engagement, or even better, make that time more effective.

Pipeline management is distinct from forecast management, but they’re both important conversations your sales managers should have with you and their teams. Below are the key elements of a successful pipeline review:

  • Structure the Agenda and Cadence: The industry is increasingly favoring a prescribed meeting agenda and cadence. Have your sales managers schedule a weekly meeting and develop a formal agenda addressing all the possible gaps in your pipeline; also make time to review areas in seller skills that need further development and refinement. 
  • Ask Powerful Questions: Train your newly promoted sales managers to ask thoughtful questions that help sales reps identify the root causes and brainstorm tactical and strategic solutions. Observe your sales managers in how they coach their reps and consider role-play strategies to apply that same coaching approach with your sales managers.
  • Determine Follow-Up Actions: Make sure your sales managers have a structure in place after their weekly calls to follow up on every discussion and agreement reached. Log these agreements so everyone is up to date on every opportunity and can check in on any pending action before the next call. Sales reps will need a few weeks before they can deliver on any promise and tracking their progress is the best way to hold them accountable.
  • Lead with Insights: Ask sales ops to provide the right reports and dashboards, and train sales managers to review them closely when they develop their agendas. Adjust the reports and dashboards according to their feedback and try to make them easy to interpret.
  • Track progress: Set metrics for the pipeline management effort and review them monthly with your sales managers. Get them involved in designing the metrics and run correct any deviated metrics. Make sure you have the funding to build this capability as you did for forecast management.

Implementing a pipeline review process requires a lot of energy; you will have to implement tools, processes, and methodology as you did to establish a top-down forecasting effort. I would prioritize reducing a bloated pipeline first, and then focus on helping your sales managers create new opportunities while they coach their team in closing existing deals faster. Within the first quarter, all that effort will be worth it—you will see how increased control and transparency strengthens your forecast and closing discussions with top executives and CFOs. I imagine you are asking yourself if this is effective in the long run. There are fast and cost-effective models like the one Convercio provides to support sustainable business growth. I invite you to explore our site and ask for a demo.

Michele Lanzara is CoFounder of Convercio

Michele Lanzara is CoFounder of Convercio