A sales funnel and a sales forecast are not the same thing. A sales funnel looks at the overall health of all the deals in the pipeline. The forecast maps customer’s buying cycle to specific business periods.  This helps predict what business will close in the specific window of time.

Sales Funnel

A robust sales funnel is a good leading indicator of medium to long-term health of your sales efforts.  It dampens wild unpredicted gyrations in forecasting.  It is critical to keep all the deals in the funnel up-to-date. Review the data in the sales funnel constantly. Here is a sample of the types of data that should be tracked:

• Number of deals
  • Deals per sales stage
  • Size of deals
  • Deal progression
  • Cost of sales
  • Velocity
  • Resource utilization

Sales funnel management helps estimate the probability that enough opportunities are moving towards closure.  This allows the organization to keep revenue flowing for a period of time. Sales funnel opportunities estimates are compared against sales target and historical performance and conversion ratios.  This helps to determine whether there is enough business in the intermediate term.

Sales Forecasting

Sales forecasting can have different meanings to different organizations.  To the majority of organizations the most relevant measure is gross dollars that are projected to close in the next business period.  Other forecast metrics include closed deals, recognized revenue, profit, and units sold.  Decide which metric, or combination of forecast metrics work best for your company to create an accurate and impactful forecast.

Sales forecasting inaccuracies can result from over-eager expectations as reporting periods near an end.  Also, a lack of understanding of where opportunities are in the sales process leads to inaccuracies.  Apply sound process, organization, management and analytics to ensure predictable and accurate forecasts.

Sales funnel and sales forecasting combined with analytics and technology will help your company achieve improved sales performance, better business visibility, and better team management.

For a complete discussion of sales forecasting, visit www.sales-management-insight.com.

Most sales reports offer information on what has already happened.  This is like driving while looking in the rear view mirror.  Tracking booked orders is very important, but it is also critical to look at what is coming in the future.

Make certain to build a tracking system or process utilizing the proper metrics.  And, review the data frequently.  Think of both the numerical data and the subjective indicators affecting the success of sales efforts.  Some things like marketing, enhanced executive relationships, and technical training usually don’t transfer directly to sale, but they are important to strengthening and solidifying deals that are in the sales funnel.

Here is a sample of the types of data you want to track:

• Number of deals
• Deals per sales stage
• Size of deals
• Cost of sales
• Deal progression
• Velocity
• Resource utilization
• Marketing presentations
• Technical training
• Executive visits

When you review your funnel, again look at more than just revenue amount.  Your review criteria might include things like:

• Best practices for each stage from your sales process
• Customer evidence of engagement
• Competitive issues
• Customer business issues
• Key stakeholder relationships
• Political concerns
• Decision criteria
• Continued qualification
• Ongoing discovery about the opportunity

For every sales deal, time can be a friend or an enemy.  Deals can progress or regress, become stronger or weaker, or even become dormant and die.  Keeping a healthy sales funnel composed of only viable deals that are moving forward improves the predictability of the business.

Click here complete discussion of the sales funnel.

At the top of the funnel there are unqualified prospects.  These are the many suspects who might need the product or service, At the bottom of the funnel, multiple sales steps later, are the people ready to purchase and receive delivery of the product or service.

A predictable sales funnel is something every company needs to make effective business decisions. Unfortunately, predictability proves to be extremely elusive and hard to achieve. What sales people say they’re going to close, and what they actually close is sometimes a pleasant surprise or it can result in an uncomfortable discussion.

An accurate picture of your business helps Sales Executives run a business more effectively. It is in your best interest to standardize on a set of best practices, metrics, and an effective repeatable process.

A sales funnel can help:

• Better manage prospective business
• Manage current customers and opportunities
• Forecast more accurately
• Identify business trends
• Focus activities across the most important opportunities

A sales funnel and a sales forecast are not the same thing. A sales funnel looks at the overall health of all the deals in the pipeline. The sales forecast maps customer’s buying cycle to specific business periods which helps predict what business will close in a specific window of time.

To achieve a required revenue target, the focus needs to be on a certain level and quality of deals. Sales funnel management helps estimate the probability that enough opportunities are moving towards closure to keep revenue flowing for a period of time. Sales funnel opportunity estimates are compared against sales target so companies have a reliable picture of the health of the business.

Some sales people are very good at managing their funnel while others are not accurate at all. This is why a good sales funnel management process is important. Without a proven process, sales projections become subjective and unpredictable.

And unfortunately, that subjectivity is usually amplified as it passes through each layer of the organization.

Accurate sales funnels help quantify the number of prospects at each stage of the sales process.  This provides an insight into expected current business, and potential for business in the future.

A robust sales funnel is a good leading indicator of medium to long-term health of your sales efforts and it dampens wild unpredicted gyrations in sales forecasting.

Click on this link for a complete discussion of a sales funnel.