Sales Funnel vs Sales Forecast

Sales Funnel vs. Sales Forecasting

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.