At first glance, exceeding your forecast—regardless of how flawed it may be—seems like a win. In many cases, it is. But there are times when it can be just as damaging as missing a well-thought-out forecast.
Consider this scenario:
– Your well-structured forecast predicts 100, and your sales team delivers 99—just shy of expectations.
– In contrast, a poorly conceived forecast predicts 90, and your sales team delivers 99—seemingly outperforming expectations.
At first glance, the second team looks like heroes, but what about the operational chaos caused by inaccurate forecasting? If demand unexpectedly exceeds what was planned, inventory shortages, service failures, and customer dissatisfaction can quickly erode long-term relationships.
The worst-case scenario? Significantly underperforming your forecast. A major shortfall can lead to:
– Poor supplier relationships
– Excess inventory tying up capital
– Missed revenue, directly impacting profitability
How Do We Fix Forecasting?
A survey by Korn Ferry found that fewer than 25% of sales organizations achieve forecasting accuracy above 75%—a troubling statistic.
One solution is leveraging Leading Indicators—data points that help predict future performance. The more your organization relies on predictive analytics rather than merely tracking past performance, the more likely you are to achieve high forecast accuracy.
Where to Find Leading Indicators?
Your CRM holds a treasure trove of predictive data—if you use it effectively. Key metrics include:
- Lead Conversion Rate – The percentage of leads that become customers
- Sales Pipeline Growth – The number of new opportunities added over time
- Lead Response Time – How quickly your team follows up with new prospects
- Sales Cycle Length – The average time it takes to close deals
- Win Rate – The percentage of opportunities won
- Customer Retention & Churn Rates – Indicators of future revenue stability
- Upsell & Cross-Sell Rates – Signals of customer engagement and growth
By selecting the right leading indicators for your business, you can improve forecast accuracy, ensure operational stability, and drive more reliable revenue predictions.
How do you approach predictive forecasting? Contact us if you need help in identifying leading indicators.