A wide variation in forecast accuracy is often perceived as a significant business risk by customers, and employees. If a company can’t predict, with some accuracy, how well they will do over a given period of time, the perception is that they don’t understand their markets, their customers, or their processes.

That’s the bad news. The good news is that there is a solution. In short, boosting forecasting accuracy comes down to focusing on facts and verifiable outcomes. It’s about linking specific steps in the sales process to the likelihood of closing. That way, when a salesperson says there’s a 75 percent chance of closing a sale, he can show he has accomplished certain steps to back up that claim. DaiShõ Marketing has developed a sales forecasting model that has produced a forecasting accuracy of around 97.0%. Here’s how a simplified version of the Excel spreadsheet based model, that can help…

Step in the Forecast Model	Percentage probability to close
Lead letter sent / acknowledged	0.00%
Referral letter / contact acknowledged	10.00%
Initial prospect meetings / discussions	20.00%
Needs analysis completed	30.00%
Evaluation and competitive plan completed & approved	40.00%
Needs analysis results accepted by buyer	50.00%
Meetings & acceptance by buying supporting influencers	70.00%
Verbal approval	80.00%
Agreement on terms and conditions	90. 00%
Written contract	100. 00%

A salesperson who says there’s a 70 percent chance of closing a sale must be able to talk about the perceptions, needs and expectations of buying influencers in the company, even if they have not been met everyone of the decision-makers. At this stage of the sales cycle however, there should be no blank spaces about how the company, as a whole, feels about the proposal. Otherwise, there’s not a 70 percent chance of closing. Such an approach takes the guesswork out of forecasting – and that’s the whole point. Forecasting is a qualitative process not about “gut feeling”; it should be tied to empirical data. To boost forecasting accuracy we need to disregard emotion and bring in the business / logical side.

Obviously, determining your specific steps and the associated likelihood to close will require you to comb through a lot of old data. But it’s worth it. Not only will your forecasting accuracy improve dramatically, salespeople will spend a lot less time forecasting because they’re no longer “feeling” their way through it; they’re using hard milestones to assign numbers and grades to their prospects.