Large and small organizations understand that forecasting is important, but that doesn’t make it any less of a daunting task. In many organizations it’s often the case that the forecasting process isn’t run efficiently and hasn’t matured to the same level as other processes. It isn’t until a major event occurs, like a big forecast miss, that everyone is forced to reassess forecasting processes.

Envisioning sales forecasting as an integrated, companywide process is an important step to improve process efficiency and forecast accuracy.

The Sales Forecasting Maturity Model sets out to demonstrate different levels or states of forecasting an organization might find themselves in. The purpose is to explain these different sales forecasting levels and to show a progression. Even if your organization is at Level 1, the purpose of the maturity model is to demonstrate that there is value at each level and organizations can take small steps to eventually get to Level 4.

Level 1: Pipeline Sales Forecasting

Create the forecast from opportunities in the pipeline

Pipeline Sales Forecasting means that the forecast is derived directly from the current pipeline. At this level of maturity, the entire process can be carried out in the CRM or in spreadsheets.

Key Takeaways
• Forecast is derived directly from current pipeline
• There is no attempt made to “improve” the pipeline data
• Assumption is pipeline data is complete and accurate, no other source of data required
• No role for historical perspective

Level 2: Collaborative Sales Forecasting

Collaborate throughout the sales organization to create connected forecasts.

Different people participate in the sales forecasting process. People usually contribute information about the opportunities they own, but sometimes this role is taken on by sales operations. It is often the case that sales representatives don’t see immediate value in completing the forecast and as a result, aren’t always motivated to do it efficiently or accurately.

It’s crucial to have the right organizational attitude in order to build an atmosphere of greater accountability around forecasts and receptivity to results. Collaborative Sales Forecasting introduces collaboration across and up through the sales team.

Key Takeaways
• Collaborate throughout organization to create connected forecasts
• Introduce more advanced ways of creating a suggested forecast from the raw pipeline data
• Track the delivery of revenue against these forecasts
• New KPIs are added to create an understanding of sales team performance

Level 3: Data-Driven Sales Forecasting

Use advanced techniques and a historical viewpoint to create an evidence-based forecast.

In Level 3, organizations need to move away from sole reliance on the known current state of opportunities and use history for additional insight. All drivers in the business are added to the forecasting process. Sophisticated techniques are used to extract value from sales history.

A data-driven sales forecast can provide management with guidance about the viability of forecasts in any part of the sales organization. Patterns can be found in historical and transactional data and can be used to identify risks and opportunities for the future. These techniques continuously improve the models with accurate, historical and ongoing feedback from data sources.

Key Takeaways
• Advanced techniques using statistics and machine learning
• Use of historical viewpoint to build an evidence-based forecast
• All drivers of the business are added to the forecasting process
• Every forecast cycle improves based on data from previous cycles to help understand forecast accuracy and delivery

Level 4: Cross-Functional Sales Forecasting

Run a forecasting process that meets the simultaneous needs of sales and finance.

Level 4 Cross-Functional Sales Forecasting meets the simultaneous needs of both sales and finance. Level 4 combines all the features of Level 2 and 3, but also includes multi-period forecasts incorporated with revenue schedules.

There are several important outcomes that occur when organizations fulfil Level 4 requirements. Management can be confident that they have complete coverage and all data sources are objectively considered and weighted based on empirical impact and combined to provide an accurate factor analysis and predictive function.

Key Takeaways
• A process that meets the simultaneous needs of sales and finance
• Combines all feature and characteristics from Level 2 and 3
• Multi-period forecasts incorporated with revenue schedules
• High level of confidence in the forecast

Ready to take your organization to the next level?

There’s a change in the air and current approaches to sales forecasting no longer cut it. Even large established organizations can miss their forecast because it isn’t always given the attention that is necessary. It’s more important for organizations to take a proactive approach rather than be left behind with a reactionary business model.

Join us for a demo and discussion about Vortini’s forecasting methodology. We want to understand your organizational requirements and provide a customized solution that meets all your business needs.

This blog is shortened version of our Sales Forecasting Maturity Model white paper. See Resources for the full paper.