Take These Steps to Improve Forecast Accuracy

If you made it this far, you lived through 2023.

That accomplishment alone means you probably don’t need us to tell you that “accurate sales forecast” feels like a misnomer. Unsurprisingly, just 43% of B2B sellers achieved quota in the fourth quarter of 2023, according to data from RepVue. That’s a decrease of about 10% from the first quarter of 2022. While RepVue’s data only covers SaaS companies, we’ve heard versions of “it’s hard out there” from sellers across industries and verticals. Amid this uncertainty, one key struggle presented itself: sales and customer success leaders aren’t forecasting with sufficient accuracy. That leads to downstream struggles like missed quotas, inaccurate budgeting, and financial headaches.

There’s a better way to forecast. Just like the Challenger choreography, it involves a series of interconnected behaviors you’ll need to adopt across your organization.

What’s Driving Forecast Inaccuracy in 2024

Teams struggle to improve forecast accuracy for a host of reasons, old and new.

First, sellers face rising levels of customer indecision. Research into more than 2.5 million sales calls, conducted in 2020 and published in “The JOLT Effect,” found that 90% of those calls contained markers of customer indecision. What do we mean by indecision? While it often shows up as the dreaded “cold feet” at the end of a deal cycle, customer indecision in fact rears its head early in a sale, often in ways that lengthen cycles and make it harder to forecast a close. In fact, win rates are negatively correlated to levels of indecision.

Second, buying groups are growing. Our research showed that the average number of stakeholders in a B2B buying team grew to an average of between six and 11, with more complex sales involving more stakeholders. A recent study from 6Sense, published late last year, found an average of nine members on B2B buying teams.

Next, there’s buyer behavior. Sellers are fighting over the scraps of an increasingly narrowing slice of customer mind-share. According to our research, buyers only spend 17% of their buying time meeting with vendors – that’s all vendors, including your competitors – and they like it that way. Seventy-five percent of buyers in our most recent study reported wanting a completely rep-free experience.

Finally, there are the evergreen hurdles: an inconsistent sales process, sellers’ tendency to listen with “happy ears,” the macroeconomic reality of any given week, and more. These factors may not singlehandedly blow up a forecast, but when you pile them on top of the foundational issues we’ve heard from many of our clients, they make it harder than ever to accurately forecast the year ahead.

What’s a sales leader to do in the face of so many headwinds?

 

The Key to Improve Forecast Accuracy

There’s no one-step solution to improve forecast accuracy (but you didn’t come to Challenger for a prescriptive process, did you?). Instead, we recommend you look at how sellers and leaders analyze g their deals, including who they sell to, how they judge progress and track markers of indecision, and the tools they use to score it all.

Train sellers to identify Mobilizers

Challenger sellers learn to take a hard look at the members of their buying group and ask whether they’re Mobilizers or Talkers. This step is crucial for improving the accuracy of your forecasts, because while Mobilizers can move deals forward, Talkers are all mouth and no movement.

A Talker readily shares information but focuses only on themselves. You’ll know them by their use of “I” statements, willingness to answer every call and email, and tendency to go along with every suggestion. You might also recognize them when your deals start to fall apart because Talkers lack the internal capital to drive decisions forward.

Mobilizers, in contrast, exhibit healthy skepticism. They are far more thorough – which can mean more intense work upfront for sellers – because they know the value of building consensus in a buying group. While they might seem more difficult to deal with, this is exactly the behavior that lets us know that Mobilizers can be relied upon to drive decisions forward.

Sellers and managers motivated to improve forecast accuracy need to focus on what the buyer does, not what they say. Truly indicative factors – those that you can hang a forecast on with certainty – will show up as customer actions, not customer words. These actions can often be difficult to observe because they may take place behind the scenes. That’s where the Powerful Question comes in.

Close the gap between what customers say and what they do

It’s impossible to predict whether a deal will close without sufficient information. Often, when those difficult-to-observe behaviors are at play, sellers need to know more about what’s going on behind the scenes. To pull out those answers and accurately predict when a deal will close, your sellers must learn to ask Powerful Questions. This means going beyond the status quo questions to dig deeper, ask for more specificity, and even ensure customers (who may be new to a complex sales process) have considered all potential blockers to a sale. This is the key to closing the gap between what customers tell you and what customers actually do so you can predict the outcome with greater accuracy.

Powerful Questions for sellers:

• “Will [exec sponsor] approve this initiative?” becomes “Does [exec sponsor] have a clear understanding of the ROI of this investment?
• “Who else needs to be involved?” becomes “Typically our clients need CFO approval for a purchase of this size. Is your CFO aware of this investment?”
• “Can we commit to a signing date of XX in order to hit XX milestone?” becomes “In order to begin on time, we need to finalize the agreement by XX date. Are your procurement and legal contacts aware of that deadline, and are they committed to meeting it?”

For the same reasons, sales leaders should be asking powerful questions of their sellers. This level of accountability helps sellers get realistic about deal forecasting.

Powerful Questions for sales managers:

• “Do you have executive sign off?” becomes “Do all executive stakeholders know they are in an active buying process? How did they respond to this investment?”
• “Do you have the right stakeholders involved?” becomes “Who is weighing in on this buying decision? Who have you spoken to? Who is still in the background?”
• “Has the client committed to a signing date?” becomes “How well do you feel your contact understands the approval and purchasing process? What is your confidence level that they’ve aligned all key stakeholders around signature by the committed date?”

Help sellers spot and address customer indecision

Crucially, research from “The JOLT Effect” shows that top-performing reps can judge the level of indecision in a deal early enough to proactively address concerns, push out its forecasted close, or disqualify the opportunity altogether. Sellers who are skilled in this approach – judging the level of indecision, offering a recommendation, limiting exploration, and taking risk off the table – have a greater number of deals in their pipelines with a high likelihood of closing on time. They don’t experience last-minute cold feet at the same rate because they spot and address customer indecision long before it can derail their deals. Imagine how an organization-wide understanding of customer indecision could affect your future forecasts.

 

Create a system for greater forecast accuracy

For accuracy and repeatability, you need a systemic approach to better forecasting. That means equipping managers to ask the right questions. They should know not just to inspect seller performance, but what to look for, using Powerful Questions to probe for an unvarnished view. They should know how to coach sellers to identify Mobilizers and limit the influence of Talkers and Blockers, and above all, how to use these signals to accurately forecast when their own sales will close – or to know when to walk away.

Because forecasting is a team sport, improved accuracy requires organization-wide change. Consider analyzing your forecasting culture to ensure you approach it thoughtfully, and not as fire drills. Forecasting cadences should be intentional, and widely-known. Forecasting accuracy should be an objective up and down the org chart, from frontline sellers to the CRO.

Most organizations will operationalize buyer verifiers in one, or a blend, of three ways.

1. Manually. Small organizations on a tight budget might decide to bootstrap their system with an eye toward forecast accuracy. In this case, organizations will spend more time training their reps to notice signals of indecision, vetting their contacts for signs they’re a Mobilizer, and drilling on Powerful Questions. They may choose to use “report cards” and other deal inspection processes to develop their forecasts. Even a manual approach can improve forecast accuracy when it’s delivered with rigor and dedication.
2. In a CRM. Building deal inspection into your existing CRM streamlines the process for sellers and removes an element of human error from your analysis. For instance, RevOps teams might tag buyer profiles such as Mobilizers, Talkers, and Blockers in Salesforce. Sellers can use additional buyer verifiers throughout the life of the deal, building a reliable and accurate timeline with less room for error.
3. Using AI. Conversational intelligence tools use artificial intelligence (AI) to observe, record, and flag buyer behavior without bias. Tools such as Gong ingest data from conversations over the life of a deal to verify progress more accurately. They eliminate the human error and “happy ears” that sneak into any well-meaning deal inspection. At Challenger, we’ve seen markedly higher win rates over traditional deal inspection after implementing AI buyer verifiers in our own sales process, both in our CRM and using conversational intelligence.

To improve forecast accuracy, go back to the beginning

Improving forecast accuracy is not about when you forecast, it’s about how. Sellers must understand who they’re selling to, the forces stacked against them, and whether they should double down or walk away. Managers must know how to ask the right questions and coach their sellers toward targets. Then, organizations must commit to a standardized, repeatable process using manual or AI-equipped tools. It isn’t glamorous, but the results are clear. Organizations that equip their sellers and managers with the skills to verify and vet deals reap the benefits of more accurate forecasts.