How to get over 90% pipeline accuracy in your B2B Sales Forecasts

In B2B Sales, forecast accuracy is driven by two essential techniques -

Qualification and Standardisation.  Today, let's focus on Standardisation.

Organisations that prioritise sales pipeline quality are 2X more likely to exceed customer acquisition expectations. Gartner

Why Standardisation Improves Forecast Accuracy

B2B Sales teams need a clear understanding of the specific information required before they can confidently move a deal forward to the next stage in the sales pipeline. 

A shared understanding of what evidence is needed for a deal to progress through the pipeline to the forecast aligns Sales and Customer Service and simplifies capacity planning.
 
Without a standard view of these essential pieces of information, sales teams will interpret them and, despite their best efforts, present an inconsistent pipeline and poor forecast accuracy.

Imagine a scenario where one team member believes that the customer budget is the most crucial factor to verify, while another team member focuses on the customer's decision-making process.

Only with a shared understanding of precisely what each of these six data elements is can the timing of each deal be correctly judged.

Similarly, revenue projections can only be accurate if there is a consensus on the essential information needed for each stage in the pipeline.

Utilising Standardisation to Increase Forecast Accuracy 

Let's walk through an example of applying Standardisation to increase forecast accuracy.

Most Forecast tools, such as CRMs and Spreadsheets, use simple multiplication to determine forecasted revenue—multiplying the deal value by a weighting percentage.

With only two elements in this equation, we have three options for applying standardisation to increase forecast accuracy.

Option 1 is to build some intelligence into either the deal value and/or the weighting percentage,
Option 2 requires evidence at each stage to eliminate interpretations of the deal's progression to close,
Option 3 is a combination of one and two.

Option 1 is quite simple to implement. Changing the percentage associated with each stage of the pipeline can be an effective way to manage expectations. The effectiveness is enhanced when the early pipeline stages have extremely low percentages.  Once the prospect acknowledges that they intend to award you, the percentages can move to 50% and over.  The second element is reducing the reported deal value artificially until the total solution and delivery mechanisms are fully understood, including warranties, insurance, liabilities, payment terms, etc., commonly referred to as Long and Low- or Expectation Setting. However, it does not solve the problem of poor qualification.

Option 2 can help with poor qualification judgements by requiring evidence at key stages in the sales cycle. For example, suppose the customer has read and understood the contracts. In that case, this clears several qualification hurdles and would be crucial 'evidence' for a deal to progress to the next stage in the pipeline.

Option 3 combines these two options with the addition of an IMPACT-style qualification technique, providing sophisticated deal qualification and realistic tracking through the pipeline. Applying Long & Low dramatically increases forecast accuracy and the alignment between Sales and Customer Service.

A standard view of these crucial pieces of information is vital for a smooth and efficient sales pipeline, leading to improved forecast accuracy.

By establishing a clear framework and guidelines, leadership can ensure everyone is on the same page and working towards a common goal.

This efficiently improves alignment between Sales and Customer Service.

Furthermore, a common understanding of these critical information points allows sales managers to track and analyse the progress of each deal accurately.

They can identify potential bottlenecks or areas for improvement, enabling them to make informed decisions and allocate resources effectively.

With a consistent approach, the improved accuracy helps the organisation plan investments and innovation for future growth and success.

Advantages of Achieving High Forecast Accuracy

Achieving high forecast accuracy in B2B companies has far reaching impact.  Reliable, consistently accurate pipeline accuracy results in much better resource allocation, enhanced cash flow and refined strategic planning, all of which drive increased profitability and sustainable growth.

One of the key advantages of achieving high forecast accuracy is the enhanced alignment between Sales and Customer Service.

This alignment ensures that both departments are working towards shared objectives, leading to a more cohesive and efficient operation.

With accurate forecasts, Sales can set realistic targets and expectations, while Customer Service can prepare to meet the anticipated demand, ensuring that resources are optimally allocated.

This synergy not only streamlines processes but also enhances the overall customer experience, as both teams are better equipped to respond to customer needs promptly and effectively.

Additionally, this improved alignment fosters a collaborative environment where insights and feedback are shared, driving continuous improvement and innovation across the organisation.

How HubSpot Sales Hub Can Help Improve Forecast Accuracy

HubSpot Sales Hub has successfully harnessed the power of AI integration to optimise forecasting processes. Sales Hub already has AI Sales Forecasts and Predictive Deal Health Scores which means when you implement the approach we mention and update your processes, paired with AI tools in HubSpot, your forecasting is likely to be consistently more accurate.

B2B sales journeys are dynamic and complex. They involve numerous stages, stakeholders, interactions, and variables.

Standardisation and a shared view of specific pipeline evidence as 'stage gates' is essential for sales teams to accurately present the pipeline and Sales and Customer Service leadership to align.

By establishing a common understanding, leaders can ensure consistent timing and revenue for each deal. This improves efficiency, enhances collaboration, and allows for accurate forecasting.  

So, let's strive for a common understanding of what each pipeline stage means and what value is assigned at each stage to achieve high forecast accuracy.

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