How to Fix Sales Forecasting with Revenue Performance Management - Page 2

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3 steps to better revenue forecasting

Bottoms-up forecasting incorporates "feet on the street" intelligence from the people who are closest to the customers and therefore most in tune with market changes: sales reps, channel partners and product marketing. Compiling data from all of these sources provides the most detailed and timely insight on changing market conditions and their specific causes, and gives companies the visibility they need to make strategic adjustments.

Instead of trying to make a square peg fit in a round hole by adapting tools such as CRM and spreadsheets, consider dedicated software that enables a real-time, multi-perspective forecasting process. The appropriate tools can help you accomplish the following three steps to revenue performance management success.

Step No. 1: Capture and consolidate

It's not easy to get sales folks to submit their forecasts; they would rather sell (as they ought to be doing). To base your revenue forecast on the input from the people closest to your customers' changing needs, you need to make it easy to capture your forecast continuously.

You need to make forecasting an everyday activity and allow flexibility for mobile, Excel and Web-based access. You need to enable contributors to enter forecasts at any level (for example, by product, account or region), not just by opportunity. You also need to provide reps with information to help them forecast (for example, a backlog for a particular customer).

Step No. 2: Align resources

As much as they might believe it, sales reps are not the only employees who contribute to achieving the revenue plan. A true bottoms-up revenue forecast incorporates forecasts from channels and product marketing and can thus guide company-wide alignment by exposing discrepancies between different groups' predictions. For example, aligning perspectives might reveal that the sales team is forecasting revenue from a new product before marketing expects that product to be available.

Step No. 3: Manage performance

Finally, the forecast should be used as a barometer to measure and improve revenue performance. Real-time, continuous bottoms-up revenue forecasting gives companies the visibility to see what changes in the forecast matter most and why they occurred. Armed with this information, executives can hold the organization accountable to the forecast-and make strategic adjustments based on the changes that will have the greatest impact on the business.


Let's hit the rewind button and imagine that our Company XYZ was following the above best practices. The sales reps on the front line in Korea get the first whiff that the price decay is coming. Each can quickly adjust his forecast while real-time roll-up allows executives to see this trend building. The regional manager is alerted and offers Korean customers a slightly lower price for higher volume orders-offsetting the future price decay and making up revenue with volume.

It doesn't end there. Because the sales forecast is part of the overall revenue forecast process, fulfillment is notified of an impending increase in volume and updates its production plan. Simultaneously, finance readies for the price change and margin impact. Smart revenue performance management allows the company to make up the revenue and prevent the loss that would have occurred by slashing prices across all of Asia-Pacific.

It's tempting to chalk up losses as inevitable consequences of the recession, but it's not all doom and gloom out there. There's opportunity, but you need to be able to see it and act on it before it disappears. Make forecasting about revenue performance rather than a single number for sales and you'll be well on your way.

Southard Jones is Vice President of Products at Right90. Southard is responsible for guiding Right90's product direction and strategy. He has over 12 years of product management and development experience including roles as an engineer, consultant and product line manager. Prior to Right90, Southard was a product line manager at Siebel Systems, where he managed marketing and development efforts for Siebel Analytics, Balanced Scorecard and Performance Management. He also has worked on product development and supply chain consulting engagements with PRTM, Raytheon and other companies.

Southard earned an MBA from the Kellogg Graduate School of Management, an MEM from McCormick School of Engineering and a B.S. in Mechanical Engineering from Cornell University. He can be reached at