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Strengthening the CFO-CRO Relationship Through the Sales Forecast

Authored by Ric Ratkowski on November 25, 2019


The sales forecast is the linchpin of a company’s future.  If it is right and can be trusted the companies’ operations run smoother and its financial stability is more secure.  Typically this isn't easy.  The sales forecasting process is shared by the Chief Revenue Officer[CRO] and the Chief Financial Officer[CFO].  The challenge is both have different motivations on its accuracy and neither have a complete vision of its drivers or its accuracy.  

When the forecasting process is trusted and transparent it relieves stress on both the CRO and the CFO.  This blog reviews how this can be accomplished. 

Short Recap fo Key Concepts from the First and Second Blog

In the first blog in this series I outlined 21 different sales technology categories for the Sales Application Stack that work with standard CRM Applications.  I also introduced the concept of application embedding.  It goes beyond an i-frame interface or typical api or data integration methods and presents both applications “in-context” to each other.  

In my second blog I expanded on the concept of “applications in context” as a method to leverage different software applications in a consistent and cohesive manner without derailing the user’s thought processes.  Applications working “in-context” are of a higher value to the user because it doesn’t require the customer to stop and restart their thought processes as they shift to different applications and make mental.  

This blog also explores the benefits of “applications in context” creates between the offices of the CFO and CRO.  

Visibility into the Sales Pipeline, Trusting the Sales Forecast

The sales forecast above all other forecasted numbers is the key forecast to get right.  When I was a financial planning executive, I was responsible for both accuracy and achievability of the financial forecast, yet I had very little visibility into how the sales forecast was calculated and had very little trust in the sales forecast.  Visibility builds trust.  

With TopOPPS embedded into the Xactly Cockpit, Finance has all the details around the sales forecast.  They can see how opportunities are moving through the sales pipeline, they can see the health score of opportunities and they can see how the sales reps and sales management rank opportunities.  They also have an unbiased system generated forecast by sales opportunity and compare it to their reported sales forecast. Most importantly they can anticipate final period sales results before they are final and take appropriate action.

Another Example of Bridging the CRO-CFO Gap

Another simple example that helps bridge the CRO-CFO Gap  is forecasting monthly/quarterly near term commission expense based on the sales pipeline.  In addition to just forecasting the near term commissions, Finance can easily war-game different what-if scenarios depending on which opportunities they wish to include in the commission calculation.   

Xactly Incent provides a screen where finance can enter all the opportunities  expected too close and then understand the projected commissions paid based on their commission structure in Xactly.

The challenge is getting a list of all expected closed deals.  That is where TopOPPS fits in.

The screen below is Xactly’s Incentive Estimator.  

Xactly Screen 1

The button highlighted in the upper right portion of the screen “Import From AI Forecast/Pipeline” opens the the TopOPPS sales pipeline view.  The user is then able to select/filter which deals they believe will close from the different  pipeline stages or forecast categories (ie. Rep Commit, Best Case, etc.) or based on opportunity health score or any other opportunity attributes.

Xactly Screen 2

This process can be run for any number of sales pipeline scenarios to understand the best case/worst case scenarios.

Seeing the Big Picture

Data driven companies are driven by metrics.  Metrics cover both high level summary to lower level supporting metrics, they include both financial and operational metrics.  Too often these metrics are stored in different system, and may be driven off of different time frames and are difficult to compare.  TopOPPS is embedded into Xactly Cockpit to provide one version of the truth.  TopOPPS provides detail operational sales metrics that can be accessed through Xactly’s Cockpit and placed along side metrics from Xactly AlignStar (territory management), Xactly Benchmarking and Xactly Sales Plan for in-context analytics.

The Ultimate Benefit 

Ultimately, the benefits of these three areas is overshadowed by the overall benefit from strengthening the CFO-CRO partnership.  As a prior Financial Planning Executive, having a sales forecast from the sale group, rooted in the sales pipeline and having the ability to drill down to all the opportunities expected to close would have been priceless to me.  Having this visibility should also help operational stability, predictability of returns, and a better understanding by both parties of the other’s perspective. Ultimately it will boosts efficiencies and reduces costs.

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