Sales forecasting is one of the most frustrating and also important responsibilities of being a sales manager. In many, if not most, organizations, forecasting rolls up to the top executives in the company and goes into the projections for a company's worth and the impact that it will have on the shareholders. This knowledge tends to add extra stress on managers as they try to nail down what their sales reps will actually close in their pipelines. The real issue with modern sales forecasting is that all the stress is completely avoidable and sales forecasting could be much simpler.
In the Harvard Business School's (HBR) review of sales forecasting methods, they found what most sales managers already know about deciding on a sales forecasting method, "The selection of a method depends on many factors—the context of the forecast, the relevance and availability of historical data, the degree of accuracy desirable, the time period to be forecast, the cost/ benefit (or value) of the forecast to the company, and the time available for making the analysis." When deciding on a sales forecasting method, there is a premium placed on the amount of historical data you have and the confidence that sales managers have in that data. In fact, research done by the Aberdeen Group found that 42% of all sales organizations cite inaccurate or insufficient data as a primary barrier to achieving analytics-driven forecasting.
The biggest issue with modern sales forecasting is the lack of faith in the data that they are using to develop the forecast. Roll that uncertainty up every level that the forecast hierarchy and you are left with a forecast that nobody really feels confident about. Even when companies decide to invoke the help of moderns sales technologies, a big pitfall that they stumble upon is a lack of confidence and understanding into how the solution comes up automated forecast number. That's why the best tools not only alert you when the data you're working with has some potential issues, but also tell you how they came up with the forecast number that you can use and take to your manager. In addition to giving the run down on the final forecast number, the best sales forecasting tools also help with pipeline management so that sales managers are up-to-date on the happenings with sales reps top deals and sales executives can always check the tool to gain confidence in the numbers that they are given.
At the very least, sales organizations deserve the ability to trust that the data they use to build their forecast is trustworthy. As a sales manager, if you forecast with the 'gut guess' or use technology that forces you to trust in the forecast that it provides you, maybe it's time to look into better options.