Sales Operations , Tools of the Trade
February 12 | Blogs
How To Implement the Salesforce Forecasting Tool
Estimated read time 6 min

As a business, you need the fluidity and freedom to tackle long-term investments and predict short-term performance. Every sales period you can predict gives you the agility and foresight to grow your business faster, smarter, and with more purpose. Unfortunately, a significant number of businesses fail to leverage sales forecasting, and nearly 80% of those that do enable forecasting end up missing their forecasts by at least 10%. In fact, research suggests that 93% of sales leaders are unable to forecast revenue within 5% of their actual revenue attained, even if there are only one or two weeks left in the quarter.

That’s a problem. Fortunately, Salesforce provides you the tools you need to build hyper-accurate forecasts. And the Sales Cloud’s Sales Forecasting Tool is easy to set up and utilize. Here’s how you do it.

The Value of Sales Forecasting

Businesses with accurate sales forecasts are ~8% more likely to hit their quotas and they enjoy ~14% higher year-over-year growth compared to their competitors. And why wouldn’t they? Foresight is a powerful weapon, and understanding what revenue to expect before the quarter ends can spark serious growth in your company. Think about it. You could ditch gut feeling and intuition and blanket each tech investment, M&A move, and business strategy in the warm and fluffy blanket of machine learning and AI.

But there’s one teeny tiny problem. Only 45% of sales leaders trust their forecasts. Your forecast is only as good as your data and the algorithms consuming that data. Of course, no forecast — regardless of its marketing claims — is perfectly accurate. Algorithms can’t predict the future; they can only build forecasts based on trends. We’re guessing that no one’s algorithm predicted Q2 2020.

Here’s the thing: sales forecasts may not be perfect. But modern sales tools are insanely accurate. And forecasting has the very real potential to change your business. For example, a recent McKinsey study noted a global manufacturer that implemented AI-powered sales forecasting — resulting in a 5% boost in sales. Another chemical company saw a 6% bump in sales.

In other words, sales forecasting isn’t only valuable for digitally-native SaaS companies with bean bag chairs and a hip coffee shop downstairs. Every business, of every size, can find tangible value in sales forecasting; you just need the right tool. Thankfully, almost every sales team on the planet has access to one of the most accurate and powerful forecasting tools on the planet — the Salesforce Forecasting Tool.

Understanding the Salesforce Forecasting Tool

Salesforce Sales Cloud comes with native, built-in forecasting capabilities. This beast of a tool combines Salesforce data with any incoming systems, lakes, buckets, or blobs to garner intelligent, real-time forecasts. Better yet, you can choose between overlays, splits, product families, and baseline opportunities, so there’s plenty of room to generate forecasts across sales functions.

Here’s a general rule-of-thumb, clean, accurate, and valuable Salesforce data (opportunity data in particular) generates hyper-accurate forecasts. Poor opportunity data with duplicate entries and non-standardized practices produce inaccurate forecasts. In other words, Salesforce’s forecasting tool is incredibly intelligent, built specifically for the Salesforce ecosystem, and immensely useful.

But it’s only as useful as the data you put into your Salesforce ecosystem. If you struggle with forecasting accuracy, you have a data governance issue. You can learn a little more about data governance in our data lifecycle series, but it’s incredibly important to focus on data health before trying to pin down forecasting.

How to Implement Salesforce’s Forecasting Tool

Here’s the good news: Salesforce Forecasting comes with your Salesforce instance. All you have to do is go in and set up users, create a hierarchy, and start seeing some rich insights. Seriously! It’s incredibly easy. In fact, forecasting is enabled by default. You just need to go in and set up a hierarchy.

Hint: You can simply search “Forecasts” in the search box (under “Home”) to quickly find the features listed below.

  • Click Setup
  • Go to Customize
  • Select Forecasts
  • Find Forecast Hierarchy

You can choose Forecast managers and users in the Forecast Hierarchy settings. After that, you simply create some forecast types:

  • Click Setup
  • Select Customize
  • Find Forecasts
  • Choose Settings
  • Select Add a Forecast Type or Add Another Forecast Type
  • Choose your data source in the Forecast Type menu
  • Choose your Forecast Measurement (Revenue or Quantity)
  • Set up your forecast features
  • Click OK
  • Save

There are plenty of other options to play around with. Depending on which opportunity type you selected (e.g., opps, product families, splits, opp splits, etc.), you’ll see plenty of unique fields to edit and toy around with, including forecasting periods and display types. In general, setting up forecasting is easy. Every business will have its own unique forecasting requirements, so we can’t give you a step-by-step guide, but most organizations should be able to handle this part swiftly and without any headaches.

Data is the Key to Salesforce Forecasting

Most businesses have an easy time setting up forecasting. The hard part is getting accurate forecasts. To win with forecasting, you need crystal-clear data streams and plenty of governance. The biggest mistake organizations make when approaching the wild and wonderful world of forecasting is data clarity. Setting up BI tools and forecasting solutions requires minimal effort. Feeding them is the hard part.

Often, businesses spend a significant amount of time pinning down the right KPIs, tweaking forecasts to display the perfect information, and setting up really complicated and holistic hierarchies to drive intelligence across every sales unit. But when it comes to maintaining and cleaning up data, they simply rely on Salesforce.

That’s a problem. You’re responsible for the clarity of your data, and Salesforce won’t spoon-feed you clear and consistent data. Remember, Salesforce lets users tap into forecasts necessary for their position. If the data feeding your forecasts is inaccurate, dirty, duplicate, and non-standardized, every member of your sales team will be operating off of false information.

Create Holistic Data Ecosystems with Delegate

Setting up Forecasts in Salesforce is easy, intuitive, and incredibly user-friendly. But setting up forecasting is simply the beginning. You need to constantly feed your forecasts accurate, high-quality data to gain the insights you need. Unfortunately, this is an area where many businesses struggle.

Maintaining your constantly expanding data ecosystem is easier said than done. We can help. At Delegate, we help companies maximize the value of their Salesforce ecosystem with world-class data lifecycle strategiesContact us to learn more.