Monthly or weekly, or even at times daily, sales teams have to forecast. Before ASPEC, sales forecasts (or “order forecasts”) were often done in Excel or some other simple tool, and sent around with some manual manipulation. With ASPEC, transparency moves to the forefront. Opportunities are entered and managed right in the software – not just for forecasting, but with a focus on creating a complete and inclusive list of all opportunities in order to manage them better and to win more.
I’m going to focus on how to use the Forecast section within ASPEC, with the goal of explaining how it works and how to forecast right from the software, in real time, whenever you want. Rather than wait for the “thumb in the wind” forecast to be sent around, at any point anyone in the team with the appropriate security access can see the forecast. (Note that I said see, not do – ASPEC builds it for you and keeps in constantly up-to-date.)
In ASPEC – forecasting works for everyone from the solo sales person or small team up to enterprise level sales organizations. Need to know the 90 day forecast for the Western Region, by sales person, with looking for potential risk? All possible.
For this post, I’d like to focus on the different types of forecasting within ASPEC. It’s important to know that within ASPEC, we are forecasting from identified business opportunities – so if the opportunity isn’t logged, it won’t be in the forecast. If you have an average sales cycle of three months, you can forecast for roughly three months using the open opportunities that have been entered. Use any interval you like, but the average sales cycle length is the most honest look at what your forecast is – the actual business opportunities being logged and worked by your sales people.
There are three categories for forecasting within ASPEC – Unweighted, Weighted, and Committed.
This is the total value of the open opportunities for the date range you have selected. For instance, if you have an opportunity for $20,000 USD, with a probability of 80%, the value will be $20,000. Unweighted shows a total picture of all of the potential business your sales people are working on. Think of this as the total value of all business out there if you were to win 100% of your open opportunities.
This is the value of the open opportunities multiplied against the probabilities. For the $20,000 USD situation with a probability of 80%, the weighted value would be $16,000 USD. This is a typical method of forecasting, and is better within ASPEC because the sales person and management can have more confidence in how probability has been assigned with ASPEC’s consistent and accurate IBO Analysis.
There is a big issue with Weighted – and that is that it can be heavily affected by ‘outlier’ opportunities. Let’s say you typically have $30,000 opportunities. However, one of your sales people is working on an opportunity for $1,000,000, but with a very low probability of 10%. This $100,000 weighted value added to your forecast can heavily skew the results.
In fact, if your business has dramatically different opportunity values with consistency, it might be best to only use the Weighted forecast as a method of validating the next type of forecast – committed.
The committed category only shows opportunity values where the sales person or owner has manually selected the committed field. Think of this as the sales person saying, “Yes, I will win this order.” The forecast would then show all opportunities at their full value for which the sales person has committed them to be won. This is the answer to the question for the sales person: “Which specific opportunities do you think you will win?” In most cases, all of these opportunities should have a high probability (80%).
Withlonger term forecasting for customers who use the committed method of opportunity forecasting, it can be difficult to judge an opportunity to be selected as committed. If you have an average 6-month sales cycle, it could be difficult to pick opportunities to be committed up 4 months out. There is a solution: if the sales person has 2-3 similar situations, he can pick one and mark it as committed.
ASPEC, like other CRM solutions, offers forecasting right from the identified opportunities. However, how opportunities are logged, managed, updated, and assigned a probability has much more meaning within ASPEC with its unique computerized sales model. Forecasting, as a result, is flexible and can match your business. Think about how your business works, and which method makes the most sense for your company.