Question: How do you know your CRM and sales forecasting tools are working? How do you know when you have a predictable business model and have hopped off that sales forecast roller coaster?
Answer: Your month-end financial statements tell you so.
That’s right – you’ve cleaned your data, segmented and prioritized your contacts and assigned them sales stages. You’re using a CRM and you are generating reports. Now, take a look at your month-end financial statements.
Here’s the financial payoff from all of your hard work:
What you thought would happen, happened. Your CRM, and the sales pipeline and data it generates, gives your business leadership team the foresight to better plan your operation, staffing and financial investments. You can no longer say, "I wish I would have known that a few weeks ago - that cost a lot of money!" You now understand what will occur before something happens, not after. Here's a few examples of how proper foresight could benefit businesses:
A manufacturing company is able to increase on-time delivery while reducing inventory holding costs and unplanned overtime, thanks to their predictable sales forecast.
A lender agrees to finance a new company’s technology investments after the lender sees the company’s sales forecast. The company had forecasted six months of sales, gross margin and net income and had the data to prove it.
Your sales forecast shows an increase in new quoting activity and a higher success rate each month. The next quarter has the potential for six new projects. You do the following in preparation:
- Develop new onboarding processes before the potential constraint occurs
- Schedule project activities to better manage internal operations teams during the launch stage
- Give your internal team plenty of time to prepare and develop a plan by clarifying future workloads
Once you plan accordingly for your forecasts, you are prepared to take on each new project with minimal setback.
Your CRM and sales pipeline gives your sales team increased confidence for price negotiations. Have you ever asked yourself, "Who priced this project so low when we already have more work than we can get done?" With predictable sales tools, visibility increases. This allows your sales team and business leadership to be on the same page, and provides insight into what you should or shouldn't do when efficiently running through sales processes. Here's an example of how you could see the financial benefits of increased visibility:
A key prospect wants to launch a new project in March, when you already have six other projects planned. Sales now has three options, which allow the team to speak with confidence while protecting the gross margin and net income of the business:
- Launch in March but increase price by 15%
- Offer to launch in May
- Offer to launch immediately
What you focus on does get measured. What you measure provides clarity and gives you the insight to make critical business decisions, projections and, when necessary, corrections. Your financial statements are also an incredible place for clarity when you review customer and project profitability. This vital information allows you to continually make improvements! You may also use it to review your customer profile as well as the markets you serve.
Remember, choosing markets or customers not aligned with your business model and culture is one of the biggest drains on a company’s profitability.
Peace of Mind
Ending the roller coaster for any business owner is a dream worth fighting for. So keep cleaning, segmenting and reporting on that data!