"Planning and forecasting are only accurate when based on a long, stable operating history and a...
Forecasting in tech services is about having the right data on future deals. And the most critical data source will be the CRM. As tech services founders look to mature their forecasting capabilities, the starting point is the CRM. Your CRM sets your sales culture by both streamlining tactical execution and providing strategic telemetry. So it quickly becomes the most important tool for your company. This article, adapted from our upcoming e-book on forecasting, will help guide tech services founders in setting up their CRM.
The Information Critical For Forecasting
As you’re forecasting there are three critical pieces of information that need to be filled.
Deal Amount
Your CRM needs to have an expected amount for every deal. You will figure this value out once you have a sales conversation with the opportunity but that is fairly late in the pipeline. You should know what your average contract size is and start using those to start doing calculations.
Deal Stages and Possibilities
A good CRM has deal stages and probabilities for each stage. Founders bring invaluable intuition to their businesses, but the key to effective forecasting is grounding decisions in accurate, consistent data. By relying on objective metrics rather than gut feelings, you can avoid biases and ensure your forecasts remain a reliable foundation for strategic decision-making. Trust the process, and let data guide your insights while intuition complements your strategy. Start out by setting the deal stage probability using industry standards and define clear criteria for when a deal should be in a particular state. This consistency becomes more important as your sales organization grows. The table below shows a starter point for your various pipeline stages. It’s common to tweak the pipeline to what works best for your business.
Expected Close Rate
You need to have an expected close date for the contract. To keep it simple, start with the create date plus the average number of days to close for a deal (which is a metric you can use based on your historical data as well). But as you get more info after talking to the customer, you adjust this date to be more realistic. It is better to be conservative since that can make the difference between the deal closing this quarter or the next.
Data Discipline
More important than the data itself is the team's commitment to maintaining it. The whole team needs to be committed to maintaining the data. Any changes to the pipeline need to be reflected in the CRM. Any decisions on tactics and plans for a customer need to have the CRM data front and center. There needs to be a single system of record, and every effort must be made not to duplicate the data. Whenever possible create integrations and imports instead of copying data. Everyone must be trained and pointed to the appropriate system of records when they have a question about data. To develop good data discipline you must live by your CRM.
Start Small
As you venture on this journey of operationalizing your data the most important part is to keep it small. You shouldn’t push and take on more than your systems are mature enough to handle. Similar to how we’re saying, start small and build up consistently with the analysis of the data. Start small on what you can sustain. Remember, if you aim too aggressively on data collection, you will be blocked before you can analyze and interpret it. In addition, you’ll carry a bigger workload in maintaining the data. We hope this advice helps you start implementing a CRM and build an organization focused on using data to make decisions. As we mentioned in our previous blog post, bookings forecasting is a prerequisite for business strategy. To succeed as a tech services founder, you must cross the maturity step. Please subscribe to our mailing list to make sure you don't miss out on our free e-book that will give you an in-depth guide on this topic.
