Sales Forecasting

Why Sales Forecasts Fail and How to Get It Right

Ask any commercial leader what their biggest headaches are and sales forecasting will always get mentioned.

Despite investing heavily in CRM systems, sales methodologies and sophisticated sales forecasting tools, inaccurate forecasting remains a common problem across many sales organisations.

Having worked on both sides of the problem, as a salesperson submitting forecasts and as a sales leader reporting them to senior leadership, I’ve learnt that the problem rarely lies with the technology.

In this article, I’ll explain how sales forecasting works, why sales forecasts go wrong and how to improve sales forecasting through sales training, opportunity engineering and better sales leadership.

Jump to a section:

• How Sales Forecasting Works
• Why Sales Forecasting Fails
• Why CRM Stages Are Not Enough
• Introducing the Deal Matrix
• Forecasting When Opportunities Will Close
• How Sales Leaders Can Improve Forecasting Accuracy
• How to Measure and Improve Forecasting Accuracy
• Final Thoughts
• Frequently Asked Questions

How Sales Forecasting Works

Sales forecasting is the process of estimating how much revenue a company expects to generate over a specific period.

It typically combines information from the current sales pipeline, historical performance, expected closing dates and assessments of individual opportunities.

Each salesperson will normally share their forecast with their manager in weekly pipeline meetings, and the manager will report the numbers to their leader.

Depending on the size of the organisation, the forecast may go through numerous levels of leadership and iterations before it reaches board level.

Why Sales Forecasting Fails

Sales forecasting remains a major challenge, with Gartner reporting just 7% of sales teams achieve forecast accuracy of 90% or more, while 69% of sales operations leaders say forecasting has become harder over the past three years.

There can be many reasons why sales forecasts are so inaccurate within a sales organisation, but in my experience, it often comes down to some of the following fundamental problems.

Revenue targets and quotas are often treated the same as the sales forecast

One of the biggest mistakes companies make is confusing their revenue targets and sales quotas with their sales forecasts.

A revenue target is what a company wants to achieve.

Sales quotas (targets) are typically what each salesperson is expected to achieve.

The sales forecast is what the available evidence suggests it will achieve.

The revenue target and sales forecast are two very different things, but are frequently treated as though they are the same.

Imagine commercial leadership agrees to set a new revenue target of £500,000 for the coming quarter.

What typically happens is that number will be divided by the number of quota-bearing salespeople on the floor.

That means if there’s a team of 10 quota-bearing sellers, each is given a £50,000 quota for the quarter.

Now imagine the sales manager reviews the forecast with their first rep, who confidently forecasts £30,000 in revenue for the coming quarter.

In my experience, what happens in this scenario is the manager points out their quarterly target is £50,000 and challenges them to identify additional opportunities that could close.

After some discussion, the initial forecast in the early stages of the quarter would typically stay at £50,000.

Now imagine that same scenario happening across all 10 reps, and you have already started off the quarter by forecasting dramatically inaccurate numbers based on revenue targets rather than forecasts.

Sales forecasts get constant iterations before they reach board level

The scenario mentioned above where a sales manager pressures the rep to increase their forecast is real.

But the problem does not stop there.

When a manager submits the team’s combined forecast to the VP of Sales or whoever sits above them, the same pressure is applied to the sales manager.

This process repeats itself until the consolidated forecast reaches senior leadership, potentially having increased several times along the way.

By this point, the original forecast may bear little resemblance to what the salespeople actually expect to close.

This doesn’t necessarily mean anyone has deliberately falsified the numbers. It’s often the result of organisational pressure, optimistic assumptions and a reluctance to communicate disappointing information.

I’ve experienced this myself.

During my earlier years in sales leadership, I would often reduce my team’s forecasts by approximately 20% before reporting them upwards.

Part of the reason was that I knew some salespeople were naturally optimistic. The other was that I expected senior management to challenge the figures and potentially increase them again.

It wasn’t a particularly sophisticated approach, but it reflected the forecasting environment I was working in at the time.

Today, I’d much rather establish a reliable forecasting process that removes the need for arbitrary adjustments.

However, even the most sophisticated forecasting system will struggle if senior management continues treating the forecast as a number that needs to be negotiated upwards.

Sales leaders must distinguish between what they want their teams to achieve and what the evidence suggests they will deliver.

Otherwise, forecasting becomes an exercise in managing expectations rather than predicting revenue.

Poor lead qualification results in inflated sales pipelines that are impossible to forecast

Even when salespeople are encouraged to submit realistic forecasts, the quality of their predictions depends heavily on the opportunities they’re forecasting.

And this is where poor qualification becomes particularly expensive.

During my early days in sales leadership, I conducted a review of almost 200 lost opportunities to understand why they hadn’t converted into sales. The results were revealing.

Reason for losing	Percentage
Poorly qualified	62%
No or insufficient budget	18%
Unknown or no response	9%
Lost to a competitor	6%
Project postponed	5%

These figures were specific to my team rather than an industry-wide study, but they exposed a significant problem with how we were qualifying opportunities.

Too many deals were entering the pipeline without sufficient evidence that they represented genuine commercial opportunities.

It’s a common problem.

A salesperson has a promising discovery call, delivers an impressive product demonstration and receives positive feedback from the buyer.

They create an opportunity in the CRM, assign an estimated value and select an expected closing date.

The opportunity looks promising in the CRM, but there’s very little evidence to support it.

Multiply this across multiple deals and an entire sales team, and it’s easy to understand how companies end up with substantial pipelines that fail to turn into revenue.

A large sales pipeline is not necessarily a healthy sales pipeline.

This is one of the reasons I developed Reverse Qualification as part of the Bold Sales Methodology^TM.

Rather than looking for reasons to keep every potential opportunity alive, Reverse Qualification encourages salespeople to actively investigate the factors that could disqualify it.

The objective is to establish whether there’s a genuine commercial opportunity worth pursuing before committing significant time and resources.

However, I don’t believe it’s reasonable to place the entire responsibility for poor qualification on individual salespeople.

Sales leaders must establish clear qualification standards, document those requirements and provide the training their teams need to apply them consistently.

Even experienced salespeople need to understand how their organisation defines a qualified opportunity.

Without clear standards, two salespeople can interpret an identical buying situation very differently.

One might consider it a strong opportunity, while the other would disqualify it immediately.

Until that inconsistency is addressed, forecasting accuracy will remain a challenge.

Why traditional CRM stages are not enough to forecast opportunities accurately

Even with a well-qualified pipeline, there’s another problem that makes forecasting particularly challenging in complex B2B sales.

Most CRM systems organise opportunities into a relatively small number of linear stages, such as qualification, discovery, demonstration, proposal, negotiation and verbal commitment, etc.

These stages are useful for understanding where opportunities sit within the sales process, but they don’t necessarily tell you how much work remains before an opportunity can close.

Consider a common scenario in enterprise software sales.

You’ve completed discovery, demonstrated your solution, negotiated the commercial terms and received verbal confirmation the buyer wants to proceed.

You update the opportunity in your CRM to reflect the verbal commitment and confidently include the deal in your forecast.

In most CRM systems, that opportunity moves into the ‘Best Case’ category.

However, several activities might still be outstanding.

Has legal has started and reviewed the contract?
Has InfoSec started and completed their review?
Has the CFO approved the purchase?

Although the buyer has verbally committed to purchasing your solution, there could still a considerable amount of work to complete before the contract can be signed.

Depending on the organisation, those activities could take weeks or even months.

This highlights a fundamental limitation of conventional CRM stages.

They tell you where an opportunity sits within your sales process, but they don’t necessarily reflect its actual readiness to close.

The obvious response might be to introduce additional CRM stages, but I don’t believe that’s the right solution.

In complex B2B sales, many activities happen simultaneously. Others follow different sequences depending on the buyer’s internal procedures.

For example, one company might require legal approval before its information security team begins an assessment, while another might conduct both activities simultaneously.

Trying to represent every possible activity within a linear sales process would create an unnecessarily complicated system.

Instead, I prefer to retain a manageable number of CRM stages and introduce a separate way of measuring the actual progress of individual opportunities.

That’s where the Deal Matrix comes in.

Introducing the Deal Matrix: A More Practical Way to Measure Opportunity Progress

The Deal Matrix is a practical sales forecasting tool I created as part of the Opportunity Engineering module within the Bold Sales Methodology.

It helps salespeople and managers evaluate opportunities against a defined set of qualification requirements, activities and milestones.

Rather than relying exclusively on CRM stages or subjective predictions, the Deal Matrix provides a more detailed picture of how far an opportunity has actually progressed.

The concept is relatively simple.

Start by identifying the activities and information required to successfully qualify, develop and close an opportunity.

For example, a matrix might include the following criteria:

• The buyer’s business problem has been established.
• The commercial impact of that problem has been understood.
• The value of the proposed solution has been established.
• A realistic implementation timeline has been identified.
• An internal champion has been developed.
• Relevant stakeholders have been identified and engaged.
• The internal decision-making process has been established.
• Legal review has started.
• Legal review has been completed.
• Procurement requirements have been identified.
• Procurement approval has been completed.
• Financial approval has been confirmed.
• The contract has been issued.

The actual criteria should be adapted to your company’s sales process and the purchasing procedures of your buyers.

Notice that I’ve separated the start and completion of certain activities into individual criteria.

That’s deliberate.

One of my main reservations about using sales methodologies like MEDDIC and others is the terminology used for qualification is heavily focused on identifying processes and people.

Knowing that a legal review is required isn’t the same as knowing it has started. And knowing it has started doesn’t mean it’s finished.

The same applies to champions, financial decision-makers, procurement, security reviews and every other part of the buying process.

Identifying something tells you what needs to happen. Evidence of progress tells you whether the opportunity is actually moving.

These distinctions become particularly important when forecasting when an opportunity will close.

Keep the Scoring Simple

One mistake I encourage companies to avoid is making their deal scoring systems unnecessarily complicated.

You could assign different numerical weights to each criterion, giving greater importance to certain activities and less importance to others.

However, I’ve found this often introduces complexity without providing enough additional value to justify it.

My preference is to assign equal numerical weight to every criterion.

If your matrix contains 20 criteria and 15 have been completed, the opportunity receives a score of 75%.

When something doesn’t apply to a particular deal, simply mark it as completed so it doesn’t affect the overall score.

That doesn’t mean every activity is equally important.

An incomplete legal review or outstanding financial approval could prevent a contract from being signed, regardless of how many other criteria have been satisfied.

The score simply provides a consistent way to measure how much of the defined work has been completed.

You must still consider the importance of any outstanding requirements when evaluating an opportunity.

The principle is to make the criteria sufficiently detailed without making the scoring unnecessarily complicated.

Establish Your Own Forecasting Benchmarks

The real value of the Deal Matrix becomes apparent when you start comparing opportunity scores with actual sales results.

During one client engagement, I introduced a scoring approach based on these principles.

After approximately one full quarter, we began identifying a useful pattern in the data.

When opportunities reached a score of around 71 out of 100, it was a significant confidence signal that indicated the opportunity would be won.

This gave us a practical benchmark for evaluating the pipeline.

For example, a salesperson might have an opportunity sitting at verbal commitment with a score of only 51.

Despite the apparent progress in the CRM, the matrix would indicate that a considerable amount of work remained.

We’d therefore have good reason to challenge whether the opportunity belonged in the committed forecast.

An opportunity with a substantially higher score would provide a stronger basis for confidence, provided there were no outstanding issues that could prevent it from closing.

It’s important to understand that the score of 71 was a benchmark observed during that particular engagement.

It isn’t a universal threshold, nor does a score of 71 represent a 71% statistical probability of winning.

Every company needs to establish its own benchmarks by reviewing historical sales performance and understanding how opportunity scores relate to actual outcomes.

I’d recommend measuring both how often opportunities are won and how often they close within the forecast period.

The Deal Matrix provides the information needed to make those assessments more consistently.

However, there’s another equally important element of forecasting that a score alone cannot address.

Forecasting When an Opportunity Will Close

One of the most frustrating aspects of sales forecasting is that an opportunity doesn’t need to be lost for the forecast to be wrong.

Sometimes a salesperson correctly predicts that a deal will close but gets the closing date wrong.

An opportunity forecast for the current quarter might eventually close in the following quarter, or perhaps even later.

The revenue is ultimately secured, but the original prediction was still inaccurate.

This is particularly common in enterprise sales, where purchasing decisions involve multiple stakeholders and several internal approval processes.

The problem often begins when salespeople accept the buyer’s proposed timeline without investigating what needs to happen to achieve it.

A buyer might tell you they want to implement your solution before the end of the quarter.

That’s useful information, but it isn’t enough to establish a realistic closing date.

You need to understand the internal purchasing process and activities that must be completed before a buyer can proceed.

In my sales qualification training, I always introduce three questions that I recommend asking early in the qualification process:

1. What does the internal process look like inside your company for investing in a solution like this?
2. Who else, apart from yourself, is involved in that process?
3. How long does the process typically take?

These questions provide a foundation for understanding the buyer’s decision-making process.

As the opportunity develops, however, you need to investigate the individual activities in considerably more detail.

Understanding which activities can happen simultaneously increases forecasting accuracy

Suppose the buyer needs to complete legal, procurement and information security assessments before signing your agreement.

Rather than simply recording these as outstanding requirements, investigate when each activity can begin and how long it’s likely to take.

Can legal and information security conduct their reviews simultaneously? Does procurement need to wait until the commercial terms have been finalised? Does financial approval depend on the outcome of another activity?

The answers will vary between companies.

Some organisations have relatively flexible purchasing procedures, while others follow rigid internal processes that simply cannot be accelerated.

Understanding these differences allows you to work backwards from the proposed closing date and establish whether it’s genuinely achievable.

It also helps you identify activities that could begin earlier in the sales process rather than waiting until the buyer has verbally committed.

For example, if you know an information security assessment typically takes six weeks, it may be possible to initiate that process while the buyer is still evaluating your solution. However, you’ll need to establish whether the buyer’s organisation will allow it.

This is a fundamental part of Opportunity Engineering: actively managing the activities required to complete a sale rather than waiting for the buyer to progress them independently.

Continuously validate the closing date

Another common mistake is treating the original closing date as though it remains accurate throughout the opportunity.

Purchasing requirements can change. Stakeholders can introduce additional conditions, and internal approval processes can take longer than expected.

Salespeople need to regularly validate outstanding activities and their expected completion dates. They should also confirm that completing those activities will actually result in a purchase.

For example, if the buyer tells you legal approval is the only outstanding requirement, confirm that nothing else needs to happen before the agreement can be signed.

Otherwise, you risk discovering additional obstacles just when you believe the opportunity is about to close.

The Deal Matrix helps you track the work that’s been completed, while a detailed understanding of the buyer’s purchasing process helps you establish when the remaining work can realistically be finished.

You need both to produce a reliable forecast.

How Sales Leaders Can Improve Forecasting Accuracy

Although salespeople are responsible for managing their individual opportunities, I believe sales leaders must take responsibility for establishing the framework that makes accurate forecasting possible.

That begins with ensuring everyone understands what constitutes a qualified opportunity and what information is required to support a forecast.

These standards should be documented in the sales playbook, incorporated into the CRM where practical, and reinforced through training and coaching.

It’s unreasonable to expect consistent forecasting when individual salespeople are left to interpret the requirements for themselves.

However, establishing the process is only the beginning. Managers must also use it effectively.

Turn Forecast Meetings Into Deal Coaching Opportunities

One of the immediate benefits of introducing a Deal Matrix is that it changes the nature of weekly pipeline reviews.

Instead of relying on vague conversations about which opportunities look promising, managers can examine the specific activities that have been completed and identify what remains outstanding.

Imagine a salesperson confidently predicts an opportunity will close before the end of the quarter when the Deal Matrix shows a score of just 43 out of 100.

Rather than simply challenging the salesperson’s confidence, the manager can investigate the information supporting the prediction.

How long does legal approval normally take?
When is the process expected to begin?
Who is responsible for managing it?
Have we established contact with the relevant people?

If the salesperson cannot answer those questions, the manager has identified a specific weakness in their opportunity management.

That creates an opportunity for coaching.

Perhaps the salesperson needs to improve their discovery questions, become more comfortable engaging additional stakeholders or develop a better understanding of procurement procedures.

This is far more productive than simply telling someone their forecast is unrealistic.

It also helps managers identify problems that might otherwise remain hidden until an opportunity is lost or pushed into the following quarter.

Of course, the Deal Matrix is only useful when everyone understands what each criterion means.

For example, a salesperson might tick a box confirming that the buyer’s business impact has been established when they’ve merely identified a general problem.

Another might consider an opportunity fully qualified because the buyer has expressed interest and agreed to attend a demonstration.

Managers must establish clear definitions and challenge the information supporting completed criteria.

The objective isn’t to encourage people to tick more boxes. It’s to ensure the work has genuinely been completed to the expected standard.

Stop Pressuring Salespeople to Accelerate Deals Unnecessarily

There’s another leadership behaviour I believe deserves particular attention.

Sales managers often place considerable pressure on their teams to accelerate opportunities, particularly towards the end of a quarter.

Sometimes that pressure is justified.

There may be outstanding activities that could be completed sooner, additional stakeholders who need to be engaged or commercial arrangements that could encourage the buyer to proceed.

However, there’s an important difference between actively managing an opportunity and repeatedly pressuring someone to accelerate a process they cannot control.

Suppose a salesperson has established the buyer’s legal department requires approximately eight weeks to approve the agreement.

The salesperson has confirmed the process has started, identified the people involved and investigated whether it can be accelerated. The buyer has explained that eight weeks is a realistic expectation.

Despite this, the sales manager continues pushing the salesperson to contact the buyer and request an earlier decision.

What exactly is that supposed to achieve?

Repeatedly asking the same question isn’t going to make the buyer’s legal department work faster.

It may, however, frustrate the buyer, damage the relationship and make the salesperson appear desperate.

Sales managers need to distinguish between activities that can legitimately be accelerated and those that must follow the buyer’s internal timetable.

Sometimes the commercially sensible decision is to accept that an opportunity will close in the following quarter rather than risk losing it by applying unnecessary pressure.

Forecasting should reflect the reality of the buying process, not the impatience of the sales organisation.

How to Measure and Improve Forecasting Accuracy

Once you’ve established clearer qualification standards, introduced a more detailed way of measuring opportunity progress and improved your forecasting discipline, you need to establish whether those changes are actually working.

I’d approach this from two perspectives: behaviour and results.

First, look at how your team is managing opportunities.

Are salespeople becoming more specific when discussing their deals?
Do they understand the buyer’s internal processes?
Can they explain which activities have been completed and what still needs to happen?

Are managers using pipeline reviews to challenge assumptions and provide coaching rather than simply discussing whether the team will meet its target?

These behaviours indicate whether the organisation is developing the habits needed to support more reliable forecasting.

However, improvements in behaviour must ultimately translate into better results.

That’s where you need to compare your submitted forecasts with the revenue actually achieved.

Compare Forecasts With Actual Results

Start by establishing a consistent method of measuring forecast accuracy.

One straightforward approach is to calculate the absolute difference between forecast revenue and actual revenue, divided by the forecast revenue.

For example, if you forecast £100,000 and achieve £90,000, the forecast error is 10%.

Using the same calculation consistently allows you to compare forecasting performance across different periods.

I’d also investigate whether your forecasts are consistently too high or too low and why individual predictions were inaccurate.

This can help you identify whether your team is being overly optimistic or conservative and where the underlying problems might be.

Did opportunities close for less than expected?
Were deals lost entirely?
Or did they simply close later than predicted?

These are different problems, and they require different solutions.

You should also review the Deal Matrix scores of opportunities at the time they were forecast and compare them with their eventual outcomes.

This includes won and lost opportunities, along with deals that closed in a different period from the one originally forecast.

Over time, these comparisons can help establish which scores are associated with successful outcomes and identify patterns that improve your forecasting decisions.

If your historical CRM records contain enough information, you may be able to establish an initial benchmark using existing opportunities.

However, you must use the information that was available when the forecast was originally submitted rather than retrospectively completing the matrix using information discovered afterwards.

The amount of data needed to establish a useful benchmark will depend on your sales cycle, the number of opportunities and the consistency of your records.

The objective is to continuously improve the relationship between the information available and the predictions you make.

Diagnose the Problem Before Investing in More Technology

When I am brought into a company that is consistently struggling with forecasting accuracy, I don’t begin by recommending another forecasting platform.

I start by investigating how the existing process works.

I speak with salespeople, sales managers and senior commercial leaders to understand how they approach forecasting and where they believe the problems originate.

Next, I examine how forecasts change as they move through the management structure and investigate whether unrealistic targets or internal pressure are influencing the numbers.

And I also review the CRM, qualification requirements, opportunity stages and sales playbook.

One particularly revealing exercise I like to do is examine the process from the perspective of a newly recruited salesperson.

Could an experienced new employee understand exactly how the company expects them to qualify opportunities, manage their pipeline and submit forecasts using the training and documentation provided?

If the answer is no, there’s a good chance the problem is organisational rather than individual.

Finally, I investigate the purchasing procedures of the company’s typical buyers and assess whether the sales team has the skills and information needed to manage those processes effectively.

Only after understanding these factors do I recommend introducing additional tools, changing the forecasting process or making other significant investments.

In many cases, improving the team’s existing capabilities through targeted training and management coaching may address problems that another piece of software would simply make more visible.

Final Thoughts

Accurate sales forecasting isn’t about predicting the future with absolute certainty.

There will always be circumstances outside your control, and even the most thoroughly qualified opportunities can be lost or delayed.

But there’s a considerable difference between accepting that uncertainty and relying on guesswork.

Better forecasting starts with better qualification, a clear understanding of the buyer’s purchasing process and a consistent way of measuring actual opportunity progress.

The Deal Matrix provides a practical framework for achieving this, but no scoring system can replace sound judgement or compensate for a sales culture in which people feel pressured to submit numbers they don’t believe they can achieve.

Before investing in another forecasting tool, I’d encourage you to examine the quality of your pipeline, the way your team manages opportunities and how forecasts are challenged throughout your organisation.

A reliable forecast should be the result of a well-managed sales process, not an attempt to make the pipeline look more impressive than it actually is.

About the Author

I’m David Craig White, a British B2B sales trainer, coach and consultant with more than 20 years’ experience helping sales teams get results.

When I’m not writing B2B sales articles, I’m providing B2B sales training, coaching and sales consulting to B2B sales teams, sales leaders and business owners.

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