Reliable sales forecasting in tech hardware: Enhancing revenue predictability

As a finance leader in the tech hardware sector, you’ve likely faced moments of uncertainty regarding your forecasting processes, with financial results landing far from what was expected. To mitigate these uncertainties and avoid surprises, it’s crucial to implement adaptive forecasting models that can respond to market shifts in real time. 

In an industry particularly vulnerable to rapid market changes, sales forecasting is fraught with challenges that can distort data and lead to misguided financial decisions. Forecasts require regular monitoring and revisions, yet they often reach your finance team after delays, causing the data to be stale. Sales projections can quickly become obsolete, complicating long-term planning and budgeting. 

In the first of our blog series, we explored the benefits of seamlessly integrating your marketing activities with sales initiatives to drive revenue growth. In this second installment, we’ll delve into how accurate sales forecasting is critical for achieving this alignment. 

Barriers to successful sales forecasting 

A disconnect between finance and sales teams often results in forecasts that do not align with financial planning. Sales teams may provide overly optimistic forecasts due to pressure to meet targets, leading to biased projections. Establishing a culture of transparency and realism, along with cross-verifying sales data with historical trends and market analysis, can help reduce this bias.

Different business units or divisions may have unique operating models, but regular communication and collaborative forecasting sessions can bridge this gap. However, other challenges persist. Inconsistent data from various sources can lead to unreliable forecasts. Multiple CRM platforms and varied forecasting methods cause data discrepancies, making it difficult to obtain a comprehensive and granular view of the forecast. 

The forecasting process often relies on rough estimates, inconsistent methods, and disorganized reporting. This can derail GTM budgets, investments, and other crucial decisions. 

What can go wrong?

• Multiple CRM sources create burdensome and error-prone manual workloads.
• Inadequate pipeline data can lead to significant overestimations or underestimations.
• Management judgment layers are tough to apply on top of base forecasts.
• Performing what-if analyses and contingency planning is challenging, slowing response times when gaps appear
• Poor handoff between sales and finance often results in incomplete or misleading analysis.
• Limited KPIs for forecasting accuracy and a lack of variance analysis hinder effective forecasting.

You need a system that quickly and easily produces reliable, accurate forecasts by integrating data and insights from across the organization.

What does success look like? 

When Infinera approached Anaplan for help with GTM planning, they needed a solution to prioritize and manage the process of closing deals. Infinera works with over 1,000 customers worldwide and offers over 30,000 products in its catalog. For the sales team, getting accurate pricing to the client in good time is the difference between a closed sale and a missed opportunity. Before Anaplan, the sales team used spreadsheets to handle pricing inquiries, causing delays and errors as pricing was not always up to date.

In early 2020, Infinera adopted Anaplan, enabling consistent and efficient deal evaluations on a unified platform. The deal evaluation process shifted from a slow, spreadsheet-based method to a streamlined, efficient system. This transformation has strengthened customer relationships and empowered Infinera's teams with better visibility and control over sales operations.

“Our bread-and-butter use case is our pricing tool that allows the sales team to go out and make a custom offer to the customer, choosing from 30,000 potential SKUs, each with its own price, each with its own cost,” said Infinera’s director of bid management. “Before Anaplan, it would take us days, sometimes weeks, to get back to the customer. But now, with Anaplan, we can get back to the customer [on the] same day.”

If you decide more robust GTM planning and sales forecasting is for you, let’s look at the benefits you can expect.

The potential gains 

Effective sales forecasting hinges on the seamless collaboration between finance and sales teams. Here’s how this collaboration can enhance your sales forecasting efforts and ultimately boost revenue:

• Headcount and staffing: Accurate forecasting helps determine the right number of staff needed to meet demand without overburdening the budget.
• Talent retention and skills development programs: Predictable revenue growth enables better planning for training and development initiatives, crucial for maintaining a competitive edge in the tech hardware industry.
• Sales compensation spend: Aligning sales compensation with realistic targets prevents overspending and motivates the sales force effectively
• Cash flow decisions: Reliable forecasts ensure smooth cash flow management, critical for sustaining operations and making timely investments.
• Commercial investments and marketing spend: Informed forecasts enable strategic allocation of resources toward high-return investments and marketing initiatives.
• Production budget and inventory management: Accurate sales projections prevent overproduction or stockouts, optimizing inventory levels and reducing costs.
• Project funding: Reliable forecasts ensure appropriate funding allocation for IT projects to R&D endeavours, supporting innovation and growth
• Discretionary spending budget: Ensure discretionary spending aligns with expected revenue, avoiding budget overruns or missed opportunities.

What’s holding you back from achieving all of this?

Tech hardware sales forecasting often begins with analyzing historical sales numbers, augmented with current internal and external data from various sources, including the sales force. Spreadsheets are commonly used to aggregate and consolidate forecasting data but have limitations. They can be cumbersome, complicated, and prone to errors. Multiple tables representing different business units or geographies can only go so far — they don’t highlight gaps and risks with real-time visibility. Meanwhile, data in your company’s CRM could be incorrect, outdated, or incomplete, making analysis difficult. 

Techniques for improving sales forecast accuracy 

If sales forecasts do not match reality, your business may over or under invest in key operational areas, jeopardizing financial success. To improve sales forecasts, you can use various techniques and tools that provide real-time updates on sales projections. These include:

Predictive Pipeline Optimization: This uses third-party data to help you forecast and prioritize the most promising deals, making your sales pipeline more accurate. With advanced algorithms and machine learning, tools like Anaplan give you insights into pipeline health and sales performance.

Predictive Insights: This helps you understand your customer better by analyzing external market data such as growth trends, business alliances, hiring trends, technology usage, buyer intent signals, and purchase likelihood. 

Using these tools gives you a clearer view of your sales pipeline, identifies key revenue drivers, makes more accurate forecasts, and improves decision-making in sales, marketing, and overall business operations. You’ll be able to:

• Align your sales forecast: Use past sales data to create a baseline for future forecasts, spotting trends, seasonal changes, and patterns to keep your sales forecast in sync with your financial and sales plans in real time.
• Develop multiple forecast scenarios: Prepare for different market conditions by creating various forecast models. This helps you stay flexible and ready to adapt to changes.
• Enhance forecast precision: Use advanced statistical models and machine learning algorithms to process large datasets and uncover hidden patterns, making your forecasts more accurate.
• Regular forecast reviews and updates: Keep your forecasts relevant and accurate by regularly reviewing and updating them with the latest market data and internal performance metrics.

Benefits of using Anaplan for sales forecasting  

Anaplan enables sales leaders to deliver more accurate revenue projections and facilitates faster, more agile forecasting. Finance gains a reliable view of the business, enhancing the partnership with sales to meet strategic objectives. Anaplan’s AI-driven predictive insights optimize the pipeline, while Connected Planning aligns the revenue organization with corporate financial goals and budgets.

With Anaplan you can focus on reliable revenue sources and identify the right cross-sell and upsell opportunities. You can also increase forecast accuracy and create a trusted sales forecast based on a realistic, winnable pipeline. By leveraging statistical models and third-party data, you can identify trends and buying intent.

Other benefits include decreased customer acquisition costs, as you focus on high-potential opportunities and desirable customers. You can also evaluate sales forecasts and the pipeline in real-time, adjusting sales capacity, territories, and quotas for optimal performance.

Connected sales forecasting in a competitive world

Reliable sales forecasting is indispensable for finance leaders in the tech hardware industry aiming for predictable revenue growth. By overcoming common obstacles, fostering collaboration between finance and sales teams, utilizing advanced forecasting techniques, and implementing powerful tools like Anaplan, organizations can achieve more accurate and actionable sales forecasts. This strategic approach enhances financial planning and drives sustainable business growth in an increasingly competitive market.