What is a CRM Forecast?

Executive Summary

• A CRM forecast is a forecast that is entered into CRM systems.
• We cover what is rarely covered in the CRM forecast.

Introduction

Understanding the CRM forecast and its use is one of the most important questions around sales forecasting.

Our References for This Article

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What is a CRM Forecast?

CRM is the dominant system for storing sales information generally and also sales forecasts. CRM forecasts have been massively overstated in terms of their effectiveness. And this is primarily because CRM systems are promoted by CRM vendors that spend a great deal of marketing effort trying to tell sales organizations that their particular CRM system will solve all of their problems, including, of course, their sales forecasting problem — and sales forecasts are notoriously inaccurate.
We provide evidence of the exaggerated claims of CRM vendors in the following sections.

Quotes from Copper CRM on Sales Forecasting

One article on sales forecasting where the claim can’t be made the author does not have sales experience is from Copper. Copper happens to be a CRM system that integrates with Gmail (we installed Copper as a plugin a few months ago but never got around to using it much more than creating a few opportunities in it).
The problem is that because Copper is trying to get people to sign up and use its CRM system, its coverage on sales forecasting is also inaccurate. Copper presents its CRM system as a silver bullet for sales forecast accuracy. However, we have done a lot more research into the topic (we think) than Copper and are a research entity, unlike Copper, which is a software vendor. We contend that CRM systems do not improve sales forecast accuracy, as we cover in the article Is Your CRM System Increasing Sales Forecast Error? After observing numerous CRM systems being used for sales forecasting, it isn’t easy to see how CRM systems will help sales forecasting accuracy.

Let us look at some of Copper’s quotations.

Say goodbye to spreadsheet wrangling. Think of Copper’s out-of-the-box forecasting reports as a roadmap to a reliable sales outcome. Copper’s forecasts are simple and intuitive so you can drill into each deal to see different deal stages and weighted forecasts. It’s never been easier to monitor the health of your business, plan ahead for future quarters, and manage the next steps for each opportunity. – Copper

This does not address the primary issues with sales forecasts, and the issues cannot be distilled down to “spreadsheet wrangling.”
These primary issues with sales forecasting are the following:

1. Most sales forecasts are incomplete
2. Sales organizations do not measure forecast accuracy and hence do not change the behavior of inaccurate salespeople.
3. Sales organizations tend to care about quota far more than forecast accuracy.
4. Many sales VPs and Directors are as bad as salespeople when it comes to rigging sales forecasts, as their jobs are as much dependent upon the story they tell the rest of the organization. VPs and Directors will, on many occasions, go into CRM systems and alter the forecast, not to be more accurate, but to further whatever narrative they intend to tell.

Overall, this quotation from Copper confuses data with an improved sales organization when it comes to being serious about accurate sales forecasting.
This is a common inaccuracy provided by software vendors.
The quote continues…

Need to check how closely a rep’s forecast aligns with their final bookings? Copper’s built in sales forecasting allows you to see individual deals by stage, amount, and win probability right from the reports. Not only does it help hold sales reps accountable, it also lets you see their progress in real time and improve their accuracy over time. Know which reps are on track to beat their targets and which aren’t, so you can help them hit quota. – Copper

There is absolutely no guarantee that visibility will translate to accountability.
Again, Sales are measured on sales, not accuracy.

This is a critical point.

Sales organizations’ expectations are normally set such that a high percentage of salespeople do not meet their quota. There is little support for any other focus by Sales organizations other than making the quota.

CRM Forecasts

A major problem with CRM forecast is the same with sales forecasting in general, which is that the forecast error is rarely if ever, measured.

Until the forecast error is measured, there can be no feedback given that requires salespeople to make an actual effort in increasing their forecasting accuracy. Frequently, salespeople enter knowingly inaccurate forecasts. This is why we picked a mushroom house to represent the CRM forecast.

This is the fastest and most accurate way of measuring multiple forecasts that we have seen.