#6 How to Optimize Revenue for Business Success

• The majority of firms believe they are accurately forecasting, but the majority are missing the mark. While almost all firms claim to be measuring the accuracy of their forecasts, and the majority believe their forecasting capabilities are mature, only 18% say their quarterly forecasts are within 5% of their actual revenue, dropping to 15% for monthly forecasts. In fact, more firms are off on their forecasts by 20% or more than are within the ideal 5% range.

• Forecasting is becoming more difficult due to increasing complexity and volatility. Most firms believe that current trends such as the acceleration of business change, increasing complexity of the buyer journey, and new revenue models will make forecasting even more difficult in the future. Real-time data, visibility across different lines of business, and workflow automation are essential to achieve accurate forecasting.

• Challenges with technology contribute to the difficulty of forecasting. A third of firms say that poor technology is a cause of forecast variability in their organizations. These technology issues can also create additional data-related problems, such as the use of manual processes or bad data for forecasting. To solve these issues, revenue solutions must include revenue intelligence, workflow automation, and the use of real-time data.

• Poor forecasting can have a wide-reaching negative impact on an organization. Missing the forecast can lead to capacity-planning problems such as increased costs or future budget and resource restrictions, which 89% of respondents identified as a result of poor forecasting. These problems can also damage the reputation and perception of the organization and its leaders, hampering the company's ability to invest in growth and potentially lowering valuations. This can also erode trust in leadership, leading to the manager and employee turnover.

Business implications of missing forecasts:

1. Capacity planning failure

2. Increased carry cost for inventory

3. Tightening of budget and resources

4. Erosion of trust in corporate leadership

5. Erosion of trust in sales leadership

6. Less ability to invest in the growth of the business

7. Negative impact on market valuation

8. Less ability to attract capital investment

Key Recommendations:

• Link technology and business growth goals. It is important to ensure that technology investments that optimize revenue and improve forecasting accuracy align with the business's commercial priorities. Solutions that offer visibility across different lines of business to the entire revenue team help the entire organization align with company-wide goals. Without this alignment, it will be difficult to demonstrate the impact of these investments and secure ongoing or increased funding.

• Upgrade to advanced forecasting tools. If you are still using spreadsheets and relying on sellers' opinions to forecast, it's time to upgrade. Revenue operations and intelligence platforms improve forecasting accuracy, visibility, and management. These platforms capture and leverage buying signals, particularly buyer interactions, and automate this process. Do not rely on sales reps to do this manually, as it is likely to lead to inaccuracies. These interactions offer an alternative view of buyer behaviour, reducing the reliance on the seller's opinion alone. Interaction and activity capture is a key features of RO&I platforms.

• Make sure your forecasting basics are solid. To improve your forecasting process and capabilities, focus on four key elements: (1) establishing a strong data and technology foundation, (2) managing the human processes related to forecasting governance and execution effectively, (3) using insights to increase accuracy and predictability, and (4) meeting the needs of stakeholders who rely on accurate forecast information for strategic and tactical decisions.

• Link your technology investments and forecast accuracy to your business objectives. Make sure that your technology choices align with the goals of the company and that progress is easily measurable. This will ensure that the impact of the investments is clear and that funding will continue to be provided. Additionally, aligning performance reviews and operational metrics with strategic growth initiatives will help the entire organization stay focused on the overall goals of the company.