FORECASTING
The Intelligent Revenue Cycle – Aligning Sales Forecasting with Planning CHRIS LI
Though a vast majority (95%) of finance and revenue operations teams express confidence in their ability to plan from existing sales forecasts, an overwhelming 98% say they struggle to formulate a forecast. To build a team’s confidence in both processes, the most important thing for organizations to pinpoint is what they are trying to achieve in their forecasting versus planning.
While sales forecasting essentially produces predictions on what is likely to occur in a reasonably short period driven by historical data, planning is all about effectively figuring out what to change based on what the forecast predicts. Leaders can then move for- ward with changes, like either shifting around priorities or focusing on push- ing different products. When a plan isn’t producing the de-
sired outcome, what are the next steps? As businesses and technology
continue to evolve at an accelerated pace this year, plans can become obsolete quickly and fail to deliver de- sired outcomes. To stay competitive, companies must design flexible plans, as rigid adherence to outdated strate- gies can be counterproductive. In any sales plan, leaders must dif-
ferentiate between the foundational elements of the plan (such as target market segments) and those ele- ments that can be tweaked without causing significant disruption (such as
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decreasing the number of sales reps allotted to a certain market). What differentiates successful organiza- tions is their ability to remain agile. Continuous miniature course correc- tions throughout the planning period enable teams to stay on track and achieve their goals more efficiently. However, if a change to those foun-
dational elements becomes neces- sary, leaders must allow for a certain time horizon to elapse before making another foundational change; other- wise, they will be forcing the team to operate in chaos. The market’s reac- tion to the organization’s strategy can indicate if one of these foundational changes is necessary. Planning is most effective for large companies when systemized through tools that help efficiently manage models and track these changes. These technologies can help busi- nesses maintain organization and structure while remaining agile and adaptable to evolving needs.
AGILE PLANNING LEADS TO MORE ACCURATE FORECASTS Forecasting helps organizations build a roadmap and identify necessary adjustments, but planning is the key to refining and enhancing future fore- casts. Planning forces teams to think strategically about potential outcomes that directly impact the next forecast- ing cycle. In an intelligent revenue cycle, there is a continuous feedback loop: Forecasting predicts and the team makes necessary changes, reviews results, and then integrates those insights into the next round of accurate forecasting utilizing the results from past experiences.
THE SUPPORT OF AI WITHIN THE INTELLIGENT REVENUE CYCLE According to a recent Salesforce report, 81% of sales teams are either experimenting with or have fully implemented AI, and 83% of sales teams with AI saw revenue growth this year, while only 66% did without the use of AI. Within this cycle, however, compa- nies need to balance their instincts with what the data is explicitly telling them. Although AI can predict risks and agentic AI can institute changes, the components of human reason and intuition are still key to the process. AI will continue to evolve and become more accurate, but sales leaders must also rely on their data interpretation or brainstorm creative ways to reach goals. While forecasting and planning serve distinct yet interconnected roles, their synergy is essential for driving business success. Organiza- tions must cultivate agility, leverag- ing both historical data and strategic adjustments to refine their sales plans. With the balance of AI and human intuition, businesses can enhance forecasting accuracy and optimize decision-making. By embracing a flex- ible, data-driven approach, compa- nies can navigate market uncertainties with confidence, ensuring sustained growth long-term.
Chris Li is SVP of Product at Xactly.
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