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A Test of B2B Sales Forecasting Methods: July 2012
A Test of B2B Sales Forecasting Methods: July 2012
Table of contents
1 Introduction
....................................................................................................................................
3 Analysis of sample
.................................................................................................................
5 Conclusion ........................................................................................................................................ 6
1 Introduction
Sales forecasting is a major issue for B2B companies. On one hand, B2B companies often lack the
thousands of data points that statistical forecasting techniques require. But on the other hand, recent
research by Aberdeen Group shows a clear link between forecasting best practices and sales
performance.
The implication is obvious: robust, B2B-specific forecasting methods would change the life of sales
managers.
This white paper describes the test of common and not-so-common B2B forecasting techniques we
recently performed on a sample of SalesClic client data. Our research yields a number of confirmations and
a few surprises.
12 sales teams
3 Analysis of sample
2.2.Methodology
Training and test periods
We divided the historical data of these 12 teams
into training and test periods for the selected
algorithms. The training period is always twice
as long as the test period, with a minimum of 1.5
4 Forecasting methods
120%
4.1.Description
100%
80%
techniques we tested.
60%
40%
20%
0%
50
100
150
200
250
300
-20%
probabilities
eighted pipeline #3 uses declared opportunity
W
The linear predictors assume a linear relationship between stage amounts on day d and
closed-won amount on day d+n
1. The time to win of an opportunity is the average time required to win opportunities that have reached the corresponding
pipeline stage.
2. The duration of a pipeline stage is the average time that opportunities spend in that stage.
3. Time to win for pipeline stage n and the sum of stage durations for stages n to i usually differ
because of early losses, stage jumps and back-and-forth opportunity movements.
Whether they use declared or calculated closing dates and closing probabilities
How computer intensive they are
Closing date
Closing probability
Computer intensive
Weighted pipeline #1
Declared
Declared
Low
Weighted pipeline #2
Declared
Calculated
Medium
Weighted pipeline #3
Calculated
Calculated
Medium
Weighted pipeline #4
Calculated
Calculated
Medium
WP combinations
Both
Both
Medium
Linear predictors
Both
None
High
None
None
High
None
None
Low
4.2.Results
Judgmental forecasts are not reliable
cannot be trusted.
Leveraging historical data helps
weighted pipeline #1
Accuracy improvement
Weighted pipeline #1
Reference point
53%
Decision tree
predictors4
46%
Weighted pipeline #4
42%
WP combinations
20%
Linear predictors5
11%
Weighted pipeline #3
7%
Weighted pipeline #2
-8%
forecasts by 53%. Forecast accuracy also increases by 20% compared to weighted pipeline #4.
4. This is the average of 3 decision tree predictors all 3 tightly grouped around this average.
5. This is the average of 6 linear predictors. The best one improves forecast accuracy by 21% over weighted pipeline #1.
5 Conclusion
This research suggests immediate ways for B2B companies to improve sales forecast accuracy.
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