Accurately forecasting your pipeline is more critical than ever. However, many organizations fall victim to the “Forecast Fallacy” due to inconsistent qualification processes. In this article, we’ll explore three key points from the video “Forecast Fallacy 5—Inconsistent Qualification and the Need for Stage Gates” to help you avoid this pitfall and improve your forecasting accuracy.

Defining Stage Gates

The first step in ensuring consistent qualification is clearly defining your stage gates. These gates outline the specific information and evidence required to move an opportunity from one stage to the next in your sales cycle. By establishing and documenting well-defined criteria for each stage, you create a standardized framework that all team members can follow, reducing ambiguity and inconsistency in the qualification process.

Digitally Enforcing Qualification Criteria

Once your stage gates are defined, it’s essential to enforce them within your CRM or Salesforce automation system digitally. This enforcement ensures that opportunities can only progress to the next stage when the required qualification criteria are met and backed up by evidence. Automating this process minimizes human error and maintains consistency across your sales team, resulting in more accurate forecasting.

Adapting to new information 

New information, such as key stakeholder turnover or a financial event, should trigger a review and change of the qualification to date. Opportunities should be allowed to move forward when they meet the new criteria and move back if they no longer qualify under the updated requirements. Maintaining this flexibility ensures that your forecasting remains accurate and aligned with your current business needs.

Concept in Practice

Imagine you work for a SaaS company that sells a marketing automation platform. Your sales process consists of four stages: Prospect, Qualified, Proposal, and Closed-Won.

Defining Stage Gates

  • To move an opportunity from Prospect to Qualified, the lead must have a verified need for your product, a budget of at least $10,000, and the authority to make a purchasing decision.
  • To progress from Qualified to Proposal, the lead must have attended a product demo and expressed interest in moving forward.
  • The lead must have signed a contract and paid the initial invoice to advance from Proposal to Closed-Won.

Digitally Enforcing Qualification Criteria

The CRM system is set up to enforce these stage gates automatically. When a salesperson tries to move an opportunity from Prospect to Qualified without meeting all three criteria (verified need, sufficient budget, and decision-making authority), the system prevents the change. It prompts the salesperson to gather the missing information. Similarly, opportunities can only move to the Proposal stage if a product demo has been completed and to Closed-Won if a signed contract and payment have been received.

Adapting to Changes in Qualification Criteria

After six months, you realize that the $10,000 budget requirement is too low, as most of your successful deals have a budget of at least $15,000. You update your qualification criteria to reflect this change. When a salesperson tries to move an opportunity with a budget below $15,000 to the Qualified stage, the system automatically moves the opportunity back to the Prospect stage until the budget criteria are met.

Your coach at a new deal introduces the team to a key decision maker and that individual stated that the decision timeline is next quarter, not this quarter. The opportunity no longer passes the stage gate and must be moved to an earlier stage. 

TL:DR

By defining clear stage gates, digitally enforcing qualification criteria, and adapting to changes in your qualification process, you can significantly improve the accuracy of your sales forecasting. Implementing these strategies will help you avoid the “Forecast Fallacy” and make data-driven decisions that drive your business forward. Remember, consistency is vital when it comes to qualification, and by following these guidelines, you’ll be well on your way to more reliable forecasting and increased sales success.

This article was previously posted on LinkedIn.com.