Pillar
Forecast accuracy: why the number drifts
Forecasts drift for structural reasons, not because people are bad at guessing. Fixing the structure beats asking for better guesses.
· 1 article
Every quarter, a number is produced. Every quarter, the number is wrong in a direction that surprises nobody. The usual response is to ask for more discipline in the estimates, which treats a structural problem as a motivational one.
Where the drift comes from
Most forecast error is not random. It comes from a small number of repeatable sources, and each of them has a different fix.
- Stage is used as a proxy for probability, but stage only records what has been done, not what the buyer intends.
- Close dates are set by the seller's quarter, not by the buyer's decision process.
- Deals that have gone quiet keep their last known probability until someone intervenes.
- The same optimism is applied to every deal, so errors compound instead of canceling out.
Why averaging does not save you
The hope is that optimistic estimates and pessimistic estimates cancel. They do not, because the bias runs in one direction. Nobody sandbags a deal they are excited about, and almost everybody holds on to a deal they are not ready to give up on.
A forecast built from one hundred independently optimistic estimates is not more accurate than one optimistic estimate. It is just more confident.
What actually tightens the number
Outside evidence. A close date that is supported by something the buying organization did in public is a different kind of claim from one supported only by a conversation. Deals carrying recent, dated, verifiable evidence behave differently from deals carrying none, and separating those two groups is usually a bigger accuracy win than any amount of estimate coaching.
A practical test
Split the pipeline in two: deals where you can point to something the buyer did in the last thirty days, and deals where you cannot. Forecast each group separately for one quarter. The gap between the two is the size of the problem you are actually solving.
Common questions
- Does a better CRM fix forecast accuracy?
- Not on its own. A CRM records what was entered. If the inputs carry a one directional bias, a better system records that bias more neatly.
All articles in Forecast accuracy
- Stage is not probability — Mapping a pipeline stage to a fixed percentage records what your team has done. It says almost nothing about what the buyer will do. (, 2 min read)
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