3 Reasons Why Sales Sandbags Forecasts (and what FP&A can do about it) 

Sales sandbagging—the practice of deliberately underestimating revenue forecasts—continues to pose a challenge for finance, planning, and analytics teams. While often overlooked as a cultural or tactical norm within sales, its impact is far-reaching: distorted forecasts, inefficient budget allocations, and reduced trust in planning processes. For organizations relying on accurate data to drive strategic decisions, this misalignment can slow down performance and erode confidence across departments. To address the issue, FP&A teams must first understand the root causes.

In this post, we unpack three common reasons sales teams sandbag forecasts—and outline what finance leaders can do to improve forecast transparency, collaboration, and accuracy.

Reason 1: Gaming Compensation & Hitting Quotas 

Let's be honest, compensation drives behavior. And in the high-stakes world of sales, quotas are king. 

Why Sales Does It: 

It often boils down to a few key motivators: 

• Job Security & Bonuses: The most straightforward reason. Hitting that quota means a steady paycheck, commission, and maybe a nice bonus. Under-forecasting makes the target seem more achievable. 

• Building a "Rainy Day" Fund: Some reps like to keep a few deals "in the back pocket." If they're already crushing their current quarter, why not push a deal into the next to get a head start? It smooths out their performance and income. 

• Playing the Comp Plan: Smart reps know their compensation plans inside out. They might delay a deal to hit a higher accelerator tier next month or avoid a commission cap this month. 

• Fear of Missing: The flip side of ambition is the fear of failure. No one wants to commit to a big number and then miss it spectacularly. 

What FP&A Can Do About It: 

While we don't usually design sales comp plans, our analytical prowess is invaluable here. 

• Deep Dive into Comp Plan Impact: Time to partner up! Work with Sales Leadership and HR. Analyze how the current sales compensation structure might be unintentionally rewarding sandbagging. Are the accelerators too steep? Are quotas perceived as wildly unrealistic? Let the data tell the story. 

• Champion a Broader View of Performance: Okay, revenue is key. But what if we also, subtly, started looking at forecast accuracy? FP&A can highlight the cost of inaccurate forecasts and propose discussions around KPIs that reward predictability, not just volume. This isn't about penalizing, but about balancing incentives. 

• Data-Backed Quota Setting: Help make quotas less of a "finger in the wind" exercise. Provide solid historical data, market growth insights, and seasonality trends. When quotas feel achievable and fair, the pressure to sandbag lessens. 

• Model Different Scenarios: Show, don't just tell. Model the financial outcomes of various compensation plan tweaks. How would changing an accelerator impact behavior and the bottom line? This helps Sales Leadership see the bigger picture. 

FP&A: "Your data insights can transform compensation discussions from opinion-based debates into strategic, behavior-shaping decisions." 

Reason 2: Fear & Lack of Trust  - "If I Crush It, They'll Just Raise the Bar!" 

This one's more about psychology and relationships. If sales reps feel like they're constantly being set up for failure, or that honesty isn't rewarded, can we blame them for being cautious? 

Why Sales Does It: 

• The Moving Goalpost Syndrome: A common fear: "If I blow out my forecast, they'll just jack up my target next year to something impossible." It's a self-preservation tactic. 

• Trust Deficit: If there's a history of management using ambitious forecasts as a stick rather than a carrot, or if reps feel their honest assessments aren't valued, trust erodes. Why stick your neck out? 

• Once Bitten, Twice Shy: A bad experience – like being lauded for over-performance only to be saddled with an unachievable target the following quarter – can make reps very conservative. 

What FP&A Can Do About It: 

FP&A can be a powerful force for building trust and transparency. 

• Shine a Light on Target Setting: While Sales Leadership ultimately owns target setting, FP&A can provide the narrative. Use clear, data-backed stories about market potential, historical growth, and economic factors. When the "why" behind targets is clear, they feel less arbitrary. 

• Forecast Together, Win Together: Make forecasting a partnership, not an interrogation. Show sales how their insights are critical and how accurate forecasts help the whole company make smarter decisions – decisions that ultimately support sales success (think better resource allocation, timely marketing campaigns). 

• Embrace the Range: Who says a forecast has to be a single, terrifying number? Introduce scenario planning – best case, base case, maybe even a "sky is falling" case. This lets sales communicate the full spectrum of possibilities without the fear that the highest number automatically becomes the new, unbreakable target. 

• Review, Learn, Don't Blame: When looking back at forecast accuracy, make it a constructive learning session. What drove the variances? What can we all learn to improve predictability? Ditch the blame game; it only fuels defensiveness. 

Reason 3: Managing Volatility & Uncertainty The - The "Just in Case" Buffer  

Sometimes, sandbagging isn't purely about gaming the system or fear. It can also be about genuinely trying to manage the inherent unpredictability of sales. 

Why Sales Does It: 

• The Personal Safety Net: Sales is volatile. Deals slip. Competitors swoop in. Internal roadblocks appear. A self-created buffer in the forecast can feel like essential protection against these unknowns. 

• The "Under-Promise, Over-Deliver" Mantra: It feels good to be the hero who consistently surpasses expectations. A low forecast sets a low bar, making it easier to shine. 

• Pipeline Jitters: Especially for deals in the later stages, if there's even a sliver of doubt, a rep might get overly conservative in their estimation just to be safe. 

What FP&A Can Do About It: 

This is where FP&A's ability to bring objectivity and robust processes to the table really shines. 

• Build Your Own Crystal Ball (Sort Of): Strengthen FP&A's independent forecasting muscle. Use statistical models, trend analysis, and driver-based forecasting. This creates an objective baseline that can act as a sanity check against sales-submitted forecasts, especially for critical financial planning. 

• Keep it Rolling: Static annual forecasts? So last decade! Implement or refine rolling forecasts. These dynamic, regularly updated views make it easier to adapt to real-time performance and changing market winds. This reduces the need for sales to build massive "just in case" buffers into their initial forecasts. 

• Pipeline Forensics: Team up with Sales Ops. Develop crystal-clear metrics around pipeline health. What are the real conversion rates at each stage? How long is the average sales cycle for different deal types? Data-driven insights can pinpoint where excessive conservatism might be creeping in. 

• Talk About the Elephant (Risk) in the Room: Create safe spaces for sales to actually talk about the risks and opportunities in their pipelines. If they can flag a deal as "high potential but high risk" without it immediately being discounted, you get a much richer, more honest picture. 

FP&A Quick Tip: Don't just ask "What's your number?" Ask "What are the biggest risks to hitting that number, and what's the potential upside if everything clicks?" 

Moving from Frustration to Fruition 

Sales sandbagging isn't just a sales problem; it's a business problem. And while FP&A doesn't hold all the cards, we have a critical role to play in changing the game. It's less about pointing fingers and more about fostering a culture of collaboration, building trust with transparent data, and implementing smarter processes. 

By understanding the "why" behind the sandbag and strategically applying our analytical and partnering skills, we can help steer the ship towards more reliable forecasts. And a reliable forecast? That's not just good for FP&A; it's the bedrock of smart, agile, and successful business. Let's get to work! 

Lumel empowers FP&A teams to take control after reading this—equipping you with the tools and insights to challenge sales sandbagging and build smarter, more accurate forecasts. It's time to lead with data, trust, and collaboration. The firm was recognized as the best new vendor for EPM in 2024.  

To follow our experts and receive thought leadership insights on data & analytics, register for one of our webinars.