Sales Forecasting can bring great value to any business. It allows you to identify issues related to team quota attainment or pipeline coverage; plan marketing efforts and budget accordingly for the future; or just plan marketing strategies and budget for marketing efforts and budget.
Create an accurate sales forecast requires more than simply studying historical sales data. There are other internal and external factors which must also be taken into consideration.
- Analyze historical data
Historical sales data provides a solid basis for projecting future revenues. It gives an estimation of how many units are likely to sell within any period, depending on factors like product price and company growth rate over time.
Market analysis also allows businesses to identify seasonality or market trends; however, it does not take into account new opportunities or changes in customer behavior.
As well as using historical sales data, it is also vitally important to incorporate your team’s intuition. Field experience and in-depth customer knowledge can be used to identify new opportunities and make accurate forecasts. When coupled with data-driven insights, sales intuition is often the best way to predict customer behavior in an ever-evolving business landscape – helping set challenging yet attainable sales quotas and ensure production can meet demand while alerting you of issues such as competitor discounting strategies or an insufficient sales compensation plan.
- Take into account market trends
As part of your forecasting sales strategy, it is vital that you factor in market trends – this may include industry changes, new laws or regulations, promotions from competitors or seasonal fluctuations in customer buying patterns.
If your forecast indicates that more salespeople will be needed than last year to meet demand, recruitment should begin immediately. Conversely, if it predicts decreased opportunities instead, consider pausing recruitment efforts and prioritizing resource management instead.
Your organization can consider external factors by employing data-driven approaches. You could, for instance, collect historical information through accounting software or CRM systems and compare it with your current performance; use expert opinions or market research data for forecasting; use customer surveys or interviews with frontline salespeople to gain valuable insight into emerging market trends; or utilise quantitative models like regression analysis to create more sophisticated predictions.
- Look at current trends
Sales forecasting may never produce perfect results, but that doesn’t make your forecasts less useful. With good data and the appropriate forecasting methods in place, your sales numbers can provide insightful analysis about what lies ahead.
Trend analysis allows your business to take account of current market factors and customer behaviors to plan for future business success. For instance, if it has become clear that certain candle fragrances sell well during winter holidays, your company could use that data to more efficiently produce those scents or develop marketing campaigns around them.
Accurate forecasts allow you to set realistic, motivational sales targets for your team while tracking expected revenue, both of which are essential when making budgeting decisions across an organization. Without accurate forecasts, companies may overspend or create unreachable quotas which demoralize sales reps; ultimately sales forecasts can help establish trust between functional leaders and stakeholders.
- Consider your competition
Predictive analytics is an invaluable way to reduce subjectivity and provide a more objective picture of sales forecast trends, helping your team make better decisions. Furthermore, real-time course correction and reforecast capabilities allow your team to quickly adapt as needs evolve – this fosters alignment while saving valuable time.
Your competitors’ actions can have an enormous effect on how customers view and purchase from your business, so it is essential to account for them when making forecasting decisions. Are they running an aggressive new marketing campaign designed to drive increased demand or have they modified their pricing model so as to match that of yours?
Accurate sales forecasts can have an enormous impact on many aspects of your company, from hiring and resource allocation to team satisfaction and meeting the demands of both customers and investors with positive repercussions to your bottom line. By investing in an accurate process that yields more reliable results than guesses, an accurate process can produce results more reliable than guesses that will keep teams happy – just like when their deliveries arrive on time! Investing in this will also allow you to meet customer and investor requirements which has an immediate positive effect on bottom line impact!
