Sales forecasting is vital for any company’s success. Sales forecast provides insight into how much revenue the concerned organization will generate. In our uncertain times, forecasting revenue has become an even more challenging job with disturbed timelines and businesses and entire growth strategies in shambles. Sales assumptions are paramount in mapping and planning ahead and really affect the organization. Predicting revenue is not easy, but it is also very important to make strategic decisions for predictable revenue.
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Here are 7 techniques that you can employ to obtain a reliable and efficient forecast.
- Rely on previous data and reports
- Adopt robust tools and technologies
- Set processes
- Adopt the appropriate sales forecasting method
- Look out for exceptions
- CollaborationÂ
- Understand your customers and their needs
1. Rely on previous data and reports
Take into consideration historical sales data. Most companies have historical data that they can use to analyze sales and maintain realistic expectations tied to goals and conversion rates. Past sales data can help make more accurate predictions with regard to future performance. Historical data provides solid grounds on which you can base future decisions and weigh out all predictable and unpredictable factors for the coming year. The starting point for your sales forecast this time is your last year’s sales. Reports and data from past years can be assessed and analyzed to furnish numbers for your sales forecast. Accurate data will account for accurate forecasting.
2. Adopt robust tools and technologies
Companies cannot expect to analyze data and keep up with competitors using outdated methods. Today, companies need to analyze massive amounts of data that can become impossible to manage. The sales domain functions in a highly technology-driven sophisticated environment. The use of AI, Big Data Analytics, and automation, among others, enhances teams’ workings across the sales spectrum, and it is very important to keep up.
Definitive and reliable sales forecasting requires dedicated technology to optimize the process and drive results. CRM, for example, is used by most companies today, and it provides greater visibility to sales opportunities as well as tracking deal progress. It aids in forecast accuracy and can help you analyze your past performance, sales, leads, the business generated, clients, meetings, and other aspects. These tactics save time, energy and simplify cumbersome tasks. Sales managers can monitor opportunities and deals, providing them greater visibility to access probability, track mentions of specific terms during sales calls, then map out trends. The best tools for sales forecasting will use sophisticated technologies and software like Big Data and Artificial intelligence to deliver reliable forecasts.
3. Set processes
Build a structured sales process for your team. Standard opportunity, lead, prospect, and close definitions will be established as part of your sales process. Everyone must agree on when and how leads should be tracked when they enter and exit the funnel. Goal setting and budgeting also become important factors.
Businesses must constantly improve their procedures to improve their accuracy and efficiency because inaccuracies and inefficiency in your present forecasting procedures will have an impact on your business. As a result, organisations must identify and correct flaws in their processes. Customer relationship management software will assist in conducting audits to ensure that forecasting inaccuracies are kept to a minimum.
4. Adopt the appropriate sales forecasting method
Every business is different and so are their needs. It is crucial to identify and employ one method/model that works best for you. The key is employing an appropriate model and applying it consistently over time. The use of the same model year after year helps standardize the format making it easier to review.
Many forecasting models and techniques have been developed over the years owing to the increasing complexity of forecasting problems. The selection and application of these need to be done judiciously, wherein the team understands the full spectrum of forecasting possibilities. The forecaster and choice methods need to be based on all factors that affect the particular sales forecast, such as the expected accuracy, time period, previous data, and so on. The method an organization chooses will also depend on the age and size of the business and the quality of sales data and data tracking trends.
Leaders also need to be consistent with sales forecasting as mentioned earlier. Your team might feel the need for clarity with data and its impact on sales continuously. Framing best practices and time frames for each forecasting can help.
5. Look out for exceptions
Take into account factors that may affect your sales forecast beforehand. Although one can never be entirely prepared for unpredictable events, it is still essential to look out for those exceptions the best one can. Internal factors like company employee attrition can decrease revenue, and if significant numbers increase, you can predict a jump. Expanding into newer territories can result in a dip before your sales begin rising again. Externally, changes in the market and economy, framing of new legislative policies, and seasonality can affect sales revenue. It is important to be aware of these factors and prepare beforehand.
6. Collaboration
As is proven time and again in every aspect of organizational tasks, collaboration is the way forward for forecasting as well. Collaboration among departments will help make strategic decisions with an overview of the whole organization. Involving team leaders and members from other departments can help provide valuable insights that one team may have missed. Relevant data furnished by other departments can also be used for sales forecasting. Collaboration and team effort keep the process transparent enabling the company to evaluate and make decisions holistically as per business needs.
Your marketing team, for example, is has a direct connection to your pipeline. Their strategies and plans for the time period you are forecasting sales for will provide valuable insights. Product launches and modifications in the product team, analysis of the financial health of the company by the finance team, and recruitment trends in the HR team will all impact forecasts.
7. Understand your customers and their needs
Without a surprise, user-centricity can help sales forecasts. Companies need to analyze their consumer base and consumer behaviour to make accurate sales predictions and increase conversion rates. Data needs to be gathered about potential customers, and economic trends and sales in the past years also need to be taken into account. Surveys and questionnaires can be handed out to customers and survey data can be evaluated to help frame strategic and informed policies that increase sales and conversions. Study and understand your buyer’s journey, then create a sales process and cycle to support it. Determine the number of stages your sales cycle will have and the criteria that will qualify a deal at each level. Consumers play a vital role in the sales forecast and cannot be neglected.
