Sales forecasting is an essential part of an organization’s marketing strategy that relies upon future sales predictions based on some quantitative parameters and supportive qualitative aspects.
The sales head is responsible for defining the goals and the timeline for achieving them throughout the year. However, truth be told, this is not as easy as it seems. Building an effective sales forecasting strategy can prove to be a difficult task. Setting up unrealistic targets can hamper the team’s morale and make it hard for them to accomplish the laid objectives.
Therefore, defining goals based on the proper articulation of facts and figures and setting realistic targets for your team is always recommended.
Decoding Strategic Forecasting
In marketing and sales, strategic forecasting refers to the collective use of benchmarks, historical data, and various other factors responsible for making predictions about future demand and sales growth.
Here are some of the sales forecasting steps that the teams can implement to better-set objectives and goals based on accurate data and insights. For more information click here.
Making the correct use of historical data
Most organizations set up tracking and keep updating their data from time to time which helps them identify trends and draw relevant insights, which are then used to devise future strategies and forecasting. This type of forecasting based on past records thus helps the sales teams set more realistic goals for each team member.
However, making assumptions and strategies based on past performances can be troublesome as the scenarios may not always be the same. For instance, the same strategy executed in two different years can have opposite results if the market conditions are different. Yet, the strategies based on historical data are effective as these take into consideration the unpredictable scenarios that took place in the past and may also arise in the coming years.
Keeping the database updated at all times
To make effective changes in your strategy, the databases must be updated regularly with the real-time activity of the prospects and customers. Also, the sales team needs to be trained to understand what properties of the contacts have to be updated so that the same can be referred to as and when required.
Concrete data helps the sales team map their progress more accurately and allows management to make better forecasts.
Implementation of the sales pipeline plan
The fundamental rule for building an effective sales pipeline for your organization is to always focus more on the quality of leads than the number of leads. Better quality leads have a higher chance of conversion and lead to more revenue generation in the longer run.
As a result, organizations should attempt to build a plan that helps them generate more quality leads; assisting them in increasing their revenue and making it easy for the sales team to meet the targets set by the team leader. This would also provide you with enough data points to make predictions and map the forecasting at every sales pipeline stage.
Using forecasting tools
There are many data forecasting tools available in the market that make it easy to interpret data and create a better forecasting plan based on the current scenarios. For instance, HubSpot has its forecasting tools that consider the deal stages to lay out a forecasting report.
To maximize the returns from your forecasting plan, special emphasis should be laid on selecting the right set of data forecasting tools for your organization.
Anticipation based on qualitative data
While making a forecasting plan, both the quantitative and the qualitative aspects of the data should be considered. Organizations should also consider the new datasets as they can help make more accurate predictions.
Understanding the factors that influence the decisions of your customers also helps in making better forecasts.
Seasonality is a factor
Making forecasting linear throughout the year can often turn out to be inaccurate. Every organization has its specific services or products that they sell, leading to fluctuations in results for every month of the year.
These fluctuations in sales are a part of the process as ‘seasonality’ plays a crucial role in determining the monthly sales. For instance, organizations manufacturing ice creams can reap a good amount of revenue during summer, but their sales would be impacted during winters. Therefore, seasonality becomes an important factor that needs to be accounted for to make better predictions.
Market trends and competition
When a business is incorporated, it might not have too many competitors in the market. But gradually, as the competition emerges over the years, it becomes essential to consider this factor while creating your forecasting plan.
Market trends and competition are two important aspects as they change with time. There might be new product launches and fluctuations in price by the competitors, which can profoundly impact the organization’s sales figures. Keeping track of all the activities of the market and your competitors would surely help create a better plan.
Negative implications or scenarios
Sometimes, the scenarios don’t turn out to be the same as they were in the previous year. There might be instances where the data would show favorable outcomes during the last year, but the same forecast might turn out to be negative in the current year due to different market conditions.
Moreover, there can be scenarios involving new products not living up to the mark, employees getting lured by competitors, and customers getting churned. RK, employees getting lured by competitors, and customers getting churned.
Hence, while crafting a plan, organizations should consider these scenarios and devise a strategy to tackle them, as they can have severe implications on both the forecasted results and the growth of your organization.
Tracking Forecasted plans
Once the plan is ready and implemented, it is essential to track it to understand the progress. Tracking helps in strategic implementations and allocating budgets to the different marketing activities of the organization.
The final figures might not be as accurate as planned at the time of forecasting. Still, regular tracking would surely help in keeping a check on the effective utilization of available resources and understanding whether the pre-decided targets are attainable or not.
It is essential to understand that a Sales Forecasting plan is not one-time crafting. It is a continuous process that keeps evolving with updates and upgrades being made from time to time to reach closest to the actual figures at the end of each quarter or a financial year.