Simple Tips to Improve Your Sales Forecasting
This is an article “Simple Tips to Improve Your Sales Forecasting” by Marc Primo
Any good marketer would want to feel the right pulse of sales events as it could play a major role in the success of their campaigns. Though it’s difficult to predict actual sales results with 100 percent accuracy, having good figures to work with allows a company’s salespeople and business owners to come up with improved goals and other factors that concern revenue.
Weekly sales forecasting on average only takes a little more than two hours for an accuracy rate of 75%. Generating these routine and in-depth reports can certainly impact any business regardless of scale positively as it gives the sales team a good overview of what has the best potential to sell from a weekly to an annual timeframe, with the help of previously recorded performance data.
It’s important to note that coming up with sales forecasts takes an entire team’s efforts – managers rely on sales representatives to estimate the figures, while directors use these figures to anticipate sales and make smarter decisions. Business owners can then prepare projections of organizational sales reports, which they can present to investors or board members. In short, sales forecasting requires a chain of processes to optimize the best and most reliable outcomes.
Here are three simple tips that can help improve your sales forecast efforts in this age of competitive marketing:
Go for an annual forecast
Most companies have seasonal sales events recorded throughout the year and reviewing these can help you come up with more accurate sales forecasts for the incoming sales year. Factors that need to be taken into account when reviewing past sales reports are your inventory of stock, staff performances, and the proper adjustments needed to boost the best-performing sales months.
Doing this will enable you to pinpoint potential issues and apply mitigating measures to your course-correction strategies. Say, you’ve noticed that your sales dipped a few points during the mid-year due to more aggressive online marketing campaigns from competitors, you can create new offers to both your core and lookalike audiences to increase your online presence and traffic, and eventually increase your sales leads during the same period.
Another good example is how retail businesses usually experience increased sales during the holiday season. Allocating more stocks in both eCommerce platforms and brick and mortar stores than normal while hiring the appropriate number of temporary staff or third party hires to get the job done can best be predicted by using past annual sales reports.
Every sales process has its stages along the pipeline and spotting opportunities in your marketing funnel can strengthen the potential of closing deals. To do this, you can select a sales timeframe from the previous year (whether a few weeks or months depending on your targets vis-a-vis the duration of your sales cycle), and multiply each sales’ potential value by the probability of a complete transaction. Once you’ve come up with the figures, get the sum per sale to get your overall sales forecast.
It’s important to note that this method of spotting the opportunity stage of your sales calendar is not 100% reliable in the long term. However, it gives you a good idea of what you can improve on in terms of your messaging, product innovations, or sales process moving forward in a manner that’s straightforward to execute. Simply approach your opportunity reports and their corresponding calculations objectively and you can gather great insights on how to effectively close more sales in the short term.
Consider the length of your sales cycle
This one is very important if you want to get more accurate figures on your report and can be done by meticulously monitoring the events within your sales pipeline. How do potential customers come into the frame? When do they signify their interest to purchase? Relying on your customer relationship management (CRM) software is one good way to achieve this as it can automatically generate log interactions and predict consumer behavior more accurately.
As for the length of tracking for your sales forecast, pick a good period for individual opportunities near the stage when customers are more likely to close a sale. Suppose one of your potential customers books a demo, determining the length of the sales process for that particular customer can manifest by looking into similar buyer personas and their corresponding sales cycles from your previous sales reports. Categorizing your core audiences as per their potential sales cycles can help you improve your funnel marketing campaigns and determine which stage or segment needs more push and budget.
Take intuition into account
Most sales managers only give estimates when it comes to potentially closing consumer transactions. Despite all of its vagueness, an intuitive forecast can still help draw a clearer path on where the trajectory of your sales will land on your graph. That is if you apply intelligent insights that are based on previous performance reports.
Besides, your sales managers are the ones who are closest to your prospects and their main job description entails making these smart forecasts to close sales. Of course, each estimate should be backed by historical data, otherwise, forecasts may come up as inconsistent bits of unusable info which you won’t be able to scale properly.
However, intuitive sales forecasting can be practiced for new businesses without much historical data as well. For example, a semester-old business needs forecasts for the next six months from two of your salespeople. What you can do is compare the intuitive forecasts of both sales managers based on their reviews of your current sales pipeline and reconcile the most logical factors that could affect your sales process for the same period. Sometimes, when there is no actual way to scale or verify your assessments, intelligent intuition can lead you to more leads and better sales, especially if your business is only taking off from the ground.
Practicing these tips for your sales forecasts can lead you closer to more accurate results in the future as you tweak processes to reduce potential risks and issues in your campaigns. Constantly monitor your sales pipeline and pinpoint unique trends that are caused by force majeure events (like how the pandemic disrupted your business), and you’ll soon make it easier for yourself and your sales team to adjust your strategies in the future.