Making good sales forecasts increases your chances of achieving higher sales, regardless of the size of your company or industry. In addition, sales professionals are more likely to meet their sales quota if they make accurate sales forecasts. Accurate sales forecasting is both an art and a science. Read on to find out how to make professional forecasts.
Sales forecast for a healthy business
It is not easy to make an accurate sales forecast. The more accurate you can forecast sales, the easier it is to keep your manager happy and the company healthy. In this blog post, we tell you everything you need to know about making sales forecasts. It will give you practical tools to get a clear picture of your company's overall sales and keep your expectations realistic.
What is a sales forecast?
Let's start at the beginning: the sales forecast, also known as a sales projection, is a formulation of expected sales. It estimates how much a particular company intends to sell in a specific period, such as a quarter or a year. The more accurate the forecast is, the better.
Sales forecasts can be based on different data. For example, the forecast can be based on the intuition of sales people or on hard data from artificial intelligence (AI). In essence, sales forecasts always answer two questions:
How much will it yield? Every opportunity has its own expected turnover. Sales teams must provide a number that represents the expected new turnover, whether it is 1,000 Euros or a million. To arrive at an accurate figure, everything the sales staff knows about the prospect is taken into account.
The second question is about the when. In which month, quarter or year does the sales team expect the turnover to be realised?
Factors to take into account in forecasting
So sales teams have two predictions to make, taking into account the who, what, where, why and how to answer the most important questions.
- Who. The sales team matches the forecast to the personality and identity of the prospect. Are they influencers or decision-makers? Depending on who you have in front of you, the forecast can be more or less accurate.
- What. Base the forecasts exactly on the solution that you want to sell to your prospect. This solution, in turn, will be based on the problems of your respective prospects.
- Where. Where are the products or services used and where is the purchasing decision made? These are two important factors. By mapping out your prospect's environment, you will come to more accurate insights. Pay a visit to your prospect!
- Why. Why is an existing customer or prospect considering buying a new service or product from your company? Is there an obvious reason or can't you find a clear reason? If the need is not clear, you run the risk of the deal falling through.
- How. How does the prospect usually make a purchase decision? By taking this into account in your forecast, you can make the outcome more certain.
Some of these points are based on facts, but there are also aspects where you have to guess more. Sales managers with more experience often make better forecasts because they can draw on this experience.
The importance of sales forecasting
The sales forecast is very important and helps your business to stay healthy. The information from the forecast helps you to plan resources, for example, for the shipment of your products. You also know how much money you need for marketing campaigns and hiring staff, and what is available. By using accurate sales forecasting, your supply chain runs like a well-oiled machine. You meet customer demand and needs not only now, but also in the future. Internally, sales forecasting ensures that sales are achieved within the target period, keeping managers and staff happy and knowing what they are working towards.
Is a forecast wrong? Then problems arise that have consequences across the board, from determining the right price to the final delivery to the customer. Forecasts that are correct allow your company to make more targeted investments and respond to expected growth, for example by hiring more staff in time.
Drawing up a sales forecast plan: the steps
It is important that you see the sales forecast as essential and not just an action point that you want to tick off your to-do list as soon as possible. The plan is a force and you need to keep developing it. Of course you should create a framework for the annual sales forecast plan, but evaluate the strategies from time to time and adjust them where necessary.
Together with your team, you establish a strong forecast by focusing on three primary issues:
- Calculate numbers and define periods. Your plan should make clear how you arrive at the estimated amount and for what time frame a forecast applies. A CRM can help you with this.
- Review and adjust. In your planning, there should be room to review the forecast at a number of points and adjust it if necessary. Many sales managers monitor daily how reality compares with the forecast. Also plan some moments during the quarter to discuss these new developments.
- Breaking patterns. Processes need to change from time to time, even in the best sales organisations. By breaking patterns, you may find new ways to make even better predictions. Ask different questions, look at the data from new angles or try skipping a level.
Sales forecasts in uncertain times
Not all events can be predicted. An economic crisis, extreme weather or an unexpected pandemic such as the corona crisis; these are all things that undermine the forecast. Your plan can suddenly be turned completely upside down. As a sales professional, in such exceptional circumstances, you want quick answers to questions like what happens in the worst case and the best case.
Don't immediately drop your forecast, but adjust it by using a smart CRM solution. This will give you an accurate picture in real time of the state of affairs and of possible deals in the pipeline.
During a crisis, choose to feed your CRM with data as soon as the unexpected happens. This will give you a quick and clear view of the impact on your pipeline and will enable management decisions to be made quickly on where sales people should spend their time.
Remember: a forecast is only as good as the data that is used.
Fast access to sales data therefore offers your company opportunities in uncertain times. You can immediately adapt policies to the new situation and make the difference between continuity or the end of your company. In the event of a crisis or unexpected event, there is no golden formula for making a perfect forecast. However, by paying attention immediately, keeping a close eye on what is in the pipeline and analysing sales data even more frequently than usual, it is still possible to see trends and adjust the forecast accordingly.
As a sales professional, it is always important to be attentive and empathetic. This is especially true in a crisis situation. By empathising with your customers' problems and taking care of your team, you will build a strong bond of trust with internal and external partners. This will help you grow in the future.
Trend Skout as a helpful tool
Use your CRM in combination with a platform such as Trendskout to arrive at a reliable turnover forecast. Such a complete solution not only makes it easier to find and win new customers, but also helps you keep your current customers satisfied. Trendskout thus offers all managers involved real-time insight into the team's forecasts. You benefit from an accurate view of the entire business, make detailed forecasts and have insight into the performance of sales people.