All You Need To Know About Sales Forecasting

Sales is the financial gateway of the company as the revenue of an organization is dependent on it. Planning your sales can help in quickly augmenting the revenue figure of your company. Clear financial analysis through sales forecasting can be beneficial in anticipating the future of your business. With accurate sales forecast, you can recognize your problem as well as opportunities and keep pace with your competitors.

Let’s have a deeper insight into Sales forecasting.

Meaning

Sales forecasting is an indicator projecting the level of sales the company will achieve in a particular time frame. It is a source of valuable information needed to predict the success of the business. Forecasting accuracy results to high ROI which is a major factor for business.

Importance

Business management gets easier with sales forecasting as it helps in managing workflow, sales process, cash flow, and resources. When you know what’s ahead, it is easy to plan the course of action. It gives you a purpose to focus and work. By estimating sales figure, you have a clear goal in front of you that you need to achieve in a stipulated time span. Sales forecasting helps in identifying the problems at the right time to work on it instantly. For example, after rigorous research, you have estimated the sales figure for the month of October, but your team only achieves 25% of the estimated figure. It indicates your team’s performance isn’t up to the mark. To enhance your team’s productivity, you need to identify their weak areas and work on it to improve your sales results.

Categories

1. Intuitive Forecasting

The sales personnel are dealing with clients daily; they are aware of the time needed to close a deal. Therefore, the sales managers normally prefer to ask the sales rep to forecast a sales amount they can achieve in a month or a year and accordingly set a target. Doing this will help in increasing the closing ratio, as a sales rep knows how much he can achieve and accordingly put the number forward and work on it.

2. Historical Forecasting

Analyze the past data to predict the future of your business. A clear statistical report of the past performances can be helpful in identifying the roadblocks and predicting the future business opportunities for the company.

3. Time Based Forecasting 

• Short term forecast

Known popularly as operating forecast, it generally covers quarterly, half yearly and annual prediction. This forecast is useful in establishing sales quotas and estimating the profit over the sources used.

• Long term forecast

Long term forecast focuses on the overall goals of the company that spans over a year to six years. It needs deep knowledge of the past performance plus the current industry trends to predict the growth of the company in the coming years.

4. Pipeline Based Forecasting (Most popular these days)

Pipeline analysis helps in anticipating the time a deal will take to close. Close attention is given to the average sales cycle length to track the sales rep performance and find the loopholes that are affecting the progress of the sales team. By identifying the issue, it is easier to push the deal quickly out of the sales pipeline.

Tools

Increase the accuracy of your forecasting and predict the future trends with the Salesmate Sales forecasting tool. Such technology automatically presents the predictive insights from your data that aids the management in taking steps to use the resources appropriately. It automates the sales cycle and gives you a detailed report to forecast the sales and growth opportunities for the future of your business.

Forecasting helps in achieving the right thing at the perfect time. It provides a sense of direction to position your company. Using this valuable information, you can identify the strengths and weakness of your company and work on it to reach unprecedented heights.