There are numerous methods to choose from in order to create an effective sales forecast. Some require fewer tools and less data in order to predict your future sales, others require a great deal of data or tools, but are much more accurate, ultimately. For the purpose of this article, we’ll be looking at the more accurate, yet cost-effective methods that we have found and techniques to help create and manage better forecasts.
Useful Sales Forecasting Methods
1. Length of Sales Cycle Forecasting
A sales cycle, according to the Business Dictionary, is the course between initial contact with prospects and the sale completion. The length of time and the different steps within the process can vary greatly depending on the industry. However, looking at your own sales cycle, you can easily make estimates on how many deals you’ll close base on where it is on the sales cycle. This is a very cost-effect method that doesn’t require extra data other than what the sales teams are probably already giving you.
2. Regression analysis
Regression analysis allows for forecasting based on variables that rely on each other to make predictions and create a sales forecast based on data that varies. Variables that are closely related to each other can have a major impact on your sales forecast if not taken into consideration. Regression analysis can help.
MarketingProfs uses the example of a product (A) that has a price point that may depend on the cost of another product (B), whereby predicting the future costs of product B will help determine the sales of Product A.
3. Intuitive Forecasting
Intuitive forecasting involves the “gut” of the sales staff themselves. This type of forecasting takes into account knowledge that the sales team has in order to predict sales outcomes. Experienced salespeople often know better when they think they will close a deal than the computer can predict based on specific knowledge only they have. They may know that their prospect is waiting for their tax return or is planning to travel soon, but will have the budget later, for instance.
4. Historical Forecasting
While sales forecasting should always rely on historical data to determine future sales, historical forecasting relies solely on historical sales data with the assumption that rates of growth will also be similar to years’ past.
Historical forecasting is easy and cheap and, as long as the data that was provided previously is accurate, it can give you a rough estimate of what your sales should look like. However, it doesn’t take into account changes in the market based on any number of factors.
5. Pipeline Forecasting
Pipeline forecasting is a bit more scientific as it relies on data such as its place in the sales cycle but adds calculations based on variables that are unique to each. Unique variables can include everything from the likelihood of purchasing by the customer to the track record for closing by the sales rep.
This forecasting method may require the use of a tool that can add the calculations and relies on accurate and timely data to be entered by your sales staff but can be quite accurate when done right.
Helpful Sales Forecasting Techniques
Learning and implementing one of these sales forecasting methods is the best way to propel your sales for the future. However, once you’re ready to do so, there are a number of techniques you can use to help ensure your sales forecast will work for you.
Top techniques to improve sales are as follows:
Involve the Right People
When creating your sales forecast, make sure you include any and all of the right people that can have insight and input into it. This includes your sales reps and managers, marketing, accounting, and executive staff.
Involving all of the stakeholders from the start will result in having all of the information you need to understand what to expect in the near future and beyond.
Ask the Right Questions
Another effective technique to keep in mind is to ask the right questions to get you the answers you need to create the most accurate sales forecast. The questions you ask can be considered the “who, what, where, and why” of your sales future. They include:
- Who are you selling to?
- What products are you selling?
- Where will products be most likely beneficial?
- Why should they buy from you?
Similar to getting your actual sales plan together, this will build the roots you need to create your sales forecast. These simple, yet important questions will remind you what you’re selling and to whom and will bring to the forefront your differentiators from your competition.
If it works for you, you can even add “when” if you want to include a longer than normal sales cycle or a product that isn’t ready yet. You can also add “how” if you need to differentiate downloadable products, products sold online, and those sold solely out of brick and mortar businesses.
Be Ready to Make Changes Quickly
If we’ve learned nothing else in 2020, it’s that we should always be ready to expect the unexpected. A good technique to keep in mind for your sales forecast is to be ready, willing, and able to make changes at any time to your forecast.
Ensuring your forecast is easily accessible and editable and keeping a constant eye on the market, the economy, and the world will help.
Share Sales Forecasts with the Entire Organization
Sales forecasts affect more than just your sales team. Sharing your forecast with all of the various departments that will either contribute to it or be affected by it will help everyone stay on the same page.
There are a number of ways to create a sales forecast that is shareable across the organization. This can be greatly dictated by the software you choose to create, maintain, and manage your forecasts, which brings us to our final technique….
Use the Right Software
Using the right software may be the single most important technique you administer to your sales forecasting methods. There are some basic aspects that you’ll want to make sure your software includes, such as:
- Proper account management so you can input all relevant information on prospects and repeat customers in the pipeline.
- Dashboards so you are able to see all of your potential sales together on your dashboard.
- Easily generated reports so you have all of the information at your fingertips.
What else to look for:
- Ability to manage deals from contact to closing.
- Advanced analytics and metrics to keep your sales team accountable.
- Lead scoring so you know how much weight to give each lead to create a more accurate sales forecast.
This is where Agile CRM can help with all of the features listed above, plus features such as lead prospecting right from your chrome browser and gamification to turn sales into a fun, collaborative, and competitive venture. As an all-in-one CRM solution, Agile CRM offers numerous robust features at a very reasonable price with options to integrate other workplace productivity apps as well.
Sales forecasting is very important. According to Business Management Ideas, good sales forecasting should not only be accurate, but it should be simple and affordable too. It’s not uncommon to start the sales forecast creation process and realize there isn’t a particular method that you know will work for your unique needs. That’s where this list of tried-and-true methods will come in handy. Plus, the top techniques listed here are compiled from those we know have worked for us.
Whichever method you choose, you’ll be glad you did. And your future sales will be the ultimate metric.