Sales are the main purpose of any business. The sole reason behind the existence of a business- whether small businesses or medium or long sized is to maximize profit via maximum sales. Therefore, sales managers have adopted the practice of sales forecasting to understand the market and trends better.
Consequently, leading to better future sales and sales revenue and setting realistic long-term sales goals.
Sales forecasting helps you to predict future sales and sales revenue by studying historical data, sales data, and the status of the sales pipeline. Businesses and sales teams opt for forecasting to design marketing strategies and plan the future course of action.
The sales forecasting tools help sales managers with highly accurate and real-time data. For instance sales, CRM software collects all customer-related information name, contact number, orders, their sales data, and preference, in one place. Now, these details help marketing sales teams chalk effective strategies to reach their target customer.
Just how weather forecasting helps you to plan your day and the upcoming week better, sales forecasting helps you to plan business better. Right from marketing strategy to set realistic sales goals and inventory management, measuring sales performance, and revenue forecasting, the data-driven sales analytics tools help businesses in day-to-day working and achieving long-term goals.
1. Business Planning- Sales forecasting offers sales managers a deep understanding of their business. The tools help them and their sales teams with accurate numbers revenue forecasting, sales data, and more facilitating better business planning. It helps small businesses understand market behavior, demand a requisite set of data, especially before launching new products.
2. Marketing Strategy- Sales forecasting tools like Sales CRM software (Customer Relationship Management) or sales automation software consolidate relevant information related to customer name, email id, order history, their spending on your products. It allows users to create accurate forecast reports. This data helps small businesses plan to implement an effective marketing strategy to reach the target customers and audience.
3. Decision making- The sales analytics tools help you with-- status of the sales pipeline, forecasting sales revenue, sales performance, length of the sales cycle, and cash flow. Now, with all the data in one place, managers can create an accurate and effective business plan, set long-term sales goals. The forecasting process helps the sales team to adopt best practices, facilitating better sales management and supply chain .
4. Budgeting- Forecasting tools give you an idea of a possible future business environment so that you can equip yourself to handle the change. For instance, if your sales forecast expects a 30% rise in opportunity, the small businesses will have to allot budget and resources, hire people, and train sales reps to keep up with the demand.
5. Investors- When you have an accurate sales forecast for the upcoming quarter, investors would feel more secure to invest in your business.
6. Trace Demand and Interest- You can't build a house without a strong foundation. Once you have the historical data of past sales, customer behavior, and preferences, you will know what sells the most or what kind of product be successful. This way sales forecasting tools help you to boost sales and expand the business.
7. Detect variance- The sales forecasts help you with expected future sales. Later, it can be compared with the actual sales with the expected sales to see if there is any variance. And can take timely measures to rectify the errors.
It’s hard to forecast your sales.
You have a lot of things to consider, like how much inventory you need, what your competitor is doing, and so on. It can be overwhelming.
Types of Sales Forecasting Methods
There are two types of sales forecasting methods-
1. Quantitative method- This is a hard-core data-driven method. It studies historical sales data and other numbers to create accurate sales forecasts and sales revenue. This produces credible forecasting and can be used by small businesses in inventory and cost management, allotment of resources, and further business planning.
2. Qualitative method- This forecasting technique uses experts' and sales rep views and market research rather than forecast future sales. It has a wider scope of error as it is more human-based and very less data-driven. And is not recommended given its low forecast accuracy.
Businesses run more on numbers and less on intuitions. The cloud based sales forecasting tools and sales management software make sure to produce reliable reports. Following are some forecasting tools that can help you improve sales , aiding to your business growth-
Businesses run more on numbers and less on intuitions. The cloud-based sales forecasting tools and sales management software make sure to produce reliable reports. Following are some forecasting tools that can help you improve sales, aiding your business growth.
- In Google Search and the social media era, content marketing has gained limitless significance. Keyword research is the basis of content and SEO marketing.
- Keywords basically are the words people use to seek solutions to their queries on search engines. And for this you will simply have to get into your customers' shoes. Observe how customers behave on your website or social media pages. The products they like, the kind of content getting more hits. And choose topics for your website and blogs accordingly.
- There are several keyword research tools available in the market, that can help small businesses understand the most searched topics in your category and the kind of words used for search purpose. For instance, a keyword research tool can help a shoe dealer in understanding what kind of words shoe shoppers use for search, the brand or the colour they are looking for. It could be white sneakers, office shoes tan brown etc.
- These words can be included in your web pages, social media articles to make sure they rank in upper half of the page when searched on internet to boost sales revenue .
- It helps small businesses to set sales goals and in effective marketing sales strategy and business planning
Managing your sales forecast can be a challenge.
There are so many factors that go into it, from the number of products you have in stock to the size of your market. How do you know what to expect?
- Social media is emerging as a successful business platform. Closely monitor your social media page, users' likes dislikes, comments, and their posts.
- Predictive analysis can help you to understand and analyze past and present trends so you can create an effective business plan.
- With features like location tags, small businesses can know the location of a user commenting on a post. This helps them with determining the inventory mix.
Big Data and its affect on forecasting
- Big Data, as the name suggests, refers to high volumes of data available from different sources and applications. In this Internet age, Big Data aids small businesses with data like customer preference, the way they are using your product, customer usage patterns demographic shifts. It is called a goldmine of data, given the diverse and detailed information, it offers.
- More the data, the better the chance of getting reasonable answers to your queries. All this data help businesses, sales team, and sales managers to plan new products, create accurate sales revenue forecasts, and better decision making.
- A study published by McKinsey stated that Companies that inject Big Data and analytics into their operation show productivity rates and profitability that are 5 percent to 6 percent hight than those of their peers.
- Invest in a forecasting tool that can handle a variety of data and yet user friendly
- No matter how accurate revenue forecasting or sales performance reports the sales forecasting tool generates, make sure your sales teams and sales rep use the predictions just as a plan to work from and over depend on it.
- Test different forecasting methods to come up with the best sales forecasting plan for your business
You're in the middle of a big project and your sales forecasting process is going well. Suddenly, you realize that your forecasted numbers are way off.
You now have to scramble to find out why your forecasted numbers are off.