7 Key Elements To Successful Sales Forecasting
In the dynamic world of sales, the ability to forecast with precision is a crucial skill. Effective sales planning not only navigates the uncertainties, but also paves the way for success. Sales forecasting helps companies predict what future sales will be, enabling them to make accurate plans and more informed business decisions. Dive into the following seven steps, each meticulously crafted to guide you towards a more efficient and effective sales forecasting process.
As we transition to the first step, let's explore how understanding your historical data can unveil valuable insights into the future of your business.
1. History: While history is not indicative of the future, it can provide insight since some portion of your business will repeat year-over-year. Consider:
What business is consistently YOY and what does the future of that business look like?
What business tapered off (or no longer exists)? Does your customer still have demand?
Are there spikes in business that won’t or haven’t repeat(ed)?
Now, let's delve into the second crucial aspect of successful sales forecasting: Customer Insight. To truly understand the future, let's start with the customer.
2. Customer Insight: If you have not already done so, ask your customer:
Are they happy with you and your company?
What is their business outlook? What portions of their business will be up, flat or down in the year ahead and how does that correlate to your existing business? NOTE: Do NOT assume when they say something such as, “Our business is/will be up 5%”, that 5% applies to your business. Know the product mix; Where are the products you supply used in their process and correlate that to exactly how their product mix will impact yours. They might be up 5% in certain areas, while the areas using your products are/will be down 5%!
What other business exists and what would it take to secure it (ask this specific question. Do NOT ask open-ended question such as, “Could we quote or get the business?”
You might be thinking great, now we can get going. Not quite. Let's evaluate your organization's capabilities and how to match them the unmet needs and opportunities of your customers.
3. Company Issues & Objectives:
If your organization is going through change, how might this impact your sales efforts?
If you are a leader, be sure to clearly communicate the company’s goals, objectives and expectations. Aligning the sales effort with the rest of the organization is crucial, so be sure everyone is on the same page. If you are directly responsible for customers, be sure your sales plans support company objectives.
Next, we consider the competitive landscape (think SWOT).
4. Competitive landscape: If your organization is not ready to compete, don't have blind optimism. A few key areas that come to mind are:
Product: Do you have what the customer needs? Is it one, multiple or a total product offering?
Quality: People buy based on perceived value and quality is given. Don’t come up short.
Price: Can you be competitive?
Support: Do you have the supply chain, customer service, technical and other forms of support the market demands?
Remember to continuously monitor and adapt to remain competitive.
Of course, you need tools in your toolbox to help customers solve their issues.
5. Tools: How will you implement and manage your progress?
Do you have sales and marketing materials?
Do you have a proactive sales process for planning and monitoring for necessary adjustments? Remember: "If you fail to plan, you are planning to fail" (Ben Franklin) and “What gets measured gets done”.
OK, now were are ready? Not exactly. How are you going to accomplish everything?
6. Strategy: Now, it's time to turn your insights into a concrete plan. Outline your strategy for each account, specifying the actions needed, who will carry them out, and when. This step serves as a catalyst for internal discussion, making your strategy even more robust.
You are NOT done. You've laid everything out and you are in a forward-looking mode now. No time to take your foot off the gas. No need to look in the rearview mirror-look ahead, through the windshield.
7. Monitor & Adjust:
Reviewing sales performance (and backlog) weekly. If you are up, why? If you are down, why? If you don't know, find out. Don't wait until month/quarter/year-end; it will be too late!
Back to the strategies you established. Are you on track? Maybe this explains your current sales performance? Perhaps you need to adjust your strategy? Remember, you are a forward-looking sales organization, and like sales numbers, addressing any issues now is far better than waiting until.....you got it, it's too late.
As you conclude your journey through these seven steps, remember that successful sales forecasting isn't just a process; it's a mindset. By incorporating these steps into your planning, you're not only aligning with your company's objectives, but setting the stage for repeatable success. Keep your focus on the road ahead. Successful sales forecasting is not just about analyzing the past; it's about steering confidently into the future.
If you're seeking further guidance, explore the GENREV!™ process-a pragmatic solution designed to elevate your sales and financial insight across all levels of your organization.