How to Make an Accurate Sales Forecast


sales-projectionWhen creating a sales forecast, it is not the time for wishful thinking or letting your ego swell. Information produced from these projections helps you make decisions about everything from scheduling to budgeting, so it is very important that you are using empirical data to begin your forecasting processing. However, the routine comprises a lot more than just that. Below you will find four philosophies to help you make sure your sales forecast is accurate.

  • Have a good sales strategy – Not only do forecasts help develop strategies, but strategies help create forecasts as well. Here is one way to think of it, as written by Scott Edinger inForbes:

“When a map is wrong, it fails to accurately depict the reality of the landscape, and the same is true when a forecast is incorrect. In short, a forecast does not a strategy make.”

At least not completely. Edinger further explained that good sales strategies are developed by considering what needs to occur in order to move closer to closing business. At the same time, the strategies and correlating tactics you currently use or have used in the past can help you discern what you can expect in terms of buyers’ behavior and where to go from there.

  • Put effort into understanding buyer behavior – As mentioned, a forecast should not just reiterate sellers’ histories; they need to look at what consumers are actively doing. According to Edinger, some good questions to dig into include:  What is the decision-making process the consumer will use? What stages of the decision cycle still lie ahead? What should I be doing differently at each stage?
  • Business-Forecast-webDevelop a milestone-driven pipeline process – To accurately project where you will be at certain stages of business, you need to assess where you should be. Again, forecasts shouldn’t be wish lists, or they will only be a waste of time. The pipeline process is more of an “order of events,” which may or may not include ideal timeframes. From there, you can assess where you are against these guideposts.

“The key to being effective here is to make sure your pipeline process addresses the key milestones in your selling environment,” Edinger wrote.

  • Be ambitious – Good forecasting requires continual improvement. If you expect to be in the exact same place in your business this same time next year, then you probably shouldn’t have started your business in the first place.

“At any given time you need to remember that, done well, forecasting represents a moment in time, and since the landscape is constantly changing, forecasts need to be continually refined,” Edinger said.

Maybe a change in the market landscape indicates that an additional milestone should be added to your process. It is likely that sales data over time will give you a better picture of where you will be at certain points, so revision of your forecast should always occur, when necessary.

By using these principles when creating a sales forecast, you should be able to say that your predictions are a strategic attempt to positively impact results, instead of simply a history research paper with inferences to the future. With these tips, you should be able to add value to your company and make your job easier at the same time.

 

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