Your CRM must be accurate, up-to-date, and integrated with all relevant sources of sales data. You’ll also need to make sure your data ecosystem is clean, connected, and accessible to the entire organization. Each organization owns its sales forecasts, and different employees are responsible, depending on how many employees are available definition of sales forecast in the sales team. Product Leaders stake the ground on what products should be sold at the moment and at what average price. A business’s sales revenues from the same month in a previous year, combined with knowledge of general economic and industry trends, work well for predicting a business’s sales in a particular future month.
Highlight any major takeaways or lessons learned that your company’s leadership should be aware of as you navigate the forecasting process. Your sales process will also set standard opportunity, lead, prospect, and close definitions. Everyone needs to agree about when and how to count leads entering and exiting the funnel. You can make this prediction more sophisticated by adding your historical growth.
This potential quantity of customers is called your share of market (SOM) or your target market. Then, think about how many of those potential customers will interact with you. As the quarter or period progresses, you revise the forecast based on updated information. This method can quickly get cumbersome and time consuming without an analytics solution. Below we discuss some of the most important factors influencing the sales forecast.
Sales teams must know the sales process like the backs of their hands. A full 55% of sales leaders, and 57% of quota-carrying sellers lack confidence in forecast accuracy, according to Gartner. Once you have your sales process, sales quota, and CRM in place, you can choose a sales forecasting method.
In other words, you can only drive accuracy in forecasting if salespeople don’t feel pressure to inflate the forecast. Because it’s so data-driven, it requires an analytics solution and/or forecasting tool, which can be expensive. Because this technique relies solely on objective data rather than the rep‘s feedback, you’re less likely to get a prediction that’s too generous. Sales forecasts also come into play for a number of decisions, from hiring and resource management to goal-setting and budgeting.
The sales plan defines your sales strategy and the method of execution you will use to achieve the numbers in your sales forecast. A sales forecast growth rate is the increase that a company expects to see in its sales figures over a given period. Frontline sales managers gather the sales projections of all their reps to come up with a teamwide forecast value.
We will quickly cover what sales forecasting is about, how you can best do it, and what Excel template or specialized software you can use (we have both of those ready for you! 😘). Sales forecasts can be simply scribbled-down estimates, or they can be statistical masterpieces produced with the aid of the most sophisticated technology. The style you pursue relates in large part to your level of forecasting maturity (as well as the size and history of your business). Some of them draw from statistics concepts, such as standard deviation, and computer applications and statistics guides can help you calculate them. Going further, you can look at how multiple variables interplay, such as individual rep close rate, customer size, and deal stage.
If your salespeople don’t update the CRM diligently, your sales forecasts are based on outdated or partial data and likely to be very inaccurate. If you’re getting started with sales forecasting and looking to calculate a forecast both quickly and accurately, then you probably best use the “Pipeline Forecasting Method”. Ou at the National Tsing Hua University in Taiwan took this further with a 2011 study.