The sales forecast

The second component of the Sales Cycle Management (SCM) is the sales forecast. Many times, salespeople and sales managers do not have a realistic view of how many sales they can play in a certain period of time. This view makes the time spent on managing Opportunity less useful, and makes a sales pipeline traditional stale. What are the advantages of the sales forecast?

When you take the time to weather, you will be able to analyze sales of the past, the annual growth, and sales and growth compared to competitors in the industry. Besides this, the forecast can analyze more closely the price and cost structure, which means to have a better idea of ​​where profits begin to kick in. In other words, a realistic sales forecast can afford to virtually guarantee a profit. When you look at the numbers, sales forecasting is a great way to look at the future from an objective point of view. But how do you create a sales forecast?

The first piece is to have a precise record of past purchases. For some organizations, this is easy, but for others, the books may have been less accurate. Collect data from the past that you stronger, returning for several years, if possible. From the perspective of past and present, is a good idea to understand what factors, both internal and external, have acted on sales and sales continue to act. Make a list of these factors, just to be sure that you want. For example, external factors can range from seasonal demand for the product or service, general economic conditions, competitor activity - and their product, as well as the conditions of consumption, such as income and employment. But what about the internal factors, such as working conditions, the credit policy of the organization, and inventory? There are changes in the production process, prices, or production numbers at any point? After determining which factors are acting on your sales, you can ask for clarification, more detailed questions about the sales forecast itself.

First, what products or services you are going to be the prediction? They are grouped or separated? In most cases, is a good idea to at least create distinct groupings of products or services for the weather - in this way, the weather will start as accurate as possible. Then, ask the time of the forecast. As you can realistically do in the future? Thirdly, in consideration of the frequency. What is the actual frequency to create a prediction, and what is the frequency of review and / or review? Finally, it is a good idea to come up with an acceptable margin of error based on cost, expense, and profit. The margin of error is also a good test for the realism of the forecasts. At this point the sales forecast, may need to give an analytical look at the books, budgets, sales reports, and post sales activities. For example, you'll want to watch all activities that have occurred to the point of sale and after to get a good idea of ​​costs and expenses. These sales records should be part of your Opportunity Management System, however.

As you move forward, we must finally decide whether you want to see a qualitative or quantitative prediction. In simple terms, quantitative analysis takes into account all factors that we discussed and also estimates of sales based on these factors. The qualitative analysis will use a mathematical formula to create a number based on sales forecasts. If your organization is smaller, you may want to try a first quantitative approach, as a realistic starting point. This is especially true if your financial staff is smaller. In larger organizations with greater financial staff, a qualitative approach is possible. If you look at these approaches, keep in mind that a stable, coherent can use standard mathematical formula for forecasting. On the other hand, an unstable product can find an estimate in a variety of mathematical formulas.

However you decide to go ahead with sales forecasting, pipeline will take a less realistic and more rooted in the realistic possibilities of sale. Once you've created your forecast, you're ready to move to the next component of SCM, Account Planning ....