Before we delve deeper into the benefits and sales forecasting methods, let us find out briefly what sales forecasting is in the first place. We will discuss the same under the following topics.
What is Sales Forecasting?
As the name suggests, sales forecasting is the process by which you can predict or anticipate, within a given timeframe, how much revenue will a company, a team, or an individual likely generate. The ability to forecast revenues for your business is pivotal, an aspect that you will read through as the write-up proceeds.
Sales Forecasting Methods
Let us find out the different methods of sales forecasting below. The method that you adopt will depend on the data you have at your disposal. Most importantly, it will depend on what you want to predict.
1. Lead-Driven Forecasting – This sales forecasting method depends on the input the sales team offers. Every lead is assigned a value depending on the possibility of a closing that must be successful.
2. Intuitive Forecasting – The method depends on the analysis offered by the sales team members. In this method, each member is asked how confident they feel about successfully closing the deal.
3. Sales Cycle Length Forecasting – The method will help you know when a prospect will likely close on a sale. It focuses on the time a prospect might take to complete the cycle.
4. Pipeline Forecasting – This is one of the sales forecasting methods that is used widely as well. It will let you determine the sales opportunities available. It will allow you to assess the probability of closing a deal present in the pipeline at any given time.
5. Opportunity Stage Forecasting- This method will help you know the possibility of closing a deal based on the prospect’s current position in the ongoing sales process.
6. Multivariable Sales Forecasting Methods – In this method, many forecasting techniques are considered from the above. As such, the outcome of the analysis is much better and more comprehensive. A few aspects that this process considers include market share, sales pipeline, historical sales data, past track records related to representative performance, and seasonality of sales.
Importance of Sales Forecasting
The importance of sales forecasting must be maintained. Let us find out how your business will benefit from it.
Assessing the Revenue in the Future
One of the main benefits of methods of sales forecasting is ascertaining the sales in business in the future. You will be able to understand how your revenue generation will be next month, quarterly, or yearly.
Effective Allocation of Resources
It helps assign resources effectively across all the functional areas of your business.
If you have an idea about the closure of business deals, it helps you to set your business goals and work on your vision and mission effectively.
Plans for the Future of Business
Clarity is one of the most essential aspects you need in business. This allows you to plan your business functions and activities well.
Sales forecasting methods have more benefits than the ones mentioned above. These methods help you to get visibility in your business and seal your position at the top in the business arena.