9 Steps to Improve your Business Forecasting

Sales forecast strategies are a vital part of any business. Although essential, this process can be occasionally painful. It is necessary to prepare for the forthcoming fiscal year as well as to manage sales goals effectively. But accurate prediction is just impossible even for seasoned leaders. They just evaluate quantitative and at times qualitative data for predicting future sales.

Strategic Business Forecasting

It is considered to be the use of historical data, benchmarks including other information in sales and marketing. It helps make predictions concerning future sales growth and demand. However, excessive optimism concerning sales forecast only leads to unwanted disappointment and negativity among team members. Hence, it is necessary to identify realistic targets and exceed them based on availed solid data. It will be not useful to set unreasonably high target only to miss it.

Sales forecasting improvement tips

1. Maintain clean records:

Not communicating clear standards with the team will mean sales reps are likely to develop own uses cases and definitions. This will only result in inconsistent data entry. There are also chances of reps not knowing to use them properly. Dirty data will not be of any help. It is important for the whole team to have same knowledge.

2. Historical data:

It can help set realistic sales forecasts. Machine learning can be put to good use to identify realistic data. In case, no analytics or other tracking techniques have not been implemented to tie to conversion rates and goal, do now! Accurate forecasting is possible only if you know where you are presently and moving towards.

3. Sales pipeline-action plan:

Quality is crucial over quantity especially for sales leads. The latter might affect conversion potential. But increased lead quality increases customer demand planning and closed deal numbers. Hence, proper action plan should be in place to generate minimum lead numbers.

4. Simple model:

Trying to incorporate each model type is not possible. You may plan to use quantitative forecasting model for the first time to predict next year sales. If so, start small while improving on model with time. Regression forecasting model should be used for five common sales activities.

5. Incorporate qualitative data and ‘what ifs’:

A good number of organizations do not plan for new data sets to track/overlook qualitative data. Why check constantly same numbers to make bold predictions? Rather ask questions related to ‘what if’! You can get proper solutions on getting more data.

6. Forecasting tools:

Use a specialized tool developed specifically to forecast. It can help save a good amount of time as well as improve forecast accuracy. They might rely upon your sales-pipeline plan along with existing deal data. Using this tool, you can forecast based upon closing probability.

7. Boost collaboration among all departments:

A carefully constructed forecast is not likely to be generated by any single department. Rather, it incorporates input from different parents. This in turn, provides new perspective to the forecasting process. It can be termed to be a team effort.

8. Seasonality factor:

Linear forecast that is treating similarly every quarter and month will only end up losing on accuracy. This is due to various related factors and seasonality. Customer demand planning will also be essential to make correct decisions.

9. Incorporate External Data Wherever Appropriate

Sales forecasting should rely more on easily accessible historical and internal data. Although part of the puzzle, more realistic forecasts can be generated by incorporating several external aspects into the model.

Therefore, following the above Business Forecasting tips will allow you to forecast your business prospects.