The recipe for a successful sales forecast

The sales forecast is an extremely powerful tool for the entire company. When done correctly, it helps to achieve results that are very faithful to what was planned. However, it also brings with it several challenges. After all, it is necessary to establish ways to align it with demand, to ensure the company’s strategies are based on reliable information.

What, then, is the recipe for success when using the sales forecast? We have gathered here everything you must know about this indicator to adapt it to the demands of your company and ensure alignment with consumers. So, let’s go!

What is a sales forecast?

The sales forecast is an indicator related to the revenue prediction for a given time interval. Its calculation, so to speak, aims to demonstrate what are the opportunities for converting company leads. Therefore, it is prepared based on several factors, such as those listed below:

• company’s market segment;
• customer profile;
• experience of sales representatives;
• current leads in the sales funnel.

Its use is critical since it allows forecasting the company’s revenue in a short period (usually an interval of weeks or a few months). If the company is considering investing more, for example, this information can help it make that decision more effectively.

A second item to be highlighted is that the sales forecast helps aligning expectations with the market reality. This applies to both manufacturers and retailers. The forecast, in this context, can help to adjust the supply chain flow to end consumer demand.

Moreover, the sales team can better understand the actual need that their customers have for each product. Thus, they can be more efficient in the lead conversion actions. Finally, it is worth mentioning that the sales forecast helps to identify exactly the buyer’s profile, something essential for better trade marketing accuracy.

Hence, see what you can do to optimize the use of this particularly important tool.

How to align sales forecast with demand?

An important first point is to keep in mind that the sales forecast is not a tool for exclusive use by the manufacturer. In supply chain management – where the process as a whole must start from consumer demand – it is essential to share data with retailers to stay up to date.

Therefore, it is worth considering this external aspect when implementing our tips.

Apply the forecast weekly

As much as the market pace – and, consequently, the sales forecast – varies between sectors, holding weekly meetings to update the forecast is a practice that helps maintain alignment with demand. Although there is medium-term planning (monthly), reassessing the data weekly allows small adjustments to be made in production as well as in marketing and sales actions.

It is worth noting, in this context, that the information collected by sales representatives must be standardized. After all, if each one forwards their forecast based on an abstract scale, the calculation of final revenues will be compromised.

Consider individual and team production

To have accurate forecasts, it is interesting to evaluate the individual performance as well as the collective performance of the team. In the weekly meeting, for example, each salesperson must indicate the probability of closing deals with each customer. This type of information is strategic, as it has external and internal consequences.

With the team’s forecasts, the company can plan financially for this period, having an idea of what the revenue will be. With the comparison between sales representatives, it is possible to identify deviations (positive and negative). Then, the manager can better understand the individual challenges and offer support to improve results.

Focus on actual data

There is no point in wasting hours making a forecast if it is based solely on guesswork. Data must be reliable, based on effective and relevant indicators. In the case of a sales forecast, recent history is as important as the sales team experience.

If your company works with a customer portfolio, for example, it is advantageous to have in hand how much each has bought in the last months, what are the favorite products or services etc. This leads us to a critical issue for the success of the sales forecast: the use of technological solutions.

What is the role of technology in this process?

In a competitive market with so much technology at hand, there is no reason to prepare a forecast without the support of proper management solutions. A Sales and Operations Planning (S&OP) software, for example, helps keep forecasts aligned, even in the midst of fluctuations in demand. The goal is to increase the accuracy of the sales forecast, reducing potential loss of revenue.

Inventory, for example, is totally dependent on a good sales forecast. With an S&OP solution at your disposal, you combine company data records with statistical analytics tools to accurately calculate demand. Thus, the level of stored products is kept under control – neither in shortage nor in excess.

Storage costs are reduced, frequently improving cash flow. After all, the more material the company keeps in stock, the greater the idle capital. That’s why the supply chain must be understood – and managed – as a whole: from end consumer demand, through the retailer to production lines.

The software helps to organize information and connect it in order to avoid human error. In practice, the company starts to work based on updated and reliable information to support decision making.

So, if you want to promote a sales forecast aligned with demand, clearly define who are the leads, who are your points of contact and what data they must provide at meetings. Centralize this information in a reliable management solution and make systematic use of it to define your strategies. Results can be noticed in a short time!

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