Effective and accurate sales forecasting are crucial for the success of any organization. Managers and leaders of companies rely on sales prediction which helps them plan for the future and incorrect predictions can result in serious problems for the company. As a matter of fact, there is no existence of any universal solution for forecasting sales. What is right varies from one company to another and is dependent upon a number of factors including robustness of the CRM platform, the level of trust of the organization in its sales team as well as intuition. Below mentioned are some effective sales forecasting techniques that will helpful in developing a successful strategy for your business.
Sales Forecast by Opportunity Stages
To win the chances of forecasting accurately, sales managers need to develop a deep understanding of their sales pipeline and the stages of the sales cycle. As soon as the stages are determined, managers’ should estimate the success rate at every stage so as to accurately forecast the sale probability at closing. For example, if 50 percent of all the deals that make through the quote stage and ends up in closing, the prospects of sales in that stage will be 50-50 success and failure. Although, making sales predictions on the basis of stages may be imperfect, however, it is still a useful method for determining the sales number for that quarter.
Sales Forecast by Length of Sales Cycle
This is a number-focused approach for forecasting sales and is based on the length of the sales cycle as well as on the age of the deal. Sales managers and team should be able to calculate the length of the sales cycle and on the probability of closing of the deal overtime. Through this technique, companies are able to forecast different types of deals. These deals are categorized as new customer, existing customer or returning customer and the size of the probable quote. To make an accurate sales forecast through this method involves entering all information accurate within CRM at every interaction. It is very important to categorize and tag everything within the system so that sales predictions become accurate.
Forecasting By Using Regression Analysis
Forecasting sales through regression analysis is a more mathematically accurate way and require sales managers to have a solid grasp on the tangible factors and tangible statistics that hold an impact on the success of sales. When the relationship between stats and variables is inferred, an effective sales forecast can be made. Using regression analysis is a very accurate technique; however, it can be used by larger corporations who have the resources to employ mathematicians and data analysts.
Forecasting By Pipeline Intuition
Those sales managers who have a deep trust on their representatives use this method for forecasting sales. This technique relies on those reps who will offer within their pipeline instead of staying attached with pre-set stages. An example can be if a prospect is still in its qualifying stage, however, a rep is able to determine the rate of success of that prospect based upon his experience with that type of customer. Although, this technique for sales forecast is not as accurate as required, however, it can still provide an insight to the managers as to how sales will move on in future. It requires a great deal of practicality for the reps, to be honest about their potential of being successful, however, a right manager with a right team can derive excellent results through this technique also.
A successful sales team is led by a manager who not only has the potential to motivate his team to sell, but there should also be present a strong sense about how numbers can affect a business. A fact here is that sales forecast is both subjective and objective. No matter how accurate the calculations are, they are not 100% accurate. The technique which will work best depends on both the forecasting method and the experience and intuition of sales managers.