Sales forecasting helps organizations estimate the volume of sales expected to be achieved and how to achieve it. Most organizations use quantitative and qualitative sales forecasting when making predictions. In modern times, technology has made it possible for organizations to use AI-enabled forecasting techniques to achieve more accurate predictions.
Traditionally, companies look at their past year's performance and use it as the base to predict future performance. This strategy experiences many shortcomings, and more companies are currently opting to use AI to make data-based predictions.
Make data-driven decisions
Accuracy is important in sales forecasting. It helps organizations make better projections which attract more profits in the organization. The company gets clearer insights on what is likely to work or not work. Accuracy helps managers to capture opportunities that can help boost revenue generation and company reputation.
To make data-driven decisions, you need the right tools to support your efforts. Revenue Grid provides you with the right sales forecasting tools that make your prediction more accurate. The tools help you automate data capture, predict future performance, assess risks, create signals, and identify winning patterns. The following steps are important when making data-driven decisions.
- Identify your goals: Understand the goals of the organization based on its vision for the future.
- Identify your data sources: Know where your data is coming from. Modern businesses generate data from multiple sources, but it is necessary to know the exact sources.
- Keep your data organized: There are several tools that can help keep your data organized. You can use CRM and other AI-driven data management tools.
- Do your data analytics: Data analysis helps you understand where your organization is coming from in terms of sales and where it is headed to.
- Draw insights and make decisions: The purpose of data analysis is to help draw insights and actionable conclusions.
Implement a sales pipeline action plan
Organizations increase sales by offering quality services and products other than quantity. A viable action plan ensures sales teams increase their number of leads while improving on quality. They need to focus on the entire process from the time the first inquiry is made to the time the deal is closed.
They need to understand the total steps in the entire sales process and the total leads that convert at each phase of the process. If, for example, the organization needs to increase the number of closed deals by 20%, the team needs to know the total leads to push forward to achieve the percentage of successful deals.
Put more focus on demand instead of supply
Supply and demand are both important in a business's revenue generation. However, when working on improving sales management, focus more on demand and less on supply. The sales team’s work is not to increase supply but to create more demand. When you know you will create demand for 500 items in the next month, your concern for supply will be based on the forecasted demand.
Pay attention to important factors that affect sales forecasting
Several factors affect sales forecasts in organizations. They are divided into two main categories – internal factors and external factors.
- Change in a business location: If a business moves to a new location, there will be several adjustments to make.
- New staff joining and others leaving: When sales representatives leave a company, sales forecasts can be negatively affected.
- Changes in policies and regulations: New policies affect revenue generation.
- Competition: In every business sector, new entrants increase competition.
- Economic growth or decline: A stronger economy means people have greater buying power, unlike in a weak economy.
- Changes in the market: Customer needs keep changing, and it is upon the organization to know the latest trends and flow in them.
- Change in seasons: Customers may not buy during certain seasons of the year due to unique reasons.
- Political changes: Political instabilities affect business growth.
Accurate sales forecasting is not easy to achieve since the expected results can differ. The use of AI-based forecasting provides a more accurate way to make data-driven sales predictions. Integrating CRM with the relevant tools helps accurately predict sales and track the effectiveness of the sales team.