
The sales forecast is perhaps one of the most difficult indicators to measure within the business process. Monitoring an indicator that is not accurate creates a lot of confusion. After all, when we think about indicators, we automatically associate them with numbers and data.
Because it’s a forecast, we’re also tempted to think that the sales forecast is just a salesperson’s guess. However, such an important indicator cannot be seen as a simple opinion of the seller or manager.
In addition, the forecast is one of the main predictability tools of the business process. Therefore, in this text, I will teach you how to work with this indicator, its importance and, mainly, how to use facts to predict its results.
After all, what is a sales forecast and why is it important?
Defining the sales forecast is not very complex. We can say that it is a prediction of what will become a positive result within the work in progress.
Simply put, the forecast is the forecast of how many new sales of plots in Blue World City will be made within a given workflow.
Tracking this indicator is important for several reasons, but mainly for these three benefits:
1st Benefit – Short-term revenue forecast
When the manager has a well-structured sales forecast, the first result that becomes clearer is the revenue forecast.
Your company may, for example, be going through a moment of decisions regarding new investments or spending cuts.
Having greater clarity about which new customers will be entering at any given time will certainly help in the decision process.
Read More: Lahore Smart City (UPDATED) Payment Plan | Location | Map
2 ° Benefit – Alignment expectations
It’s important to understand if there is an alignment of expectations in your sales pitch. In other words, on the one hand, we have a salesperson who presents his solution and, on the other, someone who has needs.
If the salesperson can understand the harmony between the need and the solution, they will be able to better predict which type of customer is most likely to buy.
Finally, if your forecast process is well structured, your salespeople will know better where to invest their efforts.
3 º Benefit – Definition of purchasing profiles
How do you know which type of company buys your solution the most?
Well, this information can also be collected by simply evaluating customer profiles. In other words, what type of customer does your company have the most or have recently acquired.
However, it is equally important to compare these closings to the sales forecast. Thus, you can conclude whether the sellers’ expectations are in line with this profile.
As you may have noticed, since it deals with the results of the sales process as a whole, the sales forecast can be seen from two perspectives: the manager and the salesperson. But what is each one’s role exactly? That’s what I’m going to explain now.
How the sales forecast impacts the work of the sales manager
Looking from the manager’s side of Capital Smart City, the forecast reveals several points about the functioning of the business process as a whole. It is based on the forecast of closed accounts that the manager will take important decisions, such as hiring a new employee or redefining goals.
Furthermore, it is by comparing the sales forecast with the actual closing that the manager is able to identify errors in the process. For this, it is necessary for it to monitor step by step to find out:
- How many leads does the team need to generate at the beginning of the funnel to hit the target;
- How much time is your team spending on each step;
- How increasing or decreasing work in one step will impact the bottom line.
All of this information can be gleaned from historical conversion data from your sales process. However, it’s important not to just get stuck in the past. History and trends are important, but we must also pay attention to the current market scenario. I’ll talk more about this later.
In short, knowing how your sales team works and its results by stage is a key point to predict success in the face of variations in the process.
How the forecast impacts the salesperson’s work
As I already explained, the sales forecast is nothing more than the forecast of the number of new customers within a given group of negotiations.
The seller’s job is to present this number to the manager. The problem is that many salespeople fall into subjective analysis when predicting their own results – and subjectivity in sales is never positive.
Think with me: a sales manager has a team of ten salespeople in his hands. If each of them uses their own feeling to present a forecast, there won’t be any consistency or pattern in the overall assessment of the scenario, right?
Okay, but what about concrete information?
This informality is also a barrier when it comes to expanding the team. Imagine training ten more salespeople. How can you guide them to present a forecast of results based on “what do you think”?
We have already mentioned throughout this text how important it is not to let the sales forecast be based on the “tachometer”.
And here we come to the main point of the discussion: how to do this? Here are some tips!
5 tips for not falling into the tachometer
1. Have a structured process
These days, I read a very cool article that talks about the difficulty managers have to interpret stories told by salespeople and turn them into facts (this one).
The main lesson I took from this reading was: create formality. Adopt measures that remove subjectivities and add objectivity. Instruct your salespeople to base predictions on facts, not the lead’s word.
As a Business Intelligence manager in a Marketing and Sales consultancy, I still tell you that a well-built business process makes everything easier. A good sales forecast requires a good business strategy. This is the main point of this Forbes text.
A consistent methodology is easier to interpret for predictions. In addition, knowing your process makes it easier to interpret the lead evolution criteria in the sales funnel.
From structured training, through good monitoring with indicators, to well-defined steps and standards. All of this helps when it comes to formalizing the forecast and using the numbers and facts to your advantage.
2. Use concrete information
Establish some standards among your team, thinking about what attitudes or realities are signs of success.
Want some examples? There are countless possibilities:
- Decision process within the company – If the closure depends on many people, it is more difficult for everyone to agree. Now, if the prospected company has only one decision-maker and you are talking to him, the chance of closing is much greater.
- The speed with which the lead advanced between sales stages – Speed is a very clear sign of engagement! The faster, the more likely the lead will close with you.
- Budget – The lead has the capital to invest in your solution without having a huge impact on his budget. As you know, budget is one of the biggest deal-breakers out there. If that’s not a problem, the chances of closing are higher.
- Interest in a trial or demo – Some leads ask for the trial or demo just out of curiosity. But, if the lead is engaged, recognizes their pain, and is concerned about solving them, this request is a great indication that he will close.
Anyway, just list some points, together with your team, and adopt them as the default.
When in doubt, think about the following question: what facts or events in the qualification might indicate the lead’s interest or disinterest in my solution? From there it is already an excellent start!
3. Don’t focus on the goal
Salespeople, in general, tend to let the target influence the sales forecast. Basically, they guide the forecast to approach or exceed the goal and make a good impression…
If we stop to think, it’s natural. That’s because we often align predictions with the hope of making them happen, and the expectation is always to reach the goal.
So don’t let your goal confuse reality. At this point, let go of “where I need to go” and stick to what’s concrete.
4. Evaluate the profile of leads in the sales funnel
If you’re lost and don’t know where to start, here’s another good tip.
There are several companies within your sales flow, of the most varied types and areas of activity, right?
Define the customer profile to which you sell the most, which type of company has the greatest tendency to convert into purchases.
From that profile, look at your SQL database and see how many fit the description. With this, you will have an idea of which companies will have the greatest chance of acquiring your solution in the short term.
If you sell a lot for SaaS, for example, and three SQLs are SaaS, the probability of these closings is great.
5. Don’t just get stuck in the past
Using your sales team’s performance histories is an excellent weapon to create forecasts, I’ve already mentioned that up there. But it’s just as important not to get too attached to them.
It’s simple, think about how weather forecasts work. It is not enough to know when and how much it rained in the last year. Meteorologists also assess winds, hot or cold fronts, clouds, etc.
In sales, it’s the same thing. If you sell more in the summer, great! We have a trend there. But there may be new winds that change the number of customers. That’s where you should consider your moment in relation to the competition, the launch of new products, new opportunities, promotions…
Anyway, take your normal scenario as a starting point and increase or decrease the expectation according to what lies ahead.
Conclusion
To have a good sales forecast, it is not enough to be good at guessing. You, as a manager or salesperson, need to adopt strategies that bring consistency, do you agree?
View the forecast as an important support tool for your company’s strategic decisions. And, above all, seek continuous improvement. Frequently adapt your methodology to market variations. After all, buyers’ behavior changes constantly, and your sales forecast depends on it!