Are you forecasting sales adequately to achieve your growth goals?

Are you forecasting sales adequately to achieve your growth goals?

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79% of organizations do not meet their sales forecast, which is one of the main problems in scaling a company. The tendency to go bankrupt is imminent when this planning is not done properly.

This commercial management tool will help you to have a realistic projection of the sale of your product or service. This way, you will take strategic decisions and possible investment risks with certainty and your sales team will have a clear path to follow.

At Ventor we can help you take flight, showing you what you are doing wrong and how to solve it. That's why we created this article, to answer the most common doubts about the Sales Forecast so you can get the most out of it for your company.

What is a Sales Forecast?

Let's start by defining the sales forecast. In practical terms, it refers to a prediction of future revenues. It is a strategy in which the company's data, history and processes are evaluated, incorporating market trends, to determine how much your business will sell in the short, medium and long term.

In this way, variables that guarantee the probability of success can be predicted. However, few companies use the right methodology for this and they tend to do it subjectively. By 2025, 90% of organizations will still rely on intuition rather than statistics. Does that make sense to you? That may be a forecast...

If we put into practice all that has been said so far together with that statistic, what do you think will happen?

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What you need for accurate and assertive sales forecasting

Smart management within a company knows that to be successful it needs to establish this strategy accurately and assertively. To achieve this, you will need:

Know your sales process very well

Document everything. You and your sales manager should be able to describe the actions, step-by-step, that sales executives take to close a deal, including any obstacles they encounter in the process.

Set a clear and measurable goal

Your goals must be distinct from your forecasts, because a forecast signals what is going to happen. But, you won't know if the forecast is good or bad without a goal or objective to reach that your teams are aligned with.

Manages metrics (KPIs)

Metrics help you measure your sales to know the path you are on and the progress you are making as a company, or if you need to redirect the course by changing the strategy. Some variables to measure performance:

  • How long it takes for the customer to express interest
  • How long it takes to close a deal (Sales Cycle)
  • The average price of an offer

It is essential to follow up on these numbers as they will be the indicator and the alarm to determine whether you should apply a plan B, C or D halfway through the process to compensate the losses as much as possible.

Sales forecasting methodologies

Many companies use one or more techniques to make a sales forecast and have a clear idea of what is going to happen. We describe some of the methodologies below:

Relying on salespeople

🤔 Although it sounds absurd to mention this option as a methodology, we should mention it, since 80% of companies do not have an accurate sales forecast because they rely on the subjective intuition of their salespeople. And they can fail because they follow what they think will happen and not what the numbers say. We recommend you not to use this methodology and rather put your.

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Use of historical data

With this method you use data from previous sales performance in similar conditions. For example, you can evaluate last year's sales, the previous 6 months, or the past holiday season (seasonality). It is a little more accurate than the previous one, but ignores variables that may change.

Negotiation stage probabilities

With this tactic, what is done is to assign a probability of success to each stage of the negotiation. Then, the result is calculated by multiplying the percentage by the size of the opportunity. It is a little more sophisticated than the previous ones and very effective.

Customized method

This is the most advanced. It needs a combination of data, such as the stage of the sales process, the age of the deal, the type of deal and the characteristics of the prospect. All of that is evaluated with the help of advanced analytics tools such as Salesforce.

Example of sales forecasts

Let's do an exercise with the last custom method. When you have the variables and lead scores, with a CRM or excel set up, group your three groups of customers into A, B and C.

Then, use the average opportunity size to calculate the forecast value. You should also apply the factor that says that companies with fewer than 50 employees close deals at a 25% lower rate than those with more than 50.

It then uses the average opportunity size, which is the amount of money at stake, to calculate the predicted value.

Sales forecasting tools

Now you may be wondering how do I do this? Don't worry about those calculations right now, at Ventor we can help you create and implement an effective and customized sales forecast for your line of business. Check the content of our programs here.

In addition, there are software tools you can use to calculate the sales forecast. Some you can use:

➡️ Pipeline forecasting software.

The sales flow forecasting software analyzes your existing opportunities and calculates a win rate, so you know which ones to prioritize.

It considers variables such as:

What stage the opportunity is in
The estimated cost to close the opportunity (e.g., paying sales reps).
The average length of your sales cycle (i.e., how long it takes to close a sale).

➡️ Historical sales forecasting software.

Historical sales forecasting software analyzes the company's past performance to calculate an average (or mean) level of sales you can expect for the next month, quarter or year.

It focuses on historical trends, as well as the seasonality of the products or services being sold. However, it does not take into account opportunities that are currently in your portfolio.

It is best suited to small businesses with little or no variation in their monthly sales.

➡️ CRM Software

Manage all your company's relationships and interactions with your customers and prospects. The goal is simple: improve commercial relationships to grow your business while optimizing processes and increasing profitability.

➡️ Sales analytics platforms.

It helps you visualize CRM data to reveal sales information and forecast future performance. Sales teams and managers use it to gain visibility into daily activities; pinpoint high- or low-performing salespeople, products or communications; and make data-driven decisions.

Having an adequate sales forecast will help you to take the necessary measures to ensure success, obtaining not only an increase in your income, but also building customer loyalty.

If you need advice now on how to implement sales forecasting effectively in your company to grow, at Ventor we have the Sales Mentor as a Service program, where we make sure that what we teach you and work with you and your team, is applied and causes noticeable and permanent results.