Sales Forecasting: What It Is, The Process, and Best Practices

Also, in March, there will be a special event at the nearby fairgrounds that could draw thousands of additional vehicles to your area. To create a scenario forecast, think about the key factors that affect sales, external forces that could influence the outcome, and major uncertainties. Then, write a narrative and numerical description of how the scenario would play out under various combinations of these key factors, external forces, and uncertainties. For scenario writing to be effective, plan your potential outcomes around uncertainties with your business, and then create a clear action plan for each one.

Many of these can have either a positive or negative influence on sales. For example, changing reps’ account assignments may reduce sales, because members of your team will have to familiarize themselves with customers that are new to them. However, sales could increase if your new hotshot gets your biggest opportunity.

Which Sales Forecasting Methods Will You Use?

On the flip side, a client signing up in July will make six payments during the year,” he explains. Where companies tend to go wrong is relying too heavily on one or the other. You need a consistent process and reliable data,” says Charlene DeCesare, CEO of sales training and advisory firm Charlene Ignites. If you don’t have historical data, you can use industry benchmarks from trade publications, industry associations, and consultants. For example, if you are launching a new recipe app, look at market research on how other cooking apps have performed. Take into account changes in the business environment and question assumptions, such as that past growth will continue.

You must select the method that best explains your product or service to maximize your sales prediction. While predicting sales may look easy, selecting organizations usually use only one method for forecasting sales methods is more complex. There are several methods for forecasting sales for your company, and a company chooses a method depending on its requirements.

Regression Forecasting Analysis

With a good idea of how much product you will sell, you can stock enough to meet customer demand without missing any sales and without carrying more than you need. The best way to forecast your sales is to use whichever method is based on your historical sales results. When your sales projections are very close to your actual sales numbers, within a reasonable margin, you know you’re using the right method. Learn how to set your sales team up for success with key strategies and training.

• This model forecasts future sales based on how you acquired the lead, using the behavior of previous leads as a benchmark.
• This guide provides an overview of sales forecasting and strategies for maximizing sales.
• From your data, you can derive a mean sales cycle of a product and compare that to the sales process.
• That also means the variables they assess will have to be measurable, which is why this method typically examines sales strategies over time since companies have access to all of the information needed.