Cloudy with a Chance of Prospects: Sales Forecasting in the Digital Age
Sales forecasting has always played a major role in the sales process. Since the dawn of trade, merchants have always had to predict their future sales. These predictions affect the work that needs to be done in order to meet the needs of customers and to grow as a business.
Back in the day, sales forecasts were kept meticulously by hand. But now with all our modern sales technology we can enter them into reports or even use a CRM that automatically produces accurate forecasts, in a fraction of the time and with little effort.
What do you say, are you ready to do some sales forecasting in the Digital Age?
Where to Start
In order to forecast sales, you must know your market. Is it small, medium, or large? How many units of your product do you want to sell? How will you increase the services you provide for your customers? How much money do you want to make in the upcoming year? All of these questions and others will be answered in due time, but right now we are going to be focused on where to start, and that is your product or service. You know what your profit margins are based on what you’ve sold already.
What’s In a Good CRM?
When you use CRM, it automates the sales process for you. But that’s not all, as CRM is capable of integrating all your various factors to produce incredible sales forecasts for you. Any CRM that can effectively do sales forecasting is a boon for the sales team. That’s why Spiro’s sales automation CRM is so amazing. With Spiro, you get access to pre-built and custom reports, such as an opportunity-risk analysis report, as well as in-depth sales forecasting. It also uses artificial intelligence to automatically collect tons of data as you sell, giving you the most accurate and detailed forecast possible. Can you imagine having to do forecasting without any of the technology we have now? No thanks, we’ll stick with these new tools.
What Goes Into a Sales Forecast
The methods that are used to forecast sales haven’t changed as much as the tools have. Basically, to properly forecast you need to understand what drives your sales. This is so important because if you don’t know what is driving your sales, that means you don’t know your product or service the way you should. So, let’s say you run an ice cream shop and you sell a lot of ice cream in the summer and not much in the winter. Just as you would do with a business plan, you’ll lay out what you expect to sell over the next 12-month period based on what your previous sales were in the 12-month period before. In addition, you have your sales goals for the next year. You also want to consider your costs, and the prices for each item you plan to sell.
Did you know that, according to the Massachusetts-based data analysis firm the Aberdeen Group, companies that have more accurate sales forecasts grow their revenue as much as 10% year-over-year. This is where using a CRM will help you the most, because they utilize proprietary algorithms to help solve the quandaries of the sales pipeline, including predicting sales after crunching your numbers. You’ll want to use your past success as a guideline for your forecast. You need to include any pertinent tools or supplies needed, as well as any inventory you will be selling. CRMs can also produce detailed reports that you can later review and adjust as needed.
Direct Costs Affect Your Forecast
When you’re running a business, you must always keep certain costs in mind. These include operational costs, marketing costs, research & development costs, and more. These are also known as cost of goods sold, or per-unit cost, and is used to calculate gross margin. This may also include your inventory or services list, because these need to be calculated into a feasible sales forecast using any current and past sales information. The direct costs can be accounted for and used to produce the most accurate reports. You could always do this process by hand, but why not take advantage of your CRM.
Set Your Expectations Low, Then Aim High
Sometimes we can get ahead of ourselves, particularly if we are earning money and growing a business. That’s why it’s good to do a sales forecast, so you don’t over- or underestimate your sales. Sure the team will be trying to meet quotas and close new deals, but with a sales forecast it is easier to set quotas and sales goals because you’ll be getting help from informed data that you can trust is accurate.
Sales forecasting is extremely useful in improving your business’ outcomes. Much of the sales forecasting process has stayed constant for many years, but the difference is in the tools we have available in the 21st century. These tools are far superior in terms of speed and accuracy. If you’re going to be doing sales forecasting, it is imperative that you use a sales automation CRM like Spiro to help you. You can also incorporate an array of other tools that are available to help you further succeed at your business.
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