Your sales forecast affects sales deployment, financial planning and budgeting, operations planning, and marketing planning. Forecasting errors can have big consequences. This video will help you identify the reasons sales forecasting is beneficial to both small and large businesses.
- Sales forecasting is one of the most important processes in a company, because so many parts of the business are tied to it. Let's have a look at why sales forecasting is so important. First is the impact a sales forecast will have on the company's financial planning. For example, projections impact stock prices and how managers run the company based on investments they will make. Next, sales forecasting impacts how a company creates and manages its sales force.
Sales forecasts will be used to decide how to create sales territories, how to set quotas for each sales rep and how to measure performance. Forecasting errors here can have big consequences. Also, other departments in a company rely on accurate sales forecasts. For example, the operations department will make critical decisions based on sales forecasts. If you're a manufacturer, you decide on how much product to make everyday based, once again, on sales forecasts.
Even service industries, such as retailing, banking and food service, decide on how many employees they need each day to service projected customer volume. Sales forecasts can even affect how you manage people. It could affect how and when you hire new people and any increases or decreases in salaries and benefits. Companies must invest to grow in size and profits. Sales forecasts help managers know how much cash to generate and how potentially to spend it.
If a company wants to grow by acquiring another company, it will need accurate sales forecasts of the target company to decide how much to pay for it. It should be obvious now why managers pay so much attention to sales forecasting, because of its far-reaching effects.
- Understanding the sales forecasting process
- Defining your market category
- Understanding market dynamics
- Selecting a forecasting technique
- Using quantitative forecasting
- Understand moving averages
- Using qualitative forecasting
- Using estimates from customers, sales reps, and distributors
- Using a panel of experts