Accurate sales forecasts have traditionally been very difficult to achieve. However, without accurate forecasts, business planners cannot make the best use of company resources to invest in the personnel required to deliver the products and services that customers want. Getting a forecast right has never been more critical because of the tightness in supply chains, which places a significant premium on making the right spending and investment decisions. Sales forecasting based purely on intuition, gut feel, and previous sales data no longer cuts it.Although some volatility is outside the control of forecasters, there are ways to improve sales forecasting accuracy. Using automation tools for data-driven forecasting is a keyway to improve accuracy. Relying on manual systems and spreadsheets is likely an inefficient use of resources, and highly inaccurate.
Sales forecasting automation is not a glorified spreadsheet system. The right automation tools are advanced enough to detect patterns and help decision-makers derive insights from both company data and market trends. Automated forecasting can also lessen the burden on the people who had to input data into the legacy spreadsheet system. By integrating systems, sales pipeline data can be fed automatically into the sales forecasting system, giving excellent visibility into the actual pipeline instead of having a modified version used for forecasting.
With a continually updated forecast, business leaders can stay on top of anticipated sales and be notified immediately if something in the market or the field has impacted a forecast. Early warnings can be critical in having enough time to react and potentially still meet goal numbers.
What Are Sales Forecasts?
A sales forecast is an analysis of what sales revenues a business will generate over a quarter, a year, or a longer period. It details the deals that will close over the coming month or quarter.
Forecasting models usually utilize industry and market data insights to provide actionable analysis that can build a business case for investment in sales and marketing activities, which can drive sales revenues in the longer term.
Sales forecasting is a key component of an overall sales performance management solution. Let’s now explore six of the main benefits of using a sales forecasting solution:
- Integrated data for fewer end-of-cycle surprises
By centralizing data and providing greater visibility, the risk of being blindsided by the gap between actual sales and forecasted sales is minimized.
Gathering and reconciling data from disparate systems not only takes longer but makes errors more likely. By contrast, organizations can make big gains in forecast accuracy by adopting integrated solutions along with automation and machine learning.
- Improved analysis and understanding of sales success
Setting up an automated forecasting solution will enforce a defined sales process, to ensure that everyone is using the same playbook, and that apples aren’t compared to oranges.
“Without a clearly defined sales process, sales reps will use emotion and gut feel, as much as anything else, to forecast sales. This will hide a whole range of issues that sales managers need to be aware of.”- Graig Cleary, Varicent.
By improving data quality and visibility into sales, an automated system can identify patterns that make successful sales, including products, marketing, and sales behavior.
- Better understanding of customers
The machine learning capabilities of an automated system can provide valuable predictions about what each customer is likely to buy.
“Information about who your customers are – how they buy, which personas are involved in the decision-making, where your growth hotspots are located, and much, much more – are available.” – Zach Burnett, Varicent.
Multiple departments benefit from these insights, including sales, marketing, and product development.
- Improved agility
By ranking the probability of winning different deals, identifying cross-selling and upselling opportunities, an automated system provides guidance on where to most effectively deploy sales resources. Documenting and measuring activities can increase the ability to forecast the results of more of the right activity as related to prospective sales.
- Enhanced strategic planning for sales
When paired with a sales performance management solution, automated forecasting offers performance insights into managers, individuals, teams, and regions which can be used for coaching, better planning, and strategic decision making.
- Streamlined finances
Continuous, accurate forecasts can improve cash flow, credit, and financing. Improving forecast accuracy can help minimize the risks associated with inaccurate forecasts, disparate data sources, and slowed reaction times.
Contact us to learn more about how Intangent can help you implement and manage automated sales forecasting as part of a sales performance management solution, schedule a meeting here.