HOW TO FORECAST THE EFFECTIVE WAY

Saphyte Team

3 min read

Updated: February 25th, 2021

We all live in an uncertain world at the moment. As business owners, it makes sense if you do your best in getting predictable revenue. However, it is still a prevailing struggle for most business leaders as to how to forecast their revenues for the next year.

With scattered sales teams, businesses are now counting on their ability to forecast, now more than ever, to drive growth strategy. Yet for most businesses coming up with an accurate sales forecast is still a major challenge.

Why Sales Forecasting matters

According to Clari, 93 percent of sales leaders are incapable of forecasting revenue within 5 percent, even with two weeks left in the quarter. Sales forecasting is both a science and an art; yet is not rocket science either.

Sales forecasting is an essential tool for sales that requires data and accurate computation, and not solely on intuition. This is where most companies fail to realize, because they trust guesswork more than the actual data. If a company continually misses its sales forecast, it might result to a negative impact on its valuation over the long term.

Here are the reasons why sales forecasting, backed with data, matters for your business.

• Sales forecasts can help your business derive better business decisions. This can help in your overall business planning, budgeting, and risk management.
• Sales forecasting allows businesses to efficiently allocate its resources for future growth and manage its cash flow.
• Sales forecasts help sales teams attain their goals by recognizing early warning signals in their sales pipeline and adjust its strategies or sales pitch before it’s too late.
• Sales forecasting also helps businesses to evaluate their costs and revenue accurately based on the prediction of their short-term and long-term performance.

How to forecast sales for your business the right way

Forecasting sales may look intimidating but it’s not actually that hard. So here are some tips to follow on how to forecast sales for your business the right way.

Refer to your Historic Data and Reports

Data plays a central role in improving the precision of your forecasts and building predictable revenue. Your past sales performance is a good indicator of future sales performance. Historical conversion rates tell you how many prospects, teams, or individuals were able to convert over a given period of time.

This step requires that you understand your conversion rates at each stage of your sales funnel. The moment you gain better understanding of your conversion rates, it will give you a better understanding of what kind of future sales your team can achieve and the pipeline coverage you will need to hit those targets.

Define your Sales Process

Start your forecast with a clearly defined sales process and account for each opportunity stage in the sales funnel. These stages need to be clearly defined by the buying process and well-documented so the team knows when and how to count your leads when they drop-off the funnel.

Document the steps in your sales process that can be used when converting a lead to a customer. Define clearly how to qualify your leads, opportunities, prospects, and a close. If these standards are not communicated clearly, each salesperson will come up with their own interpretation of each stage in the sales process. Thus, leading to inconsistent data and will directly affect your ability to predict your chances of an opportunity closing.

Pick a Sales Forecasting Method

After establishing your sales process, you need to choose a sales forecasting method that works within your process. The forecasting model of your choosing needs to factor in the maturity of your business, the size of your sales team and sales pipeline, the quality of your sales data, and how methodically you track it.

Consider Both External and Internal Factors

When drawing up your annual forecast, you need to factor in several external factors such as changing economic conditions, global pandemics, competition, and the seasonality of your business. Take note that sales forecasting is not a one-time activity that you are done and dusted with at the beginning of the year.

Apart from external factors, consider also the internal factors. Factors such as change in pricing, beefing up your sales teams, promotional strategies, and new product launches. These things also need to be factored into your forecasts.

Invest in a CRM

The right CRM helps sales teams predict their future revenue growth more accurately as you can adjust your pipeline estimates based on your lead confidence. A CRM system also helps you streamline your sales process as it offers a lot of insights into the team’s productivity, success rate, and bottlenecks in the sales process.

CRM solutions such as Saphyte, Salesforce, or Hubspot will help your sales reps track sales opportunities and help you identify top lead sources. Thus, optimizing your resources by allocating more funds toward more profitable sales activities.

Why is Saphyte a great choice for a sales forecasting CRM?

Saphyte is a three-dimensional CRM that streamlines your corporate and sales activities into a single platform. Storing in essential customer data and helping you process said data into actionable insights.

The CRM software is built with sales, marketing, client management, and team management modules to help your business create endless possibilities and opportunities. The system helps you manage your customer data, conduct marketing tactics and strategies, and identify opportunities for the long haul – all without leaving the platform.

The system is designed and built for scalability and flexibility, so it can grow with your business. Thus, you’ll never have to change platforms in the future.

Furthermore, Saphyte operates on a level of transparency. What you see is what you get, and what you get is entirely up to your preference. The system’s ecosystem packages suit your business needs without the add-on costs for every feature launch.

Get your business ahead by starting off with the perfect ecosystem for you. Call us now to book a free demo or start your trial today.