Improve sales forecasting accuracy with these four tips
Sales forecasts are important for every business. They provide company leaders with figures to base key operational and budgetary decisions on, while also giving employees numbers to use. However, if your sales forecasts are consistently inaccurate, they’ll eventually become unreliable distractions. With this being said, let’s carefully review a few tips that should allow you to improve precision in the future.1. Gather and interpret analytics
In the past, companies relied on outdated data and hoped it predicted future results. The good news is that you don’t have to do this. Thanks to real time data sources and advanced technologies, you have access to incredibly relevant data and analytics.
The most important thing is that you’re using the right data and being a stickler for accurate inputs. “It is important to have reliable, current, and accurate information, as those are the cornerstones of accurate forecasts,” sales expert Matt Sunshine says
. “Don’t settle for the ‘I’ve got a good feeling’ list as that is never going to get you the predictability you need.”
Remember, your output depends on your input. If you put reliable data in, you’ll get reliable estimates out. 2. Study the marketplace
If you want to become a better sales forecaster, then you have to learn how to study the marketplace, identify trends, and apply theories based on what you see in front of you. This is what financial investors do when they perform technical analyses and look for market cycles.
Take the Elliot Wave Theory as an example. As senior market strategist Susan Green explains
, “The main goal of this principle is to identify extremes in investor psychology while identifying highs and lows in the price of a market.” The point isn’t that you need to use this theory when studying the marketplace, but rather that you need to do what other analytical professionals do and identify theories that help you make sense of the data in front of you.3. Reduce timing
The longer it takes to generate sales forecasts – and the longer period of time you’re forecasting – the less accurate and realistic your estimates become. While it’s important to have long-term forecasts, really hone in on shorter-term forecasts. Monthly reports are far more accurate than annual or quarterly ones. 4. Enhance cross-departmental collaboration
One of the worst mistakes organisations frequently make is limiting the sales forecasting process to the sales department. The truth is that many departments should be involved if you want accuracy. By encouraging cross-departmental collaboration between sales, marketing, customer service, finance, and accounting, you can get a much broader picture of what challenges and opportunities your company faces.
Driving collaboration between previously isolated departments isn’t always easy. You’ll have to strategically forge alliances
between individuals in each department and gradually work towards finding common goals. Once you’re able to do this, you’ll see some really positive momentum in many different areas of your business – including sales forecasting accuracy.