September 15, 2020 •DJ Team
Sales forecasting provides business leaders and sales professionals with vital information that helps them make smarter decisions for every aspect of an organization. From expanding the business to hiring personnel to planning product launches, anything that impacts revenue is impacted by sales. For all its benefits though, many sales leaders still have difficulty creating a forecasting method for sales that is accurate and effective.
This guide will help you better understand demand forecasting models and how to find the right one for your organization.
Understanding Sales and Demand Forecasting Models
Sales and demand forecasting work hand in hand to create an overall picture of historical sales data as well as projections for future customer demand and sales. Leaders can use that information to guide decisions that affect the company.
How do you choose the best forecasting model?
Just as every organization has its own ideas, personnel, ideals, and customer base, every company also has their own way of forecasting. In order to choose the best forecasting model, you must first analyze your business from the ground up. Look at needs, goals, past sales, customer profile, and all revenue generating functions, then look at some forecasting examples to see what fits. This will help you create the most realistic forecasting model for your organization.
How do you forecast growth?
In order to forecast growth, you must look at revenue. That is the basis for your forecast model. From there, you can apply sales forecasts, industry growth or change, and market growth. That will give you a fairly accurate forecast.
Ways to Improve Sales Forecast Accuracy
Chances are, no matter what kind of sales forecast model you use, it won’t be 100% accurate. There are simply too many moving parts for it to be absolutely perfect. However, there are ways you can improve it. For one, making sure that your accurately attributing sales to the correct channel by using an accurate marketing attribution model is vital.
What methods should be used to determine sales forecasts?
There are so many different sales forecast methods, you need to research in order to find methods that line up with your company. Try looking at sales cycle length. It will give you a tremendous amount of information.
How can you improve the accuracy of a sales forecast? Simplicity is the first step in improving your sales forecast. You can also clean your data. Over time you are sure to collect a lot of data that can be analyzed then used for sales forecast. A sales forecast calculator would certainly come in handy. Beyond that, a sales forecast example marketing plan can help you keep everything in perspective.
Which method of forecasting is more accurate?
Sales forecasting techniques can help with looking ahead at the potential for sales and growth, but the process can become convoluted quickly. When choosing a forecasting method for your business, consider the uniqueness of your business. That is where you start when trying to determine the most accurate method.
While other methods to improve sales forecast accuracy may get you there, statistical forecasts are probably your best bet.
Understanding the limitations and best features of these methods. When it comes right down to it, forecasting relies on your knowledge in order to process it and turn it into something that your organization can use.
DemandJump has taken the guesswork out of much of the forecasting process. With DemandJump’s attribution dashboards and data, you will find yourself well on your way to a data-driven sales forecast. Don’t take our word for it, give it a try - free for 7 days.