The sales forecast defines the expected revenue for a salesperson, a sales team, or the business as a whole. Sales forecasting can be weekly, monthly, quarterly, or annually, and the management of a business uses sales forecasting to set goals and make plans. Business plans that include forecasting sales are spread across departments and even among business shareholders, which makes it extremely important to be precise when forecasting sales. Jorge Zuiga Blanco, an entrepreneur and sales master from Costa Rica, explains how to predict sales effectively to achieve greater success.
Predicting sales allows you to spot potential problems when you are still in time to avoid disaster. For example, if you notice that your sales team will not meet the goal. From the planned sales, you can see what’s going on and take corrective action. Competition may have driven prices down or the sales incentives may not be well designed. Uncovering problems in sales numbers now rather than at the end of the quarter can have a huge impact on business results.
To predict sales, individuals must set goals for individuals and for the sales team. To know if you have succeeded, you must first define what this success consists of. Says Zuiga, A structured sales process is a requirement. All salespeople must use the same steps in the sales process or it is not possible to predict the likelihood of an opportunity ending in a sale.
Standard definitions of what a lead, sales opportunity, close a sale, or negative customer is are also needed. All salespeople must agree on when to include a potential customer in the system. They should also identify what stage of the sales process each sales opportunity is at.
All business departments need a database. These allow reps to point out what stage of the sales process each opportunity is at and what follows. This provides a sales forecast. Additionally, when a salesperson fails in their prediction of a sales opportunity, you need to follow up to see why it happened. This prevents sellers from overstating their forecasts. And that makes them more realistic in their expectations.
To make a sales forecast, it is necessary to understand that sales depend directly on two vital factors – internal factors and external factors. Internal factors include things like hirings and layoffs. When a salesperson leaves the company, Zuiga explains, the income goes down. Unless you have a replacement for that seller immediately. On the contrary, if a new seller is added, global sales should increase.
Another example of internal factors affecting sales is changes in company policy. Any change that occurs in the business can affect sales, especially changes in pricing policy or changes in the commission structure of sellers. If you change the sellers’ commissions, sellers can tailor the way they sell to the target. To customers who are more profitable to them, which may coincide with those who are more profitable for the company.
External factors include things such as changes in the competition. What the competition does impacts sales. If the competition initiates a very aggressive pricing policy, the company may have to lower its prices to compete in the market, which affects turnover. On the contrary, if the competition goes bankrupt, there will likely be an increase in sales. Economic situations must also be taken into account. When the economy grows, it is more likely that there will be more customers. When the economy goes into crisis, sales are very likely to suffer as people think more about it before buying.
Changes in the market are also external factors. If your potential customers are going through a rough patch, they are unlikely to decide to invest or make purchases. That’s why to forecast sales, you have to be aware of what is happening in the market, says Zuiga.
Industry changes or product changes also fall into this category. If there are technological advancements in the industry, the current sales of your products may suffer a decline. On the contrary, if there is a change in consumption habits, your product can be positively affected. As the product evolves and undergoes changes or modifications, sales may also improve. On the contrary, if the product becomes obsolete, sales will drop.
About Jorge Zuiga Blanco
Jorge Zuiga Blanco is a leading e-commerce expert who has provided his services to growing organizations around the world. He has diverse industry experience to his credit, which gives him the ability to relate and contribute to business owners in a variety of markets. He has over 20 years in the e-commerce industry and over the past nine years has dedicated his expertise and knowledge to helping executives and managers grow their businesses.
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