What is Sales Forecasting and How is it Beneficial for Retail Businesses?
The COVID-19 pandemic has led to uncertain market conditions for the majority of businesses. Depending on guesswork without any proven data can lead to financial loss. Companies are finding ways to make demand projections for the upcoming months and years to plan business operations and avoid revenue loss. Sales forecasting is one solution to optimize supply chain.
If you’re a company looking to learn more about what sales forecasting is, or how to forecast sales, you have landed on the right page.
Sales forecasting is a data-driven process that delivers results based on the previous data and other elements responsible for sales fluctuations. Using sales forecasting methods, you can get an idea of how much stock is required to meet consumer needs and the revenue required for producing those products.
By forecasting sales, your company will have a sales target to work toward, and all your team members can be motivated to achieve these new business goals.
According to an Aberdeen study, companies using forecasting software have observed the following:
• 23% increase in revenue
• 8.3% increase in the sales cycle
• Around 10% increase in the number of sales reps
These figures show the significant difference sales forecasting tools can make in businesses that are striving to increase their revenue and explore new market opportunities.
What is sales forecasting software?
Sales forecasting is the process of predicting future sales using historical data and other relevant factors that affect sales. Companies can monitor their short-term and long-term performance using sales forecasts. Sales forecasting software is a data-driven software that uses your previous sales data. It also uses other inputs, including events, economic changes, and upcoming trends to make sales projections for upcoming months or years.
Sales forecasting software analyzes events and sales patterns to identify how much the company could sell during a period of time. You can determine when demand will be higher or lower for different products. Without sales forecasts, you might miss opportunities by being unaware of potential spikes in demand.
For example, a toy company uses sales forecasting software to predict an increase in sales during Christmas time. They are able to implement various strategies to reach higher targets during that time. They are able to meet consumer demand. If the company wants to launch a new Christmas toy, they can use sales data of a similar product or competitor’s product to forecast what sales will look like for their new toy.
Benefits of sales forecasting software
Here’s why businesses should implement sales forecasting software:
1. Accurately plan business operations
If you forecast sales accurately, you can understand your upcoming business leads and dedicate time, revenue, and resources toward achieving them. Sales forecasting software helps you to understand how to use resources to achieve the best possible outcome.
2. Saves time and efforts
Sales forecasting software is an automated software that records all sales data and helps optimize the inventory levels to deliver products at the right time.
3. Make informed decisions
You can make better business decisions if you start forecasting demand. Sales forecasting brings improvements in the following areas:
• Marketing and growth
• Revenue expectation
• Post-sales support
• Inventory management
Sales forecasting software for the retail industry
Many times, retail companies end up producing more or less than the actual demand. As a result, either they have excess stock on hand, or their products go out of stock. In case of excess inventory, warehousing costs increase and sometimes there’s a waste of products. On the contrary, if the supply isn’t sufficient to meet consumer demand, the consumers will be dissatisfied with the service and might choose your competitor’s product. This is a huge loss because it’s not likely for customers to return to you if their needs were met elsewhere.
Sales forecasting software for retail is a necessity nowadays. It’s used to manage inventory and provide consumers with the right products at the right time. For example, a watch company can estimate the watches needed in every location using a single sales forecasting software. They can also manage their inventory at every location and optimize the supply chain using sales forecasting software.
For example, sales forecasting software predicted that the demand for watches in Boston is less in the upcoming months, while there’s an increase in demand in Denver. You can plan to supply Denver with the excess stock from Boston.
Sales forecasting software is essential to retail companies and various other sectors such as automobiles, aviation, food, and many others. If you’re looking for forecasting software solutions for your company, get in touch with Avercast’s experts today! Avercast has decades of experience in developing forecasting software solutions.