What is sales forecasting and how it can benefit your organization?
On what basis do you plan your future sales or strategies? If you depend on guess work, you might face unexpected loss if the market conditions aren’t the same as you expected. You must have a deeper understanding of the future market to plan your sales accurately. Sales forecasting software is used to serve this purpose. Retail, manufacturing, clothing, food, aviation, and many other industries can use sales forecasting software to predict their revenue.
Inventory forecasting software forecasts inventory needed to meet consumer requirements at the right time in the right place. Using inventory forecasting software companies can track their products to maintain a balance between supply and demand.
What is sales forecasting?
Sales forecasting is the process of predicting revenue by estimating the amount of product that will sell in the upcoming months or years. Forecasts are generated using the company’s previous sales data. Factors such as present and future market trends, promotions, seasonality, and future economic conditions are analyzed to make accurate forecasts.
Using sales forecasting software can help you understand how the market will respond to your products and services. By generating forecasts, you can make informed decisions and plan your inventory to meet consumer requirements. For instance, projections show that there’s an increase in chocolate sales during December. You can plan your production to deliver the correct quantity of chocolate to consumers. On the other hand, if you haven’t forecast the increased sales in December, you won’t have sufficient inventory on hand, resulting in loss.
Why is sales forecasting important?
Forecasts are generated to predict future sales. Using forecasts, you can make confident decisions. Finance departments can rely on forecasts to develop budgets for operations and sales. Production teams can use forecasts to plan their processes. Accurate sales forecasts enable you to optimize the supply chain with the right production capacity and material purchases.
If the sales predictions aren’t accurate, it can result in adverse business outcomes. For example, suppose the data generated from a sales forecast doesn’t match the consumer demand. In that case, the entire process, right from sales planning to production, might disrupt the supply chain. These poor decisions might result in the company holding too much or not enough inventory to meet market needs. Therefore, it is essential to make accurate forecasts to manage your supply chain.
Use of sales forecasting software in business processes
Sales forecasting is a lot more than displaying figures of future sales. It can be helpful at every stage of the business process.
1. Sales operations
Sales forecasting is a significant step for the sales operations team. Forecasting software automatically captures sales reps and operations time data and updates into the CRM. This data is collected to identify flexible modeling options to generate the most accurate forecasts.
The marketing team can adjust their strategies using deal risk profiling in the software. They can identify which products need added focus in order to increase sales.
Finance teams can benefit a lot from sales forecasting software. They can understand how much to spend for each operation and identify resources needed to achieve sales targets.
Benefits of sales forecasting software
• Improves performance of teams
Sales forecasting software can predict if the company will meet the sales goals or not. If yes, company employees can be motivated to drive more than the expected sales. Marketing teams can implement strategies that drive additional leads and increase sales. If the company can’t meet the sales quota, the underperforming teams are motivated to hit the target.
• Improves sales planning
Sales forecasting predicts the future revenue, which helps sales managers to adjust their strategies to achieve the target. If the forecast displays figures that exceed the quota, the managers can allocate a budget for additional sales, new technology, and marketing. On the other hand, if the forecasts are weaker than the quota, corrective strategies need to be implemented, including downsizing the number of employees and reducing marketing and other budgets.
Thus, predicting future revenue helps to improve the planning and stay prepared to face the market realities.
Key features of sales forecasting software
The best sales forecasting software offers the highest level of accuracy and makes the planning and operations process more efficient. The sales forecasting software should have the following features to create accurate forecasts
• Analyze market trends, seasonality, and changes in the sales pattern
The sales forecasting software should include key performance indicators (KPIs) and time-based dashboards to identify trends and seasonality changes.
• Data visualization tools
Data visualization tools such as graphs, maps, and charts are easy to understand. Built-in dashboards, analytics, and reporting can be designed using data visualization.
• Forecast across geographies and products
Make forecasts for various geographical locations, accounts, and products. Analyze sales at different levels of hierarchies according to the requirement (e.g., city/state ,a set of product SKUs)
• Generate forecasts based on different modeling techniques
Make forecasts using various techniques such as time series analysis and projection, casual modeling, and qualitative techniques. Compare all the results to find the most accurate estimates.
• “What-if scenario” modeling
Create “what if” scenarios to understand the impact of any business, economic, or political shifts in the market. Prepare for changing trends and upcoming market challenges.
AI in sales forecasting
Nowadays, forecasting software is developed using AI (Artificial Intelligence) technology. AI can be used to integrate well with your existing system to record data and sales activities accurately. Some AI systems combine with enablement solutions and customer engagement to deliver accurate results.
AI-based sales forecasting software includes multiple forecasting methods and internal and external variables to create accurate forecasts. This software offers greater flexibility with customized solutions available to serve any business needs.
Sales forecasts are necessary for businesses of almost any type and all sizes. Using sales forecasting software, you can generate more revenue and save your business from huge losses. The majority of companies nowadays adapt sales forecasting methods to stay ahead and fulfill consumer requirements.
Are you looking for the best sales forecasting software for your business? Contact the Avercast team to get accurate sales forecasting software. Avercast’s forecasting tools are developed using 200+ algorithms to generate the most accurate results possible.