Why do you need a sales forecast for your business? 

On a daily basis, business and sales leaders are faced with major decisions. Decisions that are influenced by factors both macro and micro—such as

  • economic conditions
  • efficiency of sales teams
  • competitive industry
  • technological development
  • Social and cultural forces

What these leaders then need is a sales forecasting software that can make sense of these random and arbitrary factors to make crucial business decisions, accelerate growth, increase retention, and improve cash flow. 

Sales Forecasting


 

Decoding the sales forecasting process 

Set realistic sales targets

A good place to start sales forecasting is to ensure every individual and team has targets set on a weekly/monthly basis.  Most growing businesses use their CRM software and set targets based on what they have achieved.

 

Use a comprehensive CRM 

Understand prospect’s needs and pain points, and educate them through online presentations and demos on how your product can help solve their business challenge.

Define your sales process

Have a defined sales process so there is uniformity in the way sales reps identify a lead and convert the opportunity into a deal. Set criteria for your team for converting a lead into an opportunity.

 

Ensure accountability 

A sales rep inflating the sales prediction could have a detrimental effect on business. Ensure that there is a follow-up mechanism for sales reps so they are careful about data and deals they key into the system. 

Sales Forecasting Methods

Historical Forecasting

Effectiveness score: 2/5

This is probably the oldest sales forecasting methodology for small businesses. In this method, if you want to project sales for a particular week, you can do that based on data from the previous week or year to arrive at an estimate. For instance you if won business worth $10000 in September, your sales forecast would be $10000-$11000 in October.

Opportunity Forecasting 

Effectiveness score: 3/5

This sales forecast method depends on probability and analyzes behavioral prospects. A CRM that tracks the in-app and website behavior of a prospect will play a huge role in identifying leads that would convert to prospects based on their demo. If you find that more leads who sign up for trial from your website are converting into customers, you can plan your activities around this behavior.

Pipeline forecasting 

Effectiveness score: 4/5

A deal pipeline is the easiest and most accurate way to forecast sales as it is based on data within your CRM. This method involves adding up the value of all the current deals in your sales pipeline for a particular period of time. A good CRM software like Freshsales comes with a visual pipeline of all your deals in one place, which will help you forecast your sales better. 

Sales Pipeline Vs. Sales Forecasting 

 

There is only a sliver of difference between a sales pipeline and a sales forecast and not many know this difference. Sales pipeline shows all your current deals in the sales pipeline. Whereas sales forecast predicts the opportunities that will be closed in a given time period. 

Factors impacting sales forecasting

 

Internal

Size of your sales team

When the strength of your sales team fluctuates, your sales numbers will automatically change. When you hire sales reps, the sales prediction increases.

Company decisions 

Policy changes such as discounts, pricing and product changes, business model realignment and  commissions can impact your sales forecast.

New territories

Sales reps require time to adjust to a new territory. Sales is usually better in familiar territories than in a new territory when a rep is just settling in. 

 

External

Competitive landscape 

When the strength of your sales team fluctuates, your sales numbers will automatically change. When you hire more sales reps, the sales prediction increases considerably. 

Economic factors 

When the economy is booming, sales are good across industries, whereas a recession would result in churn. 

Product development 

When you tweak your product to cater to the needs of the customer, your sales are likely to increase. A stagnant product would result in plateauing sales.

Sales forecasting within the CRM 

A CRM with the capability to predict future sales can significantly improve your decision-making abilities. 

With a CRM like Freshsales, you can track sales growth over multiple timeframes, identify the value of deals in each stage, generate visual reports without complex setups, and monitor the performance of your sales team, all from within one intuitive system.

If you want to make informed business decisions, then Freshsales CRM with in-built predictive sales forecasting capabilities can help you achieve that.