Businesses are always looking to boost their sales. They do this by producing products that help people in their daily lives or providing reliable services to those who need them. But aside from this, businesses also resort to sales forecasting.
It works by forecasting the expected sales in the future based on available data from previous and present sales figures. That said, sales forecasting is one of the most vital cornerstones of revenue-generating initiatives and a business’s future. It fuels sales planning and is used throughout an enterprise for budgeting and staffing.
Thus, most businesses are putting an enormous amount of time and effort into sales forecasting.
However, most sales teams still fail to make accurate forecasts that reflect reality.
There are several reasons for a poor sales forecast, but here are some of the most common sales forecasting mistakes you can avoid.
Relying On Your Gut Feeling
Generally, entrepreneurs and sales professionals can rely on strong gut feelings when making important decisions.
Through emotional intelligence, your salespeople can connect with your prospects, learn about their pain points, and make a good guess of what they need and when.
However, gut feelings and guesses can only get you so far. Hunch may be a powerful tool for a sales professional, but only when it’s based on comprehensive and appropriate data.
Forecasts built on data and trends may still catch you off-guard. However, it gives you a better chance at getting your predictions right than relying only on pure hunches.
A forecast based on data, especially one that follows forecasting best practices, will outperform a prediction reliant on supposition. So if you’re looking for a way to guide yourself through this, here’s an excellent guide to forecasting to help you get started.
Making Decisions On Conflicting Or Limited Data
Most companies, particularly the bigger ones, have a wide array of spreadsheets, reports, and documents for tracking and compiling data for analytics. While most people think that the more data they have, the better forecast they’ll have, this is not necessarily true.
Due to the large quantity, they may have missing data points or conflicting indicators that can prevent accurate sales forecasting.
If this is a problem in your company, you must invest the time and effort to resolve any conflicts, duplicates, and errors.
You can also search for the possible causes of mistakes and take the necessary actions to address them and prevent them in the future.
By doing these tedious and menial tasks, you can gain cleaner data for more precise forecasts to base your decisions on.
Not Using The Latest Technology
Big data, artificial intelligence, and machine learning are some relevant technological terms that have erupted and invaded every aspect of our lives.
And in the business world, these technologies help streamline complex tasks and activities such as sales forecasting.
Not relying on these technologies is time-consuming and often results in inaccurate forecasts.
To forecast accurately, you must understand and decipher large amounts of data as efficiently as possible.
You must learn what has happened in the past, consider what’s happening in the present, and come up with a possible version of the future. For this to happen, you need the technology to gather information, make sense of it, and create a better prediction.
Artificial intelligence allows for creating predictive models to examine datasets and reveal factors that impact a sale. Meanwhile, machine learning helps sales software to train on data, ultimately improving prediction over time.
Together, these tools can help give you a better view of your business’s sales performance while showing you significant changes as they happen.
Not Training Your Sales Representatives
Your sales representatives and how they do their job can significantly impact your sales forecasting.
The quality of the data you rely on for your sales forecasting is very much in the hands of your sales representative.
Whatever goodness you may be getting from your platforms, such as the customer relationship management (CRM) system, is dependent on your salespeople inserting it into the system.
Thus, your sales team must understand the urgency of keeping records organized and up-to-date.
Make sure to train your salespeople in using any technology software properly.
Also, ensure that you create and implement data collection and storage guidelines, ensuring that your salespeople only input valuable data while preventing duplications and errors, as mentioned in the previous section.
Sales forecasting isn’t as easy as it sounds. You must employ discipline and practice keen attention to detail to ensure it works accordingly.
Building sales forecasts that keep business leaders happy and their businesses healthy is an art and a science. It must come with effort and the application of technological advancements to streamline the process.
If you get it right, your sales forecasts can significantly contribute to your business’s success. If you get it wrong, your business can face unnecessary costs and reputational damage.
While there’s no such thing as a 100% accurate sales forecast, keeping in mind the above common mistakes in sales forecasting can help reduce your chances of making mistakes and ensure that your predictions are as close to reality as possible.