Sales is an essential aspect to move your business forward. Every small step you take in an organization depends on the sales revenue you generate over a period of time. Activities such as hiring, goal setting, marketing, etc., depend on the returns you make.
Therefore, it is essential to have a rough estimate of how much your business will be able to generate revenue in a month or year based on the current data. And, this process is called sales forecasting.
Now, from what kind of data you will be able to predict future sales revenue and make intelligent decisions for your business?
- Industry trends
- Historical data of customers (customer behavior, purchase history, etc)
- Sales pipeline
- Customer surveys
- Sales reports
And, the list goes on.
When you are able to make accurate forecasts, you will be able to meet customer demands, make informed decisions on the next best action, and allocate resources logically.
And, the other important point to understand is that forecast reports will not provide you with exact numbers. Uncertainty will always be there. The only good thing about forecasting is it will give you a rough idea of what to expect in the future and make strategic plans accordingly.
Now, what are the essential ingredients to perform better forecasting?
Factors to consider while forecasting
If you want to excel in forecasting, you need to understand some important points like:
- Record your sales process: You should document all the actions and steps required to close a deal. For example, meeting with a customer, sending follow-up requests, etc. This will help you in understanding the most popular technique in closing a deal.
- Set quotas: You should set monthly or yearly quotas which will make planning easier. When you set individual quotas, you will be able to identify gaps in the team’s performance and give necessary feedback. You will also be able to predict sales in the future based on the current set target and bring required changes to the sales pitch or techniques.
- Adopt a CRM to manage sales pipeline: Use a CRM application to understand and manage your sales pipeline which will help in predicting accurate sales goals.
If you want to simplify your forecasting method, it is recommended to take help from AI which will help you in automating all your forecasting activities. Let us understand how the interference of AI can increase your forecasting accuracy.
AI to improve sales forecasting
Some of the common reasons for inaccurate forecasting are lack of high-quality data, mistakes in the pipeline, etc. Errors are more likely to happen when there is an intervention from human beings. On the other hand, with AI:
- You will be able to generate and process piles of error-free data. It will help you in generating valuable insights and make right observations about your business. A report by Mckinsey states that applying AI-driven forecasting can reduce errors by between 20 and 50 percent
- You can deploy chatbots to gather information easily by giving different commands.
- You can use the lead scoring method to score your leads based on different factors such as customer engagement, demographic details, etc. This will improve your forecast and you will be able to focus on those leads who are more likely to convert.
