Sales management forecasting and planning are essential business processes. Based on past and present performance, as well as current trends, forecasting is done to predict future events. Having accurate historical and current data is key. Sales planning, on the other hand, involves devising plans to realize scenarios that you would like to see unfold in the future. Planning is also done based on past and present performance and expectations about the future. Both forecasting and planning are important managerial functions that are pertinent to other business functions, such as budgeting, financial planning and hiring.
Simply put, we could say that forecasting is focusing on what could happen in the future based on historical and current performance of a company, whereas planning is doing the thinking before you take action to decide in advance what should be done in the future.
Sales Forecasting management requires you to analyze and clarify upcoming situations regarding the operations in which you are planning to engage. As you develop your forecast, historical and current information are weighed to predict what is going to happen. Forecasting, therefore, helps us to look ahead to trends and events and figure out how they might affect your company.
Five essential questions in sales forecasting management
Although there are numerous complex tools to assist in sales forecasting, which break down into the categories of quantitative or qualitative forecasting methods, fundamentally, sales forecasting should boil down to five simple questions:
- Who: Who are your prospects? Are they decision-makers or just influencers?
- What: What solutions are you planning to sell? Are they based on need as expressed by your prospects? Is your company in a prime position to solve your prospects’ problems through its products and/or services?
- Where: Where are your prospects making their purchase decisions, and where will they use your company’s offerings? Can your sales teams be on the ground in these locations to get a real feel for what’s going on and to build solid relationships? Both of which can have a serious impact on the likelihood that your sales efforts are going to be fruitful.
- Why: Why might your prospects or existing customers consider purchasing your services and/or products? Are there current circumstances, such as new regulations or impactful political, economic or societal events that might compel them to make purchases in the near term?
- How: How do your prospects make purchase decisions? Without a clear understanding of this, the accuracy of your forecasting will be greatly compromised.
What Focus can do for your company
From the moment Focus engages with your company, we will take responsibility for sales forecasting management, including business planning, marketing scheduling, and budgeting. For many new or smaller companies, this can be a liberating experience, allowing leadership to direct their talents and energy elsewhere. Focus will plan your annual forecast and drive the monthly and/or quarterly targets necessary to reach it, breaking the targets down into manageable sections.
The Focus approach to forecasting is nuanced as we break down projections for:
- Each salesperson
- Specific accounts
- New accounts vs. existing accounts
- Markets
- Geography
- Margins
- Lead sources
Splitting our forecasts into such categories gives you an accurate, comprehensive look at what your sales are likely to be. Not only that, in all instances, our approach is both top-down and bottom-up. To optimize sales forecasts for your company we ensure buy-in and ownership from all by aligning what management wants with what salespeople feel they can deliver based on their pipelines and markets. Unless all members of your team are rowing in unison, your forecasts are likely to go off-course, which is unacceptable.
To learn more about the art and science of sales forecasting management and planning, and how Focus can help your company take yours to the next level, click here.
