Rules for good sales forecasting
Sales forecasting is essential in managing your business, because it helps to predict trends and to anticipate the month end result. It is crucial to manage the performance of your business plan.
Guide your Sales representatives
Sales representatives, and, in general, sales teams, are cautious in predicting their results. and they might need guidance.
They know their business, they know where they are (in the sales cycle), but sometimes they do not know how to predict their sales. This is because they tend to defend themselves against “management pressure”, for the reason that, the manager wants to guarantee every sale, as soon as possible!
Consequently, the sales leader should have a weekly forecast, consolidating the results of the month. As a result, will have have accurate data for senior management. So, will be better prepared for the analysis during the business review, which, typically, should have regularly with the director or CEO.
A few rules
The forecast must obey some simple rules, which will minimize the margin of error:
- There was a meeting and so the lead was qualified
- Sales rep has clear details about the needs and, hence, has an expected date of delivery of the product; knows its fundamentals (why now?)
- Is in contact with, or has access to, the decision maker
- Has already discussed and addressed pricing
- Knows which the competitors are in the process
- Has a precise follow-up date agreed with the potential client, so the rep is leading the process
As a result, we can then define the probability of closing the sale (e.g. 75% ? 80% or more?). The better the forecast, the greater the predictability of your business. In organizations with a monthly budget and business plan, this is a moment of extreme relevance.
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