Which factors influence the sales forecast

A comprehensive insight into the sales forecasts

Sales Forecast | 10 mins read

What is a sales forecast?

Sales forecasting is a business management process designed to predict future sales. Proper sales forecasting helps business people make important decisions ranging from changing the business plan to expanding the business process.

In fact, companies with accurate sales forecasts are 10% more likely to grow their annual sales and 7.3% more likely to meet their quota than companies without accurate sales forecasts.

In general, companies that have historical data on their sales performance can more easily predict future sales accurately. Newer companies need to use outside information to make educated guesses about their forecast sales such as market research statistics.

A sales forecast provides crucial insights into human resource management that can be used to optimize the productivity of the sales team. For example, if there are salespeople who have emerged as sales directors in your company, your sales directors may choose to pair them with a less successful team member for training and mentorship purposes.

Mentorship, training, and coaching opportunities that incorporate historical forecast data can help underperformers on your sales team transform into successful salespeople who are likely to close more deals.

When companies accurately forecast sales, they have the opportunity to better allocate their resources. Business owners can take into account the resources available and ensure that their sales team and other departments have the right tools to perform at their best.

A big mistake that companies make is to pursue a growth rate that is not realistic. Using data based on sales projections reduces the likelihood that a company will expand too quickly or without the resources to sustain it over the long term.

An accurate sales forecast is a performance management, risk management and overall solution for human resource management. The combination of historical data and educated guesswork can give companies a competitive advantage, higher financial success and a long company life.

The importance of a sales forecast

Even with only two weeks left in the quarter, a shocking 93% of sales managers cannot accurately forecast sales within 5%. For this reason, both small businesses and large business owners should make sales forecasting a top priority.

A sales forecast is a great risk management, budgeting and planning tool. When the company predicts revenue from data, it eliminates some of the human biases that can be deadly to business success and longevity.

Business owners and sales managers can be overly optimistic about the future and can easily make catastrophic decisions based on emotion rather than educated guesswork. Understandably, your sales reps and sales teams rely heavily on intuition in their roles.

In fact, some of the best sales leaders use emotion to their advantage. However, intuition does not serve a business plan or budget in the same way that it can positively affect sales skills.

With the information provided by an accurate sales forecast, you can make more informed business decisions. One area for which the sales forecast can be particularly valuable is the growth rate and the expansion potential of a company.

For example, a company that has had immense success in the past three months may assume that it's a good time to open a second location. However, when forecasting sales, the company can see that making a huge decision based on a finite period of time is not sustainable in the long run and can instead choose wisely to collect more historical forecasting data.

Alternatively, being overly conservative and cautious can lead to a lack of important opportunities to increase the rate of growth or expand the business. Accurate forecasting can encourage business owners to join new sales directors or develop existing sales teams by allocating the available financial resources. If financial success is ongoing and your existing business is developing appropriately, it may be a good time to consider expanding your business.

Another benefit of accurate sales forecasting is the ability to address minor issues before they turn into major issues. For example, your forecast could show early warning signs about your sales pipeline that can be addressed and corrected.

How to create a sales forecast

Business planning doesn't have to be as precise as bookkeeping and is much more based on educated guesswork. With a combination of made up assumptions and data, you get the basis for making your forecast.

While making a sales forecast may seem intimidating at first, anyone can make a forecast for their business plan by using-

  1. Sales projection- Split sales forecasts into its component parts, e.g. B. by units. Remember, it's not just companies that sell products that can divide sales into units.

    For example, service industries such as restaurants can break down sales by meals sold, or lawyers can break down sales by hours worked.

  2. Historical data- Historical sales data is valuable when forecasting future sales. Sales analysis and statistical tools combined with common sense can produce more realistic sales forecasts.

    Some companies choose to use the data from the last few years and present it on a monthly basis in a line chart. From there you can visually follow future sales forecasts over the same lines.

  3. New Products- Unveiling a new product can be an exciting and stressful time for any business. Of course, no company knows how a new product will become a trade fair on the market, but new products should never be used as an excuse not to make sales forecasts.

    If your new product is similar to products made by another company, investigate how the new product launch will affect total sales. When launching entirely new products, you should consider historical forecast data for similar products.

    For example, when fax machines were introduced, sales analysts used typewriters and photocopiers to forecast historical sales data.

  4. Breakdown factors- Similar to sales forecasting, you can specify that sales should be forecast based on other factors. For example, some retail companies project sales based on sales from companies that have similar square footage.

  5. Project prices- Estimated guesses of the sale are the hardest part of forecasting sales. Projecting the price next to the planned sales units is much easier.

    Combine different sales items and their estimated prices to calculate total sales. Be sure to factor in the cost of selling, including the cost of goods sold.
At the very least, your sales forecast should be for the next twelve months. Some sales projections are five years, but three years into the future are sufficient for most business plans.

Sales forecasting techniques

There are several sales forecasting methods for business professionals to choose from depending on their specific business needs and desires. Make sure you thoroughly analyze the available data, business plans, and your sales team before deciding on a particular sales forecast.

Historical forecasting is a very easy and quick way to forecast sales, but sometimes it is better to use a benchmark as a basis for forecasting. A disadvantage of historical forecasts is the constantly changing market.

Intuitive forecasting is ideal for newer companies or companies that do not have sufficient historical data for reference. Intuitive forecasting is based heavily on the intuition of your sales force, so it's entirely subjective.

Sales Cycle Forecast Length and Opportunity Stage Forecasting methods are excellent forecasting methods for companies that are not seasoned forecasters but have busy sales pipelines. Both the duration of the sales cycle and the forecasting methods of the opportunity phase are very objective, but can suffer from a lack of historical data availability.

If a company wants to track sales pipeline specific forecasts, pipeline forecasting and multivariate analysis forecasting are great objective sales forecasting options. A common problem is that even a small data error can have disastrous effects on multivariable analysis and pipeline forecasting.

Multivariable analysis is widely recognized as the most accurate and comprehensive forecasting method available. Multivariable analysis and pipeline forecasting are ideal for sales teams with excellent pipeline and sales data.

How to have a sales strategy

Develop Developing a sales strategy is a great way to optimize your company's sales process and increase long-term profitability. Tips for developing a sales strategy are-

1. Increase in value- 74% of executive buyers will patron a company with a buying vision. A value proposition increases the urgency and reveals previously thoughtless needs for your potential customers.

2. Urgency - 60% of the dealsin the sales pipeline will not be completed as no decision has been made, unlike a competitor. With a sense of urgency, motivate your customers to change, then offer the unique solution your company has to offer.

3. Storytelling- Develop customer relationships and increase sales through personal storytelling and creativity. Your ultimate goal is to ensure that customers can see the potential of your service or product in order to positively change their own reality.

4. Problem orientationA program-driven sales plan is not always effective because every customer has different needs and wants. Capture the specific needs of your customers and make sure the sales process is relevant to them.

5. consider it- Instead of focusing on product traps or buyer personas, instead lead customers to focus on their ill-considered needs. Focussing on unconsidered needs creates a sense of urgency to purchase your service or product.

6. EnlighteningInstead of delivering according to customer needs, you generate new needs for your customers. Develop a story that illustrates potential rather than strictly providing data points and online statistics.

7. marketing- Make sure your sales teams and marketing department work closely together. A helpful analogy is that if your sales rep is the storyteller, your marketing team is the story builder.

8. Existing customers- Almost 50% of companies invest less than 10% of their marketing budget in customer expansion and retention. Instead of concentrating primarily on acquiring new customers, you concentrate on expanding existing customers

Renewals and upsells can generate massive profits without the additional cost of acquiring new customers.

As you can improve sales, there are many best practice tips for improving sales

on developing an outstanding sales strategy. Various tips to improve sales are-

  1. Research competition- Consider your competitors, research their success and their weak points.

  2. innovation- Instead of focusing on customer acquisition, you should think about how your company can offer new products and services to retain your existing customers.

  3. Customer service- Make sure that customers feel consistently valued by your company and that your sales force and your customer service team are easily accessible.

  4. Promotions Promotions are a great marketing tool that can attract new customers while adding value to existing customers. Consider offering customers free samples or discounts on a consistent basis.

  5. marketing- In addition to acquiring new customers, marketing should look for unique ways to reward existing customers. The main goal of marketing should be to highlight the high quality and uniqueness of the product or service offered by your company.

  6. Credibility- Customer testimonials and reviews are great ways to increase the credibility of your products and increase your sales.


  • Sales forecasting is a risk management, performance management and a comprehensive workforce management tool.

  • Accurate sales forecasting makes companies 10% more likely to increase their sales year on year and 7.3% more likely to meet their quota.

  • Forecasting based on historical data and educated guesswork can give a company competitive advantage, financial success and longevity. Other factors to consider include the introduction of new products and market conditions.
  • The
  • Forecasting sales is much more complicated than looking at the average sales generated by a company. Knowing how different factors affect sales will help you spot errors and maximize productivity. Collecting data on your average sales cycle and sales pipeline data can make forecasting sales a lot easier and more accurate.

  • 93% of sales managers are unable to forecast sales within 5% accuracy, to get an accurate sales forecast there are many different methods available. The types of forecast models available range from intuitive forecasts to historical forecasts.
  • Tips for developing a sales strategy include urgency, marketing techniques, and storytelling. Innovation and credibility are both best practice factors that can further increase sales.
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