Three Tips for Developing a Sales Forecast

 Developing a sales forecast is an essential part of any business. Having an understanding of how well a business is going to do in a given time frame enables business owners a better insight into what areas of the business need more resources.

For example, if it's going to be an extremely busy period, then owners can consider taking on more staff in production or for less busy periods, then they can invest their time in product development or marketing.

It may seem impossible for some business owners to try develop a sales forecast, however, without one it can be very difficult for managers and business owners to predict what resources will be required and where. Here are some tips on developing a forecast for new and established businesses.

Use Historical Data and Past Sales Numbers

If you operate an established sales business, then the best data that you have access to in order to run a sales forecast is historical data. The sales figures for over the last few years will provide you with a good indication of how the business is going to perform over a given quarter.

Historical data should give you an indication of how many new customers you are likely to acquire and how many will drop off. This will in turn feed into how much marketing and sales activities you will to do in order to win new business.

You should look to break down historical data into customers and product lines, to understand which customers bought what products and how many of each were sold. By focusing on more profit product lines this will enable you to generate more revenue with the same amount of effort.

Sales Forecasting for New Businesses

If you are starting a new business, then sales forecasting can be a bit more difficult, as you do not have access to historical data. However, you can analyse the following in order to try and estimate sales figures for a given period:

• Analyse competitor sales data (If its available)

• Carry out market research

• Seasonal trends in the market you operate

All of this data will give you a good indication of the likely sales figures you can achieve in a quarter. It's important that you make conservative estimates about the growth of the business, as overestimating could cost you down the line.

Surprising Sources of Sales Leads

 Do you periodically reach out to failed sales and former customers? If not, you could be ignoring viable prospects.

It's easy to think of a lost customer as lost forever. That might be true, but if you don't stay current with former customers, you could be sealing your fate unnecessarily.

WHY YOU SHOULD REVISIT FORMER CUSTOMERS

The customer who let your contract lapse or failed to include you in their selection process did so for any number of reasons. Yes, sometimes your company made an unforgivable mistake or did something equally fatal. Often, it's subtler. Either way, if you give up on them, they're likely to remain former customers forever.

If you take the initiative and reintroduce yourself, you might find out-

• Your company was perceived to be unsuitable for a reason that is not currently valid. (Your prices weren't competitive; now they are. You didn't offer a one-stop-shop experience; now you do. The salesperson who used to cover that territory was abrasive; his/her replacement is well-liked.)


• Or the decision-maker who blackballed you or was unshakably loyal to your competitor is no longer there.


• Or the person who used to routinely include you in the company's selection process has moved up or moved on, and the new person doesn't know you to include you.

Possible outcomes: a renewed relationship, news that you truly aren't a match anymore, or a frosty shoulder.

WHY YOU SHOULD REVISIT FAILED SALES

Similarly with failed sales, they may not have chosen you when a particular decision was made. That doesn't mean they'd never consider you again, but it's your responsibility to stay on their radar. If they are marketed to by a sufficient number of companies in your category, they might not include you the next time they open their selection process. By writing them off, you turn "no" into "never."

WHO SHOULD REACH OUT?

Some companies are very good about asking departing customers for an exit interview and asking failed sales for a post-selection debriefing. Unfortunately, many of these companies assign this task to the salesperson or account manager the customer or prospect just rejected. That's cruel! Think about it:

• It's very difficult for one adult to say directly to another, "This is how you disappointed me," or "This is where you fell short."


• If a former customer or failed sale is willing to be candid, the average salesperson or account manager is likely to get defensive in response. In other words, they reward candor with an argument.

Instead, feedback from lost customers and failed sales is better solicited from the VP of Sales or Account Management (or Operations). What at first blush sounds like an unwise use of very valuable time turns out to be the best way to isolate root causes and reduce the number of future lost customers and failed sales.

You may ask why a former customer or failed sale would cooperate and offer honest responses to these questions. The answer is simple:

Companies need vendors.

If you lost the customer or the sale for reasons that can be addressed to their satisfaction, you might be the vendor that offers the best deal the next time they need your product or service.

Once your team members get past the understandable discomfort of asking for candid feedback and guidance, you might win (or win back) relationships you thought were lost forever.

Ann Amati, Principal, Deliberate Strategies Consulting, helps companies use guidance from their current and past customers to grow future sales. She has a 20-year track record of using deep-dive interviews to create positive turning points in her clients' relationships with their customers.

In her national practice, Ann has clients who sell millions to companies that make billions and sole practitioners/LLCs with more modest practices. She is the author of, "What Your Customers Aren't Telling You That You Need to Know," a collection of case studies, tips and tools for companies in commercial and industrial sales.