Sales forecasts are a way to better understand the present. We found this very interesting article from Sales Hacker that looks into the important elements that the company must think about in its forecasting process. In fact, this article helps to better understand the sales forecast process and its importance. Take a look!
“A sales forecast is an educated guess about future sales revenue that uses historical data and common sense to project monthly, quarterly, and yearly sales totals for a business.
Sales Forecasting vs Goal Setting
Sales forecasting is different than sales goal-setting. With a forecast, you build a realistic map of the revenue your team can earn for a particular period.
This isn’t the time to set dream goals based off of best-case scenarios. Instead, you should define the reasonable outcome of current sales efforts combined with your return business from the previous year.
A sales forecast can help you build your overall company budget. But just like the weather, your team should view this as a plan to work from, not a firm prediction.
Before You Start: Gather Metrics
Building an accurate sales forecast takes planning and deep knowledge of your sales process. Before you begin, examine your pipeline and the milestones your sales team should meet along the way.
When you map out the sales process and pipeline before you begin your forecast, you should establish a reasonable estimate for the following items:
The time it takes the customer to express interest
How long it takes to land each contract
The customer on-boarding process
Average renewal rates
Essentially, you want to define the length of your average sales cycle.”
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