First of all, you must be familiar with the word ‘Sales Forecast Automation’ before going into more detail.
Sales forecast automation means to predict or give a projection of what the team, company, or an individual salesperson is going to sell in a week, month, quarter, or year.
The managers, directors use these estimated forecasts to determine the sales of the company.
These reports are shared with the leaders, board members of the company.
Why Sales forecasting is important?
It is vital for the organization because it can give you a clear picture of growth, revenue, the expense that an organization needs according to the planning process to achieve success.
Sales forecasting allows you to understand the required activities and mark the possible issues and try to reduce them. For instance, your team is lagging somewhere to reach the quota. Your newly launched campaign is not working as expected and does not yield your profit, or your competitor has a better program than yours. You can take precautions or remedies while having time to avoid these issues.
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Sales forecast Automation have few other advantages
Depending on the forecasted reports the organization can make vital decisions, recruiting human resources, setting goals, and estimated budgets for the organization.
When your sales go high and there is an increase in opportunities, you must hire more employees to keep up the demand, and if reports predict that the sales are going down, you must stop recruiting any resources for the organization.
It also works as a robust tool for motivation. How? You can update the sales forecast weekly or daily basis for individual sales reps. It ensures that they are meeting their target and also they are not falling behind.
The sales forecast reports will always be slightly different from the actual results but it will help you achieve growth and work in a planned manner if you are following clean data and the correct method.
Factors affecting the sales forecast automation
Some factors which will affect every you do. Similarly, with the sales forecasting, there are few internal as well as external factors that are going to affect the sales forecasting. Look at the list of factors:
1. Recruit or dismiss employees
When employees quit or your company terminates them, the revenue will come down unless you have sufficient resources. Whereas if a good number of reps are hired at a time, it will affect the budget of the organization.
2. Territory Shifting
It will take time for the sales reps to adapt to a new territory and generate the pipeline. Therefore, you must plan it effectively.
3. Change in policy
You must not modify your sales plan without changing the sales forecast before. For example, if your sales rep sells only the best prospects initially, then your revenue will be decreased, further in the quarter when customer churns will be lesser, the revenue will be higher. You can also say, if you are offering a discount on your products within a certain time, the profit will be higher during that period and comparatively lesser than other times.
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4. Economical factor
The purchaser is more likely to make investments for their business when the economy is good. The economy is low, the buyer takes a long time to purchase which increases the sales cycle including inspection before purchasing.
5. Change in Industry
If there is a high demand for any of your complementary solutions for your product then, your product will also be in demand thus increasing your profit.
For instance, if you are selling tennis balls and more people are buying rackets, naturally, they will purchase tennis balls too.
6. Change in competition
The performance of the competitors hugely impacts your business. When your competitor offers attractive discounts and prices on the product, your sales team must discount more or risk losing customers. Similarly, when your competitors face loss in the market, you will face profits and demands probably.
7. Change in a product
When you are introducing a new requested feature product or offering a complementary product or service, you will see an increase in your average sales, reducing the sales and revenue reducing the sales cycle, and turning up the win rates.
8. Change in the market
Stay updated with the market changes and know what is the status of the profits gained by your buyers. Suppose you are providing consultancy to the hotel’s services, you have to stay updated with the increase or decrease in tourism.
9. Seasons and occasions
Customers might purchase more during a certain period of the year including certain occasions and festivals. The demand and revenue remain on top during those times of the year.
10. Change in Legislation
New laws or rules passed can affect your business. Depending on what product you sell, it can create more demand for products/services or may resist people from buying it.