Monday, June 6, 2011
The Relationship Between Sales Management and Sales Forecasting
Sales managers have an important role. Not only must they manage sales representatives, but they need to know everything that the reps are doing in order to make informed decisions about the future. The decisions that they make are critical, and they can often be held accountable for making the wrong choice. Sometimes, the reason why a wrong choice was made has to do with the information the manager had at the time. He or she is going on information that may not be current or even accurate, due to a lack of good software that can predict sales.
A business owner without a sales forecast is like a ship’s captain sailing without a map: both operate on a whim and don’t have any direction. Sales forecasting is a vital part of sales management. Many managers disregard a good sales forecasting system because they think they have figured out a way to do it themselves. While that may work for some, it is important to recognize the relationship between sales management and sales forecasting, and how it can help your business.
A good sales forecast sets the stage for a business to run smoothly. All types of businesses do sales forecasts, from large to small companies and everything in between. Forecasting can be done as often as needed, from each week to just once a year. Forecasting is simply predicting the level of sales you expect to achieve. An accurate forecast helps managers predict future cash flow and the levels of production, so they can adjust business accordingly.
An accurate sales forecast encompasses all aspects of sales, and takes into account any details that may induce change. Some good questions to ask of a forecast are:
• How many new customers do you wish to gain each year?
• How many customers do you lose each year?
• What is the average level of sales you make to each customer?
• Are there particular months where you win or lose more customers than usual?
In sales, managers must make sure they have information on every client and lead for each sales representative. They’ll be able to better predict the performance of individual reps and the company overall, as well as make decisions regarding improvement for the force. The reason why sales forecasting so often fails to live up to its potential, is because for most companies, it is treated as a way to describe the business and not used to make any actual decisions for improvement. Managers use the process of predicting future sales based on average current performance, rather than using it to analyze, manage, and improve the revenue stream.
A good sales forecasting system is an integral part of customer relationship management (CRM). Although the customers aren’t going to see it directly, they benefit from it by having their needs met and by doing business with a company that is organized and trustworthy. It is these types of characteristics that help develop long lasting business relationships; customers are really who keeps the business going, after all. If your company relies on investors, you’ll be better prepared to answer their questions and continue to receive more investments in the future. By using a sales forecasting system through an online platform, you’re almost guaranteed to have a better business in no time.
Sales forecasting helps managers plan for the decisions that can effectively increase its clientele and ROI. With a proper sales forecast, you’ll be able to plan your investments, launch new products and services, calculate profits, and much more. Your company’s success depends on the decisions sales managers make based on a good sales forecast.