Forecast = understanding where business will come from today – tomorrow – next month – next quarter
Forecasting is the backbone of understanding where your business will come. It’s not just about numbers—it’s about preparing your team to take the right actions with the right prospects.
Why Forecasting is CRITICAL
Forecasting is essential for increasing revenue because it guides the sales activities your team needs to perform and identifies who they need to sell to, based on what the forecast reveals. The typical focus is on high, commit, and low numbers that your sales team provides weekly, monthly, quarterly, or annually. But let’s shift that focus.
The Perspective Shift
Imagine what would change if you started focusing on the differences in how each person on your team views sales. This shift can unveil insights that purely numerical forecasts might miss.
My friend Debbie Mrazek, in her book The Field Guide to Sales, perfectly captures this idea. On page 22, she writes:
“What is your sales goal? When I ask salespeople that question, they say something like, ‘Well Deb, I want to do $2 million dollars this year.’ I follow up with, ‘Would that be $2 million by selling $1 million to two customers or to twenty customers who each buy $100,000?’ Clearly, that makes for two very different plans of attack.”
Diverse Sales Strategies
Different industries and businesses have unique sales strategies and forecasting needs:
- Accounting Firms: One might aim for steady income year-round, while another might focus on generating most revenue during tax season.
- Bistros: Some cater to tourists, expecting infrequent visits. Others focus on locals, aiming for repeat business from regulars.
- Inside Sales Teams: Some salespeople might focus on landing large deals (whales) to meet their quotas, while others prefer closing multiple smaller deals daily.
Each of these diverse forecasting philosophies can result in the same annual revenue but require different approaches.
Impact of Forecasting
Effective forecasting influences:
- Target Audience: Identifying the best prospects for each salesperson.
- Relationship Building: Knowing which contacts to nurture.
- Sales Approach: Tailoring sales strategies to match the forecasted needs.
Use forecasting as a tool for sales success, not just a set of numbers your team has to provide. By understanding and leveraging the unique perspectives of your salespeople, you can create more effective and dynamic sales strategies.