Sales Forecasting: Definition and Methodologies

definition of sales forecast

Your forecast implicates resourcing, headcount, and more (see the section on sales forecasting objectives). So although things may be changing quickly, you don’t want to give up on your forecast. Extreme weather or economic crises all dramatically change your forecast.

definition of sales forecast

By consistently evaluating and revising projections, you can ensure that forecasts accurately reflect the current sales performance coupled with the current strategies you’ve put in place. A forecast is a less formal version of a sales budget, since the forecast may not have a large amount of supporting detail and also tends to run for just a few definition of sales forecast months into the future. A forecast is more likely to be based on bottom-up projections from the sales force, based on their expectations of sales to specific customers. A sales budget is more likely to incorporate top-down estimates of sales from the management team. Gather regular feedback from your team about what‘s working and what’s not.

Building a Custom Model

Teams can update their plan based on current market conditions, so forecasts change with circumstances. The platform allows users to analyze forecasts by account, territory, product line, even specific SKUs. What’s more, it uses predictive insights to ID opportunities and focuses team resources on the right goals. Historical forecasting is a quick way to gather insights based on past performance.

  • Additionally, regular forecasts help leadership keep their finger on the pulse of how things are going on the front line.
  • Begin by estimating how many potential customers you could have contact with in the period.
  • If you’re looking to improve your sales forecasting skills and know what future sales you can expect for your business, we’ll get you started in no time – that’s a promise.
  • New laws and mandates can either help or hurt your business — either by creating demand for your product or making prospects reluctant to buy anything new.
  • With this technique, you’re less likely to get an overly generous prediction since it relies solely on objective data rather than the rep’s feedback and sales quotas.

When you buy something online, whether that’s from a large marketplace or a small boutique, you get a delivery estimate. If your delivery comes a day or a week after it’s promised, that’ll affect your satisfaction with the company — and decrease your willingness to want to do business with them again. Once you have a fully defined sales forecast, you can leverage the results to drive your business goals. Extremely accurate forecasts also require a range of complicated calculations, which is why many businesses have turned to technology for support.

Common Mistakes and Pitfalls in Sales Forecasts

By following these principles, you can unlock the full potential of sales forecasting and propel your business to new heights. To enhance your sales forecasting capabilities, it’s important to leverage the right tools and technologies. Since there are other factors at play, it’s also important to get the perspectives and expertise of other departments. A company that meets or exceeds its sales forecasts is a company with a great reputation. Good things come in threes, and the better you will act, the more people will trust you in the future.

definition of sales forecast