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While it is wise to expect the unexpected, business owners must strategically plan and estimate sales to maximize revenue. Sales forecasting is the cornerstone of marketing management. It attempts to predict the volume of sales in a given period of time, using a scientific approach. Using a strategic plan, you can accurately forecast your sales to prepare for your future. Great entrepreneurs are confident about how their business will perform, but they are all reluctant when it comes to figuring out the details. A successful strategy will reflect on the challenges you’ve overcome, increase revenue operations, and build a solid foundation using a few key elements.
Unfortunately, many companies are unaware of the different quota forecasting methods and what questions to ask, such as:
In this highly competitive marketplace, you will need to stay ahead of your competitors, but how? Quota forecasting is a proven way to intelligently predict future results and drive revenue growth. Quotas should be calculated according to the past performance of the individual salesperson and the team, as well as the potential their target market has.
Just like a sales strategy or a business plan, quota forecasting is a viable component of any sales team. Although it is not a crystal ball, it is a pretty magical sales tool. It helps predict the number of deals your team will close in a specific time period of time. You can use the calculator to predict sales for your team, the whole company, or each individual salesperson depending on past performance. Remember, forecasting is not a fortune teller, but an intelligent prediction.
To make an estimate of how much your team will sell over a certain period of time in the future, you can use information such as historical data, sales team expertise, and internal and external factors.
Sales forecasting plays a major role in your sales team’s individual development. Detailed sales forecasts allow salespeople and managers to make intelligent decisions when setting goals, hiring, budgeting, prospecting, and other revenue operations factors.
The average salesperson’s sales predictions are less than 75% accurate, even after spending an average of 2.5 hours a week on sales forecasting. What is the disparity?
Quota forecasting allows you to identify potential obstacles while there is still time to avoid or mitigate them. Discovering potential problems mid-month versus at the end of the quarter has a huge impact.
A number of company decisions should be based on sales forecasts, from hiring and revenue operations to goal-setting and budgeting. For example, what if your sales forecast predicts a 30% increase in sales. To assure you’re keeping up with demand, you should start recruiting.
Your sales reps predicted their expected sales for the month and you blew your goals out of the water – right? Think again. The ability to predict revenue operations numbers and outcomes is not always that easy. Estimate your number too low and you leave money on the table. Predict your number too high and your team will be burning the midnight oil to hit end-of-quarter goals.
Beth is a Senior Manager of Revenue Operations at New Breed and specializes in optimizing how processes and platforms support revenue growth.