Sales Strategies, Sales Forecasting
The art of meeting the sales targets effectively through meticulous planning and budgeting refers to sales management. Sales Management helps to extract the best out of employees and achieve the sales goals of the organization in the most effective ways.
Some sales management strategies:
- Identify goals and objectives of the sales team. Be clear on your sales targets. Make sure the targets are realistic and achievable. Also assign a fixed timeline to achieve the targets.
- Know your product well. Understand what benefits end-users would get from your brand. The marketers must interact with customers to find out more about their expectations from the product as well as the organization. One would not be able to convince the customers unless and until he himself is clear with the benefits of the products.
- Identify your target market. Selling techniques and strategies can’t be same for all individuals. Each audience has different needs, interests and requirements.
- Hire the right individual for the sales team. Remember the sales professionals have a major role in the success and failure of organizations. Recruit individuals who are aggressive, out of the box thinkers and nurture the dream of making it big in the corporate world. Make the sales representatives very clear about their roles and responsibilities in the team. Develop a lucrative incentive plan for them. Incentives and monetary benefits go a long way in motivating the sales team.
- Don’t lie to your customers. It is important to maintain transparency. Communicate what all your product actually offers. It is unethical to make false promises. Only commit to what you actually can deliver to customers.
- Know what your competitors are offering. It is essential to do a SWOT analysis of your organization to know its strengths, weaknesses, threats and opportunities. A marketer must know how his product is better than his competitors.
- Sales representatives must do their homework before going for a sales call. One should never go unprepared. Remember the customer can ask you anything and you have to be ready with your answers. The management must promote training sessions at the workplace to upgrade the skills of the sales professionals and expect them to deliver their level best.
- Devise strategies as per the target audience. Know your market well. The individuals must be able to relate to your products. The strategies must be formulated in the presence of all. Each one should have a say in the same. Let everyone come out with his suggestions. Be ready with alternate plans if one plan fails.
- The management must conduct frequent meetings with the sales team to review their performances. Keep a track on their daily activities. The sales team must prepare Daily Sales Reports (DSR) for the superiors to know what they are up to.
- One must assess his own performance. Recall your interactions with the clients and analyze where you went wrong and where things could have been a little better.
- Treat your customers well for higher customer satisfaction and retention. Don’t oversell. Once you are through with your sales presentation, don’t be after your client’s life. Give him time to think and decide.
- The sales pitch must be impressive for the desired impact.
Sales Forecasting is the process of using a company’s sales records over the past years to predict the short-term or long-term sales performance of that company in the future. This is one of the pillars of proper financial planning. As with any prediction-related process, risk and uncertainty are unavoidable in Sales Forecasting too.
Hence, it’s considered a good practice for Sales forecasting teams to mention the degree of uncertainties in their forecast. Sales Forecasting is a globally-conducted corporate practice where a number of objectives are identified, action-plans are chalked out as well as budgets and resources are allotted to them.
The first step to proper Sales Forecasting is to know the things that fall within your domain directly as a salesperson. This usually relates to your sales staff, clients and prospects. Other factors to consider during the setup of a forecast are the negative ones like − uncertainty, abrupt changes in consumer shopping patterns, etc.
One of the most common yet basic challenges that the management of companies face in making business sales forecasts is that their usual approach is a “top to down” one. This approach leaves very little scope for interaction with the sales manager and the salespersons during the data collection process.
For a successful and accurate Sales Forecasting, it’s necessary to take into consideration the direction from significant departments of the organization, comprising of seniors, managers, sales teams and finally − your own gut feeling. Let’s list down these sources of instructions and how they contribute towards designing a reliable sales forecast.
- Directions from Top-level Seniors− It may be initially necessary for you to increase your sales by 10%, however your seniors, being wiser, may ask you to reconsider your target depending on promises made to outside investors as well as stockholders.
- Directions from one’s own manager− These kind of directions are mostly integrated along with the direction from the top level, but their expectations are generally little more conservative and realistic. If the top management gives you a target of 15% sales growth, your manager will tell you what the real expectations are.
- Direction from Sales Teams− For instance, if the Sales Teams may project a growth of 10% over the management’s forecast figure of 20%; this extra-conservative number is a cushion, so that they could increase their chances to beat the sales forecast.
- Direction from other Entities− Many other entities also take part in Forecasting. Chief among them are the Research and Development department, Human Resource department, Marketing department finance team, manufacturing unit, etc.
Once you are done taking feedback and inputs from all these people, the final question to ask is what is your interpretation of all these factors? Most often a person’s gut feeling is more accurate than all the numbers put in front of him. Although it’s not advisable to go against the company’s decision, it is always a good policy to do further research till the negative hunch doesn’t go away.
Various Methods of Sale forecasting
Survey of consumer’s opinion method
In this direct method of sales forecasting, the marketing manager takes the opinion of the users of a product. In it, buyers are asked about their future buying intentions of the product, their brand preferences, increase in the prices of products, change in the product’s features, quantities of purchases, etc. Thus, the total sales forecasts of the products are estimated by combining the responses of consumers.
- Useful when the number of buyers is very limited.
- Suitable for short-term decisions regarding product and promotion.
- The results obtained are realistic, as they are based on direct opinions of buyers.
- Simple to administer and comprehend.
- The necessity of consumers like tastes, preferences, fashion, etc, may change in long run. Hence this method is unsuitable for long-term forecasting.
- Some of the consumers do not want to give their exact requirements and thus, these forecasts may be wrong.
- Often, surveying is an expensive method both in terms of resources and time.
- Not suitable when buyers group is large.
Executive’s judgment or jury of executives opinion method
In this method, experts in the particular field are requested to give their views on the likely demand for the product in future. Here, a seminar is organized and all the executives of the enterprise participate in this seminar. The opinions of all the executives regarding demand of the product of the enterprise are collected and forecasts are determined on the basis of such opinion. This method is also called the hunch method since the experts give their opinion after weighing pros & cons of all factors affecting the product demand and arrive at an estimate. Thus, on the basis of knowledge and experience of marketing executives, the sales forecasting of the enterprise takes place.
- As this method is based on the knowledge and experience of top executives of the enterprise, the forecasts made under this method are expected to be very close to the reality.
- This method is very economical because the firm need not spend time and resources in collection of data by survey.
- No need of buyers’ investigation.
- Very useful when the product is absolutely new to all markets.
- Such forecasts are based upon opinions and experiences and not upon facts.
- As the liability of making sales forecasts may be on many executives, it may be lack of responsibility determination.
- It is not always necessary that the executives of the enterprise are expert in forecasting the sales.
Experts Opinion Method
In this method, the opinions of experts in the field of marketing are collected and forecasts for the sales of the enterprise are made on the basis of such opinion. The opinions to be collected under this method may be from wholesaler, retailers, distributors, newspapers, journals and professional experts. This method is also known as the Delphi technique, in it the experts who offer their opinions do not have face-to-face interactions and they are free to express their opinions.
- Very useful when the product is absolutely new to all markets.
- The enterprise is not required to spare its time on sales forecasts.
- This method is also economical because collection of opinions of experts is cheaper than actual survey.
- As sales forecasts are based upon the knowledge and experiences of sales experts, its is considered to be reliable.
- Not suitable to forecast the sales for different market segments and territories.
- Not suitable for sales forecasts on the basis of different goods & services, different areas and different customers (or consumers).
- Under this method, the payments are to be made to the experts. Thus, it is very expensive method.
Market Test method
This method is best suitable for the sales forecasting of a new product or potential of existing products in new geographical areas. Under this method, some certain segments of the market are selected and the particular product is introduced on trial basis in these segments only. The results of sales in these segments are collected and analyzed and on the basis of these results, the sales forecasts are made for the whole market.
- Suitable for new products.
- Less risky, as the launch of new product is limited for certain segments of the market.
- It provides an opportunity for the market and product development.
- It helps the enterprise not only up forecasting the sales but also in evaluating the merits· and demerits of its product.
- Time consuming process, as it observes the actual buying pattern of consumers.
- The results of the method are not necessary to be reliable because all the segments of a market have different characteristics and consumers of all the segments have different tastes and preferences.
- Test of marketing is very costly as it requires actual production of the product and in the event of failure of product the total cost of administrating the product goes waste.
Trend analysis method
The trend method is based on analysis of past sales patterns. It is used when the available sales data are of different time periods. This method is based on the assumption that future events are a continuation of the past. Thus, historical data can be used to predict the future.
- Very simple and economical.
- If the factors affecting sales remain constant, the results are most reliable.
- The accuracy of trend projection method depends on the availability of time series data; the longer the series, the better the results.
- This method is based on the assumption that all the factors affecting sales remains constant during the period of forecasting, but this assumption is not real. The reality is that the factors affecting the demand of a product always keep on changing. Thus, the results drawn under this method are not expected to be true or reliable.
- It may not necessarily be true that past pattern would be continued in the future.
Composites of sale force opinion method
Under this technique of sales forecasting, the views and opinions of all the salesmen and sales executives of the enterprise are collected. Sales forecasts of the enterprise are made on the basis of analysis and interpretation of these opinion and views.
- This method is based upon the opinions and views of the persons who are in the real touch of real consumers.
- The results drawn under this method are expected to be most reliable.
- This method provides direct incentives to the Sales Force of the enterprise because they feel themselves an integral part of the enterprise.
- This method is very easy, simple and economical.
- This method is very useful in determining the individual responsibility of sales personnel.
- Salesmen are not in touch with the changes in the factors affecting the sales of the enterprise.
- Not suitable appropriate for making sales forecasts for new products.
- Salesmen are not very reliable estimators of the sales of the enterprise.
Role of External Factors
While participating in a sales forecast, it is crucial for you to answer after considering both the corporate and the departmental viewpoints that may arise. This will provide the real balance between the expectations of the management and the real-case scenarios that different departments project.
External factors have a very significant role to play in Sales Forecasting. This is mainly because they are not dependent on the organizations’ functioning; the organization is dependent on theirs. Organizations study external factors with great detail because they cannot control or influence them. Just as a forecasting can only inform you about the weather but cannot change it.
The most influential factor is the competition, where the competition stands in terms of market share, new line of products, recognition of brand, expansion or contraction of the sales force, etc. Also, whether there is a new competitor in the market or if any competitor is losing out in business.
There are numerous instances where two financially unsound companies enter into Mergers and Acquisitions. Often, these companies form a strong partnership and emerge as a challenging competitor. Managers need to check whether any of their competitors are involved in any such mergers or acquisitions, and if they are, then what is their collective strength and which minuses of each other they are cancelling out.
Some people might say that being a salesperson, you should abide by a philosophy similar to all other staff members, i.e., “winning over the numbers is the game”. In fact, the reality is that winning numbers only proves to the clients that you can perform. Getting numbers is fine, however the individual contributions of team-mates is a significant factor in correlation to the culture of the corporate world. You need to consider many things, such as the economic status of the environment you are operating in, whether the spot of business is going through growth, recession, etc.
You would also need to check if there are any government-implemented hikes in the interest rates, pricing of commodities and what is the current rate of unemployment. Foreign and domestic regulatory bodies implement policies from time to time, which also dramatically influences your business.
The fluctuations of the Dollar, Yuan and Euro also play an important part. When it comes to regulation, the question to ask is – are the regulatory norms going through any significant changes that could affect your plan in a positive or a negative way? It might initially seem as a great thing to try to revise any forecasts put in front of you in order to improve your opportunities of showing up at the top level, which will give you and your team the privilege to shine among others.
On the other hand, other factors play a major role here. You are not the only one who has been given an isolated forecast; other departments have also been given forecasts depending on the same factors that you might want to manipulate.
Generating Sales Reports
Generating sales reports is one of the wisest ways of measuring the progress of your sales team staffs. It also comes in handy for your sales team while making productive changes along the way. Anyway, the days of huge sales reports with detailed information are long gone.
In the real world, salespeople dedicate very less time towards analysing sales reports, which could be as less as thirty minutes a week. More over, by the reduction of unnecessary paperwork, the salespeople can dedicate the saved time for selling.
Some important areas to consider while making reports are the current position of the business deal in the sales cycle – whether a proposal has been requested, prototypes or demos have been asked for, etc.
It is also necessary to calculate the amount of time a prospect is within an agreement with a competitor (date up to which the contract is needed to be renewed or expired) and finally, the growth rate of ongoing prospects (updates against quota).
This is a different kind of report that the salesperson maintains and it can be reviewed by clients on a regular basis. This keeps detailed updates on the current status of contacting the clients. Some updates can be as ‘first contact made’, ‘upcoming call appointment made’, ‘personal sales call appointment made’, etc.
There are some specifications which are followed because just initiating a large number of phone calls or sending a lot of e-mails or business letters does not comply with SMART principles and might just consume your precious time.
Clients are well-informed people, so it is necessary for you to have an understanding of the role played by others within the company and how the internal stakeholders will participate in forecasting of the sales business. Every call to a client should try to get information on the following areas −
- What are the new products and in which development phase are they (R&D, engineering, etc.)?
- What marketing agendas are being implemented for the promotion of demand?
- Is there an increase/decrease anticipated in the marketing budget, if so, how much?
- How financially stable is the business? What do financial executives suggest?
- What amount of human resource is required for the progress?
- What are the recruitment circumstances of the company (whether hiring new recruits or on hold, etc.)?
Finally, all the information collected needs to be sent to the management. It is crucial for you to be realistic. The important point here is that you should try to have as much say and support as possible when making a forecast. This will enable all parties to get details and information necessary for them to satisfy their prominent stakeholders and various constituents.
Balancing Time and Prospects
Managing time in Sales Forecasting is very different from that in other tasks. It is simply because it deals in a very dynamic process, so the various tools and techniques that sales managers have in their arsenal will be quite different than other managers. The reason behind that is they have to deal in daily prospects – sharing and number-delivering.
Prospect planning plays a very significant role when it comes to sales forecasting. With the correct skills and the required mindset, the team can pursue this process. Experts all over the world agree that it is nearly impossible to strategically analyze your prospects, if you do not know the value of time and the same experts will tell you that, not only the sales people, but even most of the managers are poor at managing time.
To maximize the use of your time to its fullest, you have to start with developing a desire to manage time. If you are newly appointed as a sales manager, you might fortunately have the privilege to take a fresh start.
The factors that influence your time are
- Demands made by the senior management of the Corporate.
- Demands made by your manager.
- Demands made by your sales team.
- Demands made by other departments.
- Demands made by your customers.
- Demands made by your family and friends.
- Other private demands.
You can easily conclude that all the above factors are built upon various demands of different people that eat into your productive time. However, by looking at them from a different point of view with respect to what others demand from and what you demand from yourself, you could be able to save some time. If you have a look at the effects these demands have on your time, you will notice that it is the customer-centric values that come into play here. Something that is valuable to you might not be as valuable to somebody else. Normally, the term “value” indicates your perception and if it is right or wrong from your point of view.
A good practice would be to come up with a simple personal strategy for yourself. The depth of the details you go in individual fields is entirely your choice. This may seem like a very basic exercise, still it will put into words some of the thoughts you have been contemplating.
This may encircle areas such as −
- What is your sales forecast today?
- Where do you see it in the next six months, three years, six years, etc.?
You could divide the categories into immediate, inter-mediate, quarterly, bi-annually, annually, etc. Again, you will be astonished to know how change can take place over time due to age and situations. So, you should see through this on a regular basis. The moment you would have a better command over the value you associate with time and its management, you would be able to come up with ways to manage time better.