The Art of Sales Forecasting
Sales forecasting is the process of organizing and analyzing information in a way that makes it possible to estimate what your sales will be. Some claim there is an art to it that involves making unbiased estimates of the future of sales based on past and present experience and knowledge. Yet simply extending past sales data into the future using simplistic techniques such as trend lines does not constitute effective
sales forecasting - judgement is needed.
Sales Forecasting Judgement
Applying managerial judgement to
sales forecasting is something of an art. Experienced judgement can be extremely important when selecting a particular
sales forecasting tool or software. Forecasting analysts should state their assumptions in explicit form so management can challenge the validity of assumption. A manager may then come up with a new set of assumptions based upon their professional judgment.
Sales Forecasting Accuracy
Many managers often predict future sales based upon past experience and opinion which do not require impartial methods of prediction and formulation. Many will swear by the accuracy of their intuition but this does not bode well for long-tem accuracy.
Sales forecasts often end up simply reflecting the manager’s lack of knowledge or biased frames of reference. Consequently these factors are not generally helpful in generating accurate and reliable
sales forecasts.
Sales Forecasting - Consideration of Variables
Managers accepting
sales forecasts at face value run the risk of being incorrect and missing business goals and objectives entirely. Smart managers will examine all possible variables and subject them some independent judgment tests of their own. Questioning assumptions is therefore good practice when formulating successful
sales forecasts.
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Fundamental Issues in Business Forecasting and learn how to get more from your sales forecasting.