The term ‘sales forecasting’ refers to a crucial part of the financial planning of a business. It’s a self-assessment tool that uses past and current sales statistics to intelligently predict future performance.
An organisation’s future success depends on their ability to meet the demands of the market. As an example think of a business that holds inventory. If they overestimate the stock their inventory may perish or there may be insufficient space for the other supplies that they need. Or if the organisation happened to underestimate their market’s demands they would then be in a position where they would lose out on potential business.
What Does Sales Forecasting Allow?
Sales forecasts allow one to spot possible issues while there’s still time to avoid or mitigate them. For instance, if you notice that your team is trending 35% below quota, it is possible to figure out what’s going on and course-correct. Maybe your competitor has started an aggressive new discounting campaign, or your new sales compensation plan unintentionally encourages bad behaviour.
The reality that good sales forecasting can help you develop as well as progress your strategic plans through the process of increasing your knowledge of the marketplace. Sales managers in organisations are in the front line of selling efforts and knowledge. They are in the correct position to be able to supply the information needed in order to create an accurate market opportunity analysis and sales forecast based on their knowledge. This is the reason market opportunity analysis and sales forecasting are foundational and core competencies that should be mastered by sales managers.
What Is A Market Opportunity Analysis?
The term ‘market opportunity analysis’ takes into consideration the financial capabilities, available technology and competitive readiness. Its conclusions give you the opportunity to identify new target markets, discover unmet customer needs as well as realise competitive advantages.
The importance of a solid market analysis in your area cannot be over emphasised. Whether you’re a big corporation or a small firm, understanding your market will assist with identifying many different factors that can have an impact on the business.
What Effect Does The Socio-Economic Environment Have On Sales?
The demand for a product from the market is impacted by the business’ target market and the economic conditions in the market. To stress test the market analysis for the business, the socio-economic environment is a starting point in your research.
The market demand is impacted by the socio-economic environment and the factors involved are:
- Levels of unemployment
- Level of education
- Rate of inflation
- Short-term and long-term interest rates
- Average disposable income
- Personal and corporate tax rate
- Adjustments in commodity prices
- Fluctuations in the national GDP
Sales management in a business is a vital function. It can make or break the success of the organisation as if there’s no money coming into the business, it won’t survive.
Learn the principles of sales management with our Sales Management Course and make sure that your company is always on the road to success!
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