A recent survey showed that 78% of companies believe they could increase their revenue by at least 5% if they had a more accurate sales forecast.
Given the current uncertain outlook, companies are looking for ways to grow as efficiently with as little incremental investment as possible. Improving the usability and quality of sales forecasts is a way to achieve growth, reduce waste and get better business results from existing sales resources.
The volatility of today's economy and its rapid changes mean manufacturers need to see what is happening faster to better respond to the changing needs of customers. Responsive suppliers are more likely to become "supplier of choice" and as a consequence better positioned to win more business.
A recent survey by RBInteractive Research Group found that 78% of companies believe they could increase their revenue by at least 5% if they had a more accurate sales forecast.
We Are Ready When You Are
There are countless examples of companies who have struggled to predict how well a new product is going to perform. Most recently, the world watched as Apple scrambled to catch up with consumer demand of its coveted iPad.
This type of uncertainty places huge demands on component suppliers who need to respond quickly to meet the needs of customers like Apple. Those manufacturers who are best and quickest at anticipating changes and outcomes are most likely to be selected as principal suppliers.
Suppliers have found that by improving the quality of their sales forecast, they are better able to respond to customers that were moving from design of new products to the shipping of those products. By better and more quickly anticipating the timing and nature of what these customers needed, companies can win more primary sourcing relationships and increase market share.
One way to do this is by focusing on the sales forecast. These companies can look at, scrub and modify their sales forecast in different ways, gaining more insight into what their forecast contains and having more confidence to act on what their sales forecast was predicting.
Adapting to Change: QuickLogic's Forecast Shows the Way
Take QuickLogic Corp. -- a leading provider of customizable semiconductor solutions for the hand-held mobile device market-for example. After serving the programmable logic semiconductor markets for nearly twenty years, the company altered its business model along with its product offerings and entered entirely new markets.
As it began its transition, QuickLogic realized it needed a way to forecast its newest solutions, mature products, and end-of-life products -- all at the same time. With little room for error, management needed clear line of sight into future demand for their offerings in terms of bookings and also revenue.
For this reason, the company sought a solution that would track the forecast deal by deal and allow sales and other managers in the company to view the forecast at each stage of the sales cycle so they could immediately see how customers were reacting to their new products, while also keeping tabs on their mature products. QuickLogic also able to create an accessible, reliable and up-to-date revenue forecast that drives its annual operating plan.
What's more, the company's management team is now supporting its strategic business model, including headcount planning, capacity planning, and managing their ability to meet customer commitments.
Three Key Sales Forecasting Initiatives
You can focus on three key initiatives to ensure you end up with a forecast that helps you win more business.
Sales and Marketing Efficiency and Effectiveness
First and foremost a sales forecast lives and breathes in sales and marketing, the organizations that own the company's revenue. Any application used by sales and marketing must be extremely flexible, easy to use, and adopt. The sales forecasting process needs to get the right information from the sales and marketing frontline resources without taking too much of their time to capture their input. When working with sales, give a little to get something back -- giving sales time back from forecasting will get you a better sales forecast.
Look at the Forecast from Different Perspectives and Make Judgments
A company's sales forecast is the best indicator of its future revenue. Key to understanding what is indicated in the forecast is being able to slide and dice the forecast. Understanding the forecast is just the first step; updating the forecast from different business perspectives (customer, product, region and partner) improves quality of the forecast. Finally, understanding what is changing in a forecast and preserving a detailed history of what changed, is essential to understand why outcomes may be different from what was originally predicted.
Enable Collaboration
A sales forecasting system gives a common platform to all the constituents that contribute to the forecast -- from sales and product development, to operations and finance. By letting all forecasters use the same tool and see each other's predictions and assumptions, they are able to work together more effectively. Ensuring the forecasting process is collaborative among all the key stakeholders not only ensures it is more relevant, it makes the sales forecast better.
A Final Word
In today's fast-paced and ever-changing global business landscape, few activities are as important to the success of a company as being responsive to customers. Making better use of the sales forecast is the easiest and most direct route to responding well to your customers.
While predicting your "sales future" will never be an exact science, an emphasis on new technology combined with a willingness to try new approaches will create rewards for the entire organization as well as for customers. So, as you look toward 2011, ask yourself if there might be an opportunity to invest in your sales forecasting process and systems. Your customers and your shareholders will thank you.
Kim Orumchian is Founder and Senior Vice President of Products of Right90 which is a provider of sales forecasting solutions. Right90 delivers a suite of SaaS-based applications that enable companies to generate a sales forecast.
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