Why Sales Forecasting Is Not Only Important, It's Vital

For any company, regardless of size, sales forecasting is one of the most critical pieces of information for prospecting success and long-term business growth.

An effective sales forecast should be based on an accurate picture of what is actually happening in the economy, the marketplace, and of course, your market niche. 

Multiple Sales Forecasts are Also Necessary

One of the biggest mistakes you can make when developing a new forecast is believing there's only one data set to use. In fact, multiple forecasts are necessary in order to get an accurate representation of cross-departmental opportunities in the different verticals or markets you serve. 

For instance, your sales team might develop a forecast based on all current opportunities while product management is interested in a product-specific report for future development projects. 

Senior sales executives should encourage the creation of forecasts based on all perspectives in order to bolster business growth. These critical decisions are also needed in order to build an effective pipeline of qualified prospects and increase revenue month-over-month. 

Matt Heinz, president and founder of Heinz Marketing, is a respected industry guru, who always points to the importance of collaboration, accountability, and expanding one's knowledge base. 

Heinz has repeatedly been listed as one the Top 50 Most Influential People in Sales Lead Management and the Top 50 Sales & Marketing Influencers. As such, he recommends the following:

• Develop and use consistent definitions so that everyone is speaking the same language.
  
  
• Everyone, from senior management and marketing to your sales reps, needs to understand this language. For example: Exactly what is an underdeveloped market opportunity? What is a good sales lead?
  
  
• Based on past and current history, definite your sales cycle length.
  
  
• Stay up-to-date on market conditions. The model from last year may not work for coming years due to various market conditions. Learn from it and move on.
  
  
• Conduct regular reviews and reward accuracy.
  
  
• Update the forecasts on a regular basis. 
  
  
• Study population forecasts and other demographic information to determine if some of the sweeping changes might affect your products or services.

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