- What is Sales Forecasting Software?
- Post navigation
- Forecasting Sales w/ Avercast
- Sales Forecasting Software Features
- Sales Forecasting Software Buyer’s Guide
- Types of Sales Forecasting Software
- Demand Planning vs Sales Forecasting
- Sales forecasting in GMDH Streamline
- Using Excel as a Sales Forecasting Software
What is Sales Forecasting Software?
Sales forecasting software creates financial reports of expected sales based on historical trends, economic conditions, industry behavior, changes within your company, and selected time periods.
A sales forecast will better prepare your business and sales team with expected sales and revenue that you plan to achieve over a set length of time.
Things to consider in finding an intuitive software that provides an accurate forecast will be accuracy, simplicity, economy, and availability.
Sales forecasting software creates financial forecasts by entering predicted sales, weighing them against expenses you anticipate such as labor costs, and create a forecast of the upcoming period’s sales.
These financial reports can be adjusted at any time, which will let you test out different “what if” scenarios, meaning you don’t have to be exact on any number you put into the program.
Whether a small business or a large enterprise, sales forecasting tools will help you make tough decisions.
An example is whether or not your business can afford to hire a new employee.
Forecasting Sales w/ Avercast
In that scenario, you’ll have to weigh the expense of interviewing and onboarding that employee with the expected levels of work/sales they’ll be able to bring in. Something that negatively effects a sales process for the short-term could have increasingly positive returns in the long-term, and sales forecasting software will let your business have that foresight.
Sales Forecasting Software Features
- Demand Forecast: Forecast by item or location on a monthly or weekly basis.
Create a number of item or location subcategories.
Create statistical-based forecasts that analyze each item for levels, seasonality, trends, and intermittency. Forecast new products or determine issues with lost sales due to stock outages.
- Revenue Planning: Create sales forecasts for your next periods.
Sales Forecasting Software Buyer’s Guide
Import current sales prices and use historical data to align revenue forecasts with demand forecasts.
- Approval System: Helps you see which forecasts have been viewed and approved, and which need further attention.
- Reporting: Create final forecast reports, projected revenue reports, forecast accuracy reports, and many others.
- Import Capabilities: Integrate with tools you use to record data, such as Excel, accounting software, or an ERP system
- Assumption Management: Planned promotions not reflected in historical data can be manually accounted for to ensure revenue planning and overall sales forecasts are accurate
- Collaboration: Add notes to cells and planning items to capture assumptions and view authors of edits.
Types of Sales Forecasting Software
Pipeline or Opportunity Sales Forecasting Software
Pipeline sales forecasting software takes into account opportunities that already exist within your existing sales pipeline and helps determine a win rate to establish the priority they should be handled in.
Variables to consider include:
- What stage the opportunity is in
- The expected cost to close the opportunity (such as paying a staff member)
- The average length of a sales cycle (how long it will take to close the sale).
This forecasting method is all about pipeline management, as to determine a historical win rate percentage, it looks at:
- The value of an opportunity (expected sale price)
- The age of the opportunity
- The sales personnel working the opportunity
While it may be tempting to focus all your efforts into closing an opportunity that is 10x your average sale, a pipeline sales forecast software can help you go after winnable opportunities first before shifting your priorities to “at-risk” options.
At-risk opportunities could mean ones that have been sitting in the sales pipeline for too long or ones that have unrealistic close dates (i.e. a prospect has unreasonable expectations).
Sales forecasting software lets you input all of these key figures in order to create an opportunity-based sales forecast.
This pipeline approach is made up of hot zones or clusters that tell you which opportunities need to be focused on first.
This type of forecasting is best utilized by companies that have a large amount of variance.
This type of forecasting should be avoided if your staff isn’t qualified (or can’t be trusted) to key in data accurately.
Historical Sales Forecasting Software
A historical sales forecasting software looks at previous performance of your company to determine a mean (or average) sales level you can expect for the following month, year, or whatever time period you’re looking at.
Historical trends are the main focus used in historical sales forecast software, as it will give you a general expectation of what sales should be at or near based on your past performance.
The best historical sales forecasting software will also take into account the seasonality of some products or services being sold. This can help boost up a prediction for a certain month if it typically sells above average, or the inverse if relevant.
Due to the heavy focus in historical trends, a historical sales forecast does not take into account opportunities you are currently working in your pipeline.
Those familiar with a slope of regression line will know that Y is dependent on X; thus, a historical sales forecast finds the predicted value of Y given X.
In sales forecasting software, a historical sales forecast will show the time period on the X-axis, and the total value of the opportunity on the Y-axis.
Simply put, the total value of an opportunity is dependent on the current time period. This method takes into account an average value for each month and also takes into account the variance between the months (such as the seasonality of some products/services being sold).
Sales forecasting software can help create historical sales forecasts rather easily, providing you have the proper connections with your business systems (such as CRM software like Salesforce) that record this data.
This type of forecasting method should be used by companies with little to no variance in their monthly sales (and can be better suited for small businesses).
Companies won’t find their results to be as accurate as they’d like if they see large monthly swings in their expected sales.
Surveyed Forecasting Software
Using software for a short-term forecasting method such as surveyed forecasting means the software will directly ask the customers what their intentions are for buying your product in the near future.
Asking customers comes in the form of surveys or direct interaction with prospects themselves. Generally, sales team members are brought in for their opinion, as they have the best knowledge of their customers and could have the best expectation as to if their open opportunities are soon to be closed.
This method leaves a lot up to interpretation and takes a customer at their word.
However, a customer with an irregular buying pattern won’t be of much value when surveyed, and buyers tend to leave out limitations that may come about that would prevent them from making a purchase (leading to an increased expectation that a customer may purchase).
Demand Planning vs Sales Forecasting
Being able to accurately plan your demand will be the main driving factor in forecasting sales. In fact, you could argue that planning for demand in a product is a specific type of sales forecasting.
Sales forecasting in GMDH Streamline
As shown in the methods above, sales forecasting is based on a lot of calculations and is backed up by data, while demand takes other factors into account such as economic conditions.
Demand planning software helps forecast demand for a product so it can be developed and shipped in as efficient of possible ways. It can also manage your overall sales and operations planning stage (S&OP).
In sales forecasting, demand planning is the first step in calculating expectations of sales for a specific period.
While demand planning helps gauge the interest of buyers and better assists in product development, sales forecasting provides the numbers for anticipated revenue.
Using Excel as a Sales Forecasting Software
Excel can operate as a basic sales forecasting software by using historical time-based data. Excel is the first choice for many companies trying to create sales forecasts given its prevalence in the workplace.
Excel forecasts can let your company get basic sale predictions, determine inventory requirements, or identify emerging consumer trends.
Excel predictions are based off your existing time-based data and any seasonal data you’ve input for exponential smoothing.
The program can determine a forecast as well as ranges for lower and higher ranges that are within reason.