Accurate, precise, and reliable sales forecasting can make the difference between success and failure for a business, as several functions of the business rely on expected revenue. External factors like economic shifts, seasonal changes, policy, governance, competitive landscape, legislative changes, and personnel changes are important variables to consider when predicting revenue; sales forecasting and sales forecasting tools help to make these predictions.
Read on to learn more about how sales forecasting works and some of the top sales forecasting tools on the market.
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Sales forecasting is the projection of expected sales revenue. It is most commonly predicted for the quarter or year but can be calculated for any time period.
Sales forecasts allow businesses to make important decisions about their budgeting, staffing, manufacturing, inventory management, marketing, and other business functions based on expected revenue. Sales forecasting is ultimately the responsibility of sales leaders who work with the assistance of sales reps and product leaders.
The sales forecast projects expected revenue, but it doesn’t show the probability of achieving those numbers. This is where a win probability feature can be extremely useful. It allows users to gauge the likelihood of meeting those revenue targets or closing specific sales deals.
Most sales forecasting tools allow users to generate custom reports with graphs, tables, and other visual formats; this includes projected revenue reports and final forecast reports. Reporting features can also be used to compare historical or actual sales to project sales. Finally, this feature enables users to play with different variables to see how they would affect the sales revenue outcome.
A common feature in sales forecasting tools is integration with customer relationship management (CRM) tools. This integration is particularly useful for sales teams to organize and track their sales pipeline.
Finance, marketing, manufacturing, and other departments can use sales forecasting software to share their input for the revenue forecast or view up-to-date forecasts. Collaboration tools help with accurate input, output, and interpretation of the sales forecast across teams.
Some sales forecasting tools offer a mobile app optimized for iOS or Android users, giving them up-to-date sales forecasting information on their phones. In most cases, the mobile app can also be used to update deals, manage tasks, and add contacts to the forecasting software.
Another feature in most sales forecasting software is the ability to import and export data. Data from Microsoft Excel spreadsheets can be imported into the software so the user doesn’t have to manually input the numbers. Similarly, data can be extracted or exported to other software.
Sales managers and sales reps are responsible for more than providing the sales forecast; they also use this forecast to identify high-margin products or channels, assign sales targets and sales quotas, and develop their sales strategy. For sales managers, a sales forecast is also a useful tool for sales rep performance management.
Manufacturing teams use sales forecasts to determine how much product should be manufactured. Sales personnel want the product to always be available so they can keep their customers happy, complete the sales cycle, and hit their revenue targets. Conversely, manufacturing personnel want to ensure they do not manufacture more than demand so they don’t end up using up their resources unnecessarily. This balance can be achieved by making accurate and reliable sales forecasts.
Having a backlog of orders due to lack of product or raw materials or having too much product on hand are situations that the supply chain department wants to avoid. They can use sales forecasting to manage supply chain issues, including inventory management.
Businesses can use sales forecasting to optimize resources and benchmark trends for future marketing efforts. Sales forecasting also helps marketing teams determine if a particular channel, product, or service requires more marketing efforts, a change in marketing campaign, or budget reallocation.
Sales forecasting helps human resources to project employee turnover and determine staffing needs to meet sales targets. The forecast also helps human resources determine a need to hire more staff, change employee policies, increase office size, and other factors.
Finance personnel can use sales forecasting for a variety of purposes, including the management of cash flow, budgeting, business planning, risk management, and dividends.
The sales forecast is always a moving target, making it challenging to get it right. You have to understand that when you forecast sales, you are predicting the future, so you might not be 100% accurate. However, there are a few steps you can take to maximize the accuracy and reliability of a sales forecast.
First, you must carefully choose which method of sales forecasting you want to use. You can do forecasting based on the length of the sales cycle and opportunity stages, or set up your qualification framework and metrics.
Once you have decided on the method of sales forecasting, you might need to make a few assumptions, which can have a significant impact on the sales forecast. This includes assumptions about costs, accounts receivable, economic situation, government policies, and competition. It is best to be as critical of assumptions so you understand why you picked these assumptions. You can rely on your knowledge or research, but don’t hesitate to seek expert advice about these assumptions.
You can also do a “what-if-scenario” analysis to make several versions of the sales forecast. This includes a conservative, moderate, and/or aggressive prediction about the sales revenue.
Using sales forecasting software can help users minimize common mistakes in the sales forecasting process, as it helps automate some of the processes, supports better collaboration, and offers several other productivity and accuracy features.
Zoho Analytics is one of the best sales forecasting and analytics tools, loaded with useful features. This tool is native to Zoho and is typically used with Zoho CRM for quick and easy business data syncing.
A unique feature of Zoho Analytics is its virtual sales assistant, Zia, which uses artificial intelligence (AI) to answer questions about sales forecasts. It also offers predictive analysis, collaboration tools, what-if analysis features, data storytelling to create presentations, and several other features.
What is missing is a user-friendly dashboard and reporting customization. The pricing plans range from $24 per month for standard users to $455 per month for enterprise users. There is also a free plan that can be used for basic features.
Pipedrive is primarily a business intelligence tool that offers several features for sales forecasting. It can be used to automate processes such as lead engagement, sales conversions, and lead scoring.
It also offers an analytics feature that can generate reports using metrics that are relevant to your business. Pipedrive can also be used to track contact history, as all interactions with the customer or lead are logged into Pipedrive, including email and call history. Pipedrive offers different pricing plans ranging from $12.50 to $99 per user per month.
Hubspot offers well-rounded sales forecasting tools that can integrate data from various departments like sales, marketing, and finance. The user interface is intuitive with easy navigation, which is great for new users. The other major advantage of Hubspot is the wide range of integration capabilities that support sales forecasting.
A downside to this software is that sales forecasting is only available on the higher-cost plan. Some users have also reported issues with data migration. There is a free plan available, but the most useful features are available in the professional plan which costs $450 per month for five users. There is also an enterprise sales plan for $1,200 per month for 10 users.
With a user-friendly dashboard and predictive analysis tools, Freshsales is one of the best sales forecasting tools on the market. The dashboard has a straightforward layout with very few buttons.
Some of the features offered by Freshsales include pipeline forecasting, AI insights, historical forecasting, and sales quota tracking. Freshsales is slightly lacking in customer support and the sales forecasting tools are only available in the most expensive plan, which is $69 per user per month.
With affordable plans and a full range of sales forecasting features, EngageBay offers great value. Features include sales automation tools, holistic customer profiles, account-based marketing, custom reporting, and sales tracking. The free plan includes several useful features including contact management and email marketing.
To get third-party integration, predictive analytics, and other features, users need at least the basic plan, which is $12.99 per user per month. There are also more expensive plans that go up to $49.99 per user per month; these plans are helpful for teams that need customized reports, proposal analytics, call scripts, and other advanced features.
Bitrix24 is one of the best sales forecasting solutions for e-commerce companies, but it can be used by all types of businesses. It offers several sales forecasting features, including forecasting charts and sales data by store locations.
There is plenty to like about Bitrix24, with a free plan that can be used for sales forecasting and excellent predictive analysis that highlights customer purchasing behaviors. However, Bitrix24 is missing live chat and other customer support features. The interface is also not as simple as others and can be difficult for new users to get started with. Pricing ranges from free to $159 per month for unlimited users.
Einstein Analytics by Salesforce offers various sales forecasting tools, including team collaboration, industry-specific data analysis, and a centralized sales data source. It also has templates available for specific industries and pre-built integrations and workflows for sales forecasting. Einstein Analytics offers solid visualization features for presenting sales forecasts and also has some AI-driven tools for accurate revenue forecasts.
This software requires technical expertise to use and does not offer any truly affordable pricing plans. Pricing ranges from $125 to $150 per user per month.
Sales forecasting can help smooth and optimize internal and external operations. For internal operations, sales forecasting minimizes friction inside the organization by connecting sales, marketing, product development, manufacturing, supply chain, human resources, finance, and executive teams so they’re all on the same page.
Issues such as cutting the workforce, halting product manufacturing, or having to deal with supply chain issues can all be prevented or minimized with accurate and reliable sales forecasting. When the internal operations are smooth, external operations are optimized for customer relationships and community involvement.
Read next: Buyer’s Guide to Sales Enablement Software