Every business needs a sales forecast. Whether you’re a one-person promotional products shop or you work for an industry behemoth, you should have a solid idea of what your future sales might look like. When you estimate what your sales could be over the next month, quarter or year, you can make smarter business decisions.

In fact, Andy Kofoid, the president, North America sales at Salesforce, says that a sales forecast can set the course for every critical decision, from budget to resource investment. When forecasting, he recommends asking two questions:

1. How much do we plan to sell?
2. When will we deliver those numbers?

In this issue of PromoPro Daily, we share Kofoid’s techniques that can help you answer these questions and strategically approach your sales forecasting.

1. Stay nimble. Your forecast can change on a dime. When something like a global pandemic or extreme weather upends your projections, be ready to set your forecast aside and adapt to the new circumstances. It’s more important to focus on empathy and relationships, Kofoid says. If you maintain those relationships through the difficult times, those relationships can help you grow again when the time is right.

2. Ask these five questions. Kofoid says it’s important to focus on the who, what, where, why and how when building your forecasts.

  1. Who: Forecast based on your prospects
  2. What: Base your forecast on what solutions you plan to sell
  3. Where: In what location are prospects deciding to buy and where will they use your products?
  4. Why: What’s the reason for someone to buy from you?
  5. How: Consider how prospects make their buying decisions. If you’re not accounting for how they’ve done it in the past, Kofoid says you may end up with fuzzy math.

3. Think through business risks. Called negative forecasting, this step helps you gauge risk so that you can evolve when things happen. For example, Kofoid says one his customers added a Covid field in their CRM to tag deals and see the pandemic’s impact on deals lost or postponed.

4. Create sales forecasts for everyone. People throughout your company can benefit from a sales forecast — not just those who work in sales. Kofoid says that sales forecasts can help leaders know what to spend on marketing and hiring. And if forecasts are off, the company may experience challenges across all business functions. When things change, Kofoid suggests tweaking your guidance to help everyone make better decisions.

5. Tap into technology. Back-of-the-napkin predictions won’t cut it. Kofoid recommends checking out sales forecasting technology and making it the foundation of your forecasting techniques.

A sales forecast can be tough to get right, but it’s a crucial component to business success. In the year ahead, follow the above sales forecasting techniques to confidently answer “how much” and “by when.”

Compiled by Audrey Sellers

Source: Andy Kofoid is president, North America sales at Salesforce.