What is Sales Forecasting and Some Successful Sales Forecasting Methods
Being a sales person for so long, I have come to learn that sales forecasting is a skill that is honed over time. Everyone has the acumen required for it, they just don’t realize it. When I was a kid, I was really smart. Not the Einstein kind, but the kind that knew how to get their way around obstacles. This could be to get just a little bit more pocket money, approval for a trip with friends, or to get me out of trouble. But I could read the unconscious emotional cues that told me what my father and, sometimes, my mother was thinking.
Now, years later, as a sales guy, I apply the same logic to my prospects. Right from the very first call or meeting, I would watch out for clues to predict whether they would convert or not. If there are increased ‘Danger signs’ then I would know that this lead would probably not convert.
Let me give you an example. The other day, I was called to demonstrate our product to an educational institute. I arrived right on time and proceeded with my demo. The audience consisted of users/counselors from their centers across India. I knew then that this prospect would convert – and they did! It was one of the easiest deals I had closed.
How did I predict that? Well, a house—full attendance told me that the users were serious about my product and were genuinely looking to use it. Typically, that is half the battle.
What is Sales Forecasting?
The bookish definition would be “The process of predicting, monthly, quarterly or annually, the estimated amount of sales that is going to happen for the business over that period of time”. These sales forecasts are then used by the management to make important business decisions.
I have now learned that predicting sales of a client is one of the most crucial talents that I can have, and that is what makes me a good salesman. Sales forecasting is not as complicated as you think it is. If you just sharpen your observatory skills, you also can predict sales with a 90% accuracy just like me.
Here are some signs that will tell you the sales is highly likely to close.
Positive signs to watch out for:
1. They know what they want:
Right from the outset, when you start speaking to a prospect, they would communicate why they are looking to purchase your product. Their requirements, as well as their urgency, in finding a solution to their problem will become apparent to the sales person in the first few conversations.
2. They are eager and curious to know more:
To know if the lead is really interested in buying what you are selling, there are some emotional reactions that you should be looking out for. If they are excited to talk with you about the deal, or if they are curious to know more about your product, then that is a definite sign that they are interested.
3. Their budget and timeline fit your business:
Remember that time and money are the two most important things for businesses. Positive clients give you a clear timeline on when the deal would be closed and don’t dodge around. Best of all, their budget would fit perfectly for your business.
4. The upper echelon is directly involved:
More often when you sell to businesses, you will have to cross various gatekeepers to get to the right decision maker. When the decision makers get actively involved very early on in your communications with the lead, you know that the sale has higher chances of closing.
5. They request for a trial:
Some clients insist on trying the product/service before taking a buying decision. This is another clue for you, the salesperson, that a successful trial would mean a willing customer.
6. They start haggling prices:
Remember how our mothers start bargaining for something as soon as they like it? The same way once your lead starts to negotiate on the price, you can go right in, because that is a firm clue that they are in need of what you are selling.
If a combination of one or more of the other signs can be seen in your lead, then you would know that the customer is ready for closure. These signs tell you that the lead is what you can term “low hanging fruit”. All you have to do is pitch the right way and ensure that you give them no reason to make a shift to the competition. The logic is simple, you spend 90% of your time running after clients who have lesser chances of conversion trying to nurture them. Instead, using these cues, you can identify those who have higher chances of converting and 10% of your time on those that are less likely to buy.
But how do you know that they are less likely to buy? There are some danger signs that you can look out for:
Danger signs to look out for:
1. Unclear requirement:
These leads are not really sure of why they want to buy a product. They tend to beat around the bush and keep delaying the purchase. Nine times out of ten, a lack of a solid requirement translates to a no deal. Of course, the wise salesperson that you are, should consider this a bad sign, and try to move on to better opportunities.
2. Product mismatch:
Before you get down into the whole process of selling, you should have a talk with the client about why and how they planning on using your product/service. Get a use case of sorts and analyze how your product can help them solve their problems. If you think that you cannot help them out, it is wiser to make this clear, instead of finding it out later when you have spent months on the deal.
3. Budget constraints:
Every company has a budget set aside for each department in the business. You should establish what their budget is right at the beginning. Sometimes, this is rather obvious. If you are selling a villa, you cannot try and sell it to a person who has just gotten out of college, simply because they cannot afford it.
4. Reluctant Gatekeepers:
If after 5 meetings, you are still talking with the same, say, regional manager, then that is a sure sign that something is wrong. This is especially true when the organization is large and you know that the decision makers are usually in higher position.
5. Negligent attitude:
If they do not respond to your emails or calls or keep postponing a meeting, then this is your hint to stop contacting them and move on.
6. Fluctuating timelines:
During your initial talks with the lead, always ask for a tentative timeline on when the deal should be closed. If they keep postponing and don’t give you a clear date, alarm bells should start ringing for you.
So there you go! These are the general indicators that I use to predict how much sales I can do for a particular month. But, remember that change is constant, and just because a prospect has given you negative vibes does not mean that you should ignore them altogether. Budgets can be adjusted, attitudes may change and requirements may arise. Use the methods that I have indicated as a method of sales prioritization rather than sales qualification.
– Authored by, Vineet Tiwari,
Business Development Manager
Now that you know who to reach out to first, the next step would be to strategize your sales process