Using Sales Data to Predict Future Success or Failure
Sales forecasting can be a subject of dread for both managers and salespeople. This is probably due to lack of consistency: forecasting methodologies can range from throwing darts at a board (aka “wild guesses) to performing tedious, complex data analysis using spreadsheets, databases, and more.
But what is the point of forecasting in the first place?
Really it boils down to this: to drive sales and marketing efforts for the next week, month, quarter, etc. If you don’t know where you have been, you cannot map out where you are going. And sales data provides the basis in figuring this all out.
Take a closer look
In their most simple form, forecasts compare current earnings to a previous period and see if sales are up or down. For too many businesses, the analysis stops here. And the resulting plan goes something like:
“Sales are down. Do something about it.”
Or “Sales are up. We are geniuses, so let’s party.”
The former results in panic and the latter often results in dropping the successful actions that led to the performance increase.
By segmenting markets, digging deeper into sales data and conducting in-depth analysis, such as win-loss analysis, businesses can glean insights into the reasons behind the numbers and keep things going.
In a recent Gartner report, Todd Berkowitz points out that rigorous win-loss analysis resulted in sales win rate improvements of up to 50 percent for many businesses. 50 percent!
Some other data points to look into
Here are a few data points that can help a business predict future performance.
- Sales growth rates
- Affordable growth rates
- Break even rates
- Net working capital turnover rates