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1. Sales Forecasting- Introduction
Sales Forecasting is the process using a company’s sales records over the past years to predict the short-term or long-term sales performance of that company in the future. This is one of the pillars of proper financial planning. As with any prediction-related process, risk and uncertainty are unavoidable is sales forecasting too. Hence, it’s considered a good practice for sales forecasting teams to mention the degree of uncertainties is a globally-conducted corporate practice where a number of objective are identified, actions-plans are chalked out as well as budgets and resources are allotted to them.
A sales territory is the customer demographic or the geographical area assigned for sales activity to either a salesperson or a sales team. In these cases, a sales manager generally assigns the territory among members of the sales team. Often retailers, franchisees and distributors operate under specific territories.
In this tutorial, we will discuss in detail about how sales forecasting and territory planning helps in the growth of a company.
This tutorial is designed for people who have entered a sales-based company and expected to work in the job profiles of salesperson. Understanding sales territory and forecasting will help them set a realistic target and understand the scope of their operations.
Before proceeding with this tutorial, you are expected to understand about sales records and how they are used in the financial of a company. It will be added benefit, if you also know the basics of organizational structure and working model of your company.
2. Factors to consider
For a successful and accurate sales forecasting, it is necessary to take into consideration the direction from significant departments of the organizations, comprising of seniors, mangers, sales team and finally- your own gut feeling. Let’s list down these sources of instructions towards and how they contribute towards designing
a reliable sales forecast
Directions from top-level seniors- It may be initially necessary for you to increase your sales by 10% however
your seniors, being wiser, may ask you to reconsider your target depending on promise made to outside
investors as well as stockholders.
Directions from one’s own manager- These kinds of directions are mostly integrated along with the direction
from the top level, but their expectations are generally little more conservative and realistic. If the top management gives you a target of 15% sales growth, your manager will tell you what the real expectations are.
Direction from sales teams- For instance, if the sales teams may project a growth of 10% over the management’s forecast figure of 20%; this extra-conservative number is a cushion, so that they could increase their chances to beat the sales forecast.
Directions from the entities- Many other entities also take part in forecasting. Chief among them are the research and development department, human resources department, marketing department, finance team, manufacturing unit, etc.
Once you are done taking feedback and inputs from all these people, the final questions to ask is- what is your interpretation of all these factors? Most often a person gut feeling is more accurate than all numbers in front of him. Although it’s not advisable to go against the company’s decision, it is always a good policy to do further research till negative hunch doesn’t go away.
3. Sales Forecasting- Word of Caution
In a Sales Forecasting team, you will be working with sensitive details of purchases, sales, inventory, etc., which many organizations might not want everyone to know about. These details can’t be shared with everyone in the team. The following are to be taken care of the manager only-
Highly sensitive task (for example: Reviews of Salaries, Discipline).
Tasks that involve the settlement of conflicts among employees.
Task that are not well defined or that are uncertain in nature.
Tasks that involve confidential information.
It is equally important that the concept of accepting work is willfully embraced by the team members. They should realize that is not just a desire, but a necessary for successful operation of sales.
However, the goals and objective must be clearly specified. It is only possible if the managers know the capabilities, strengths and weaknesses of staff. If your staff workload is well known to you, you will find it easier to assign them suitable newer responsibilities respectively.
The tricks is to never overload the staff and to always abide by the standard of performance. In case, people don’t find Sales Forecasting easy, then a manager should be willing to provide adequate training to his team and keep a keen interest in their progress. If the team performs as expected, it is always appropriate rewards to deserving and successful candidates.
Dealing with Pushbacks
In case of an opposition, you might require to address the task and may also need to either modify or reconsider it. A pushback can also be a symptom for a bigger issue. For example, an employee who is excellent in computer skills might feel that you are making him/her generate more and more spreadsheets and reports and are unable to balance the load of the work other members of the team.
The team members becoming victims to this type of a trap is very common, especially when somebody masters a certain attribute that is crucial to the task. Think deeply before mistaking someone expertise as someone obsession. As you would never want to make a star player feel repulsive towards his game.
Sometimes, it might be needed of you to work in condition with an employee. Often such situations involve a managerial ploy called Reverse Assignment. The meaning of this is to assign a task to you direct senior. This may feel like being a tad bit awkward at first, but it is almost same as any other type of delegation.
Although, you would only be able to delegate the tasks that come within their domain, excluding the administrative tasks. Delegating up requires to be approached with great caution, but if done in the right way, it might really make you visible and give you an opportunity to have more conversations with numerous high profile positive within your company.
4. Sales Territory Planning
A sales territory is the customer demographic or the geographical area assigned for sales activity to either a
salesperson or a sales team. In these cases, a sales manager generally assigns the territory among members of the sales team. Often retailers, franchisees, and distributors operate under specific territories.
Territory planning is a critical area in order to acquire the right results for you as well as for your team. The building blocks of sales forecasting are based on territory planning. To provide a proper direction to the team both in the present and the future, it is necessary to have a good ideas of sales staff members and their respective prospects. This process relies on efficient management of time and resources.
The factors that determine Sales Territory Planning
The number of customers or their households in appropriate vicinity of the store.
The average sales volume/unit area for similar-sized shops in the same location.
The annual expenses of the customers in that region on the product.
The best way for a company to achieve success is by creating stronger teams all over the organization. You may have been in a number of industries and may have access to a wide range of sales channels to use. This may fall anywhere within the field of internal sales (tele sales), distributors and self-dependent reps indirect workers of your company and are the typically paid on a commission basis.
Real life Scenario
However, in a real-life scenario, the customer service department of your company might be more indulged
in up-selling instead of just taking care of transactions and troubleshooting. Add to that, your company’s prospectus could be as variable as smaller individuals or top global companies.
Your company might also have been trading with various business entities within the same company or maybe in different locations or may be buying offices. As a final note, you might be creating to multinational companies or global prospects.
Some of the most usual ways are by-
Geography- By state/province, postal zip code, area of the country.
Industry- Selling to steal industry, pharmaceuticals industry, etc.
Product Lines- Selling A, B, or C products.
Assignment- If you contact a prospect, he should be assigned to you only.
Major Prospects- Separation of prospects that maybe over a specific size.
Global Prospects- Separating global structure and local prospects.
Unforeseen Factors- Various unique scenarios.
These are some of the many responsibilities for companies to try out various combinations and integrations of the various channel of sales. Furthermore, the determination of what is sold by whom
and to whom (usually termed as the sales territory) can be done in numerous ways.
5. Sales Forecasting- Team Selling
This is brand new concept in the territory planning as most of the companies, to be more specific, the midsized ones, may choose and prospect managing techniques. Whatever the case maybe, your job could be also further diversity from being a part of your core sales team to spontaneously taking care of your group of clients.
The selling of a team is very common in today’s world. Various salesperson are assigned for handling every aspect of the sales process. This may vary from the commencement of a sale to application of a solution, training, and maintenance of prospects. This is why the selling of teams could be figured out in a various
number of ways according to the industry, environment of the sales organization and demands by the customer.
Most salesperson implement different types of system for analyzing their current relationships with clients and opportunities for new business. After making efforts for the identification and categorizing of prospects into current business customers and potential new customers, the sales team need to also put together a combined effort to make sure that they handle all queries of the customers and convince him to go for the sale.
6. Ranking of Customers
What you should focus on is setting the ranking for various customers, as well as various opportunities
according to their values while moving forward. In this manner, time, money, and resources can be focused on those prospects that are the most valuable to your organization. You have the privilege to implement anyone of these rankings methodologies to determine the center of your focus.
The crucial question is not how their ranks are being symbolized, but to determine who remains where. You could have anywhere from one client to thousands of clients and/or prospects within your territory.
Considering the following factors-
The industry that you work for; whether the industry possesses a limited number of larger prospects, numerous smaller ones or a mix of both?
The parameters that divide your territory by- geographical regions, lines of product, targeting, customers, channel of sales, etc., and the way in which your competitor’s prospectus are covered.