Modern Managers have several different methods available for Sales Forecasting.
Popular methods are:
- Jury of Executive Opinion Method
- The Salesforce Estimation Method
- Time Series Analysis Method
Jury of Executive Opinion Method:
In the Jury of executive opinion method of Sales Forecasting, appropriate managers within the organization assemble to discuss their opinions on what will happen to sales in the future.
Since these discussion sessions usually resolve around hunches or experienced guesses, the resulting forecast is a blend of informed opinions.
A similar, forecasting method, which has been developed recently is called the DELPHI Method. Delphi Method also gathers, evaluates, and summarizes expert opinions as the basis for a forecast, but the procedure is more formal than that for the jury of executive opinion method.
The Delphi Method has the following steps:
- STEP 1 – Various Experts are asked to answer, independently and in writing, a series of questions about the future of sales or whatever other area is being forecasted.
- STEP 2 – A summary of all the answers is then prepared. No expert knows, how any other expert answered the questions.
- STEP 3 – Copies of summary are given to the individual experts with the request that they modify their original answers if they think it necessary.
- STEP 4 – Another summary is made of these modifications, and copies again are distributed to the experts. This time,however, expert opinions that deviate significantly from the norm must be justified in writing.
- STEP 5 – A third summary is made of the opinions and justifications, and copies are once again distributed to the experts. Justification in writing for all answers is now required.
- STEP 6 – The forecast is generated from all of the opinions and justifications that arise from step 5.
SALES FORCE ESTIMATION METHOD:
The Sales Force Method is a sales forecasting technique that predicts future sales by analyzing the opinions of sales people as a group.
Salespeople continually interact with customers, and from this interaction they usually develop a knack for predicting future sales.
As with the jury of executive opinion method, the resulting forecast normally is a blend of the informed views of the group.
The sales force estimation method is considered very valuable management tool and is commonly used in business and industry throughout the world.
This method can be further improved by providing sales people with sufficient time to forecast and offering incentives for accurate forecasts.
Companies can make their sales people better forecasters, by training them to better interpret their interactions with the customers.
TIME SERIES ANALYSIS METHOD:
The time series analysis method predicts the future sales by analyzing the historical relationship between sales and time.
Although the actual number of years included in a time series analysis will vary from company to company, as a general rule, managers should include as many years as possible to ensure that important sales trends do not get undetected.
Other complex sales forecasting methods include:
- Statistical Correlation Method
- Computer Simulation Method
Do you need support in Sales Forecasting for your organization? Do you need some support in beating the Sales Forecasts?