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SEVEN
How to Accurately Forecast Sales
Executive Summary
The ability to accurately forecast sales can be a major factor in your career success. Consistently meeting your sales forecasts gives your boss confidence that you are on top of the business and that your word can be relied on.
Unfortunately, the typical sales forecast doesn't produce confidence. Generally, it is doomed from the beginning, because it is based on hunches and fueled by a suspicious mixture of subjectivity and optimism.
Yet you can significantly improve the quality of your forecasting—if you master the methods presented in this section.
SEVEN.1
How to Improve Your Sales Forecasts
Sales forecasting is a subjective process, and all too often unreliable. But by creating a model of your typical sales process, you can reduce the subjectivity to a minimum and accurately predict when business will close.
Begin by defining the steps of a typical sale. This will be different for every company, but let's use the following example for discussion purposes.
- Qualified. Prospect meets the four qualifying criteria: has a need we can meet; has the authority to buy; plans to buy within x months; and has sufficient budget or spending authority.
- Understand Needs. You have identified and met all people who will influence the decision, and understand the needs of each.
- Survey Complete. You have completed a survey of the prospect's needs and are ready to submit a proposal.
- Proposal Submitted. You have submitted a proposal, and feedback from your inside champion indicates that it meets the prospect's needs.
- Contract Negotiations. All competitors have been eliminated and you are negotiating details of the contract.
- Final Approval. The contract has been submitted for signature.
- Contract Signed.
Depending on your product or service, it is a good idea to define between five and ten steps. Longer sales cycles will require the greatest number of steps.
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